Garmin Ltd., which makes GPS navigation systems and wearable technology products, on Aug. 2 raised its guidance for 2017 as it reported better-than-expected second-quarter results.
The Schaffhausen, Switzerland-based company raised its outlook for pro forma earnings per share for 2017 to about $2.80 from $2.65. It also upgraded its guidance for 2017 revenue to about $3.04 billion from $3.02 billion, and operating profit to around $640 million from $605 million.
"The demand for advanced wearables was particularly strong, but was partially offset by negative trends in the activity tracker market," Garmin CEO Cliff Pemble said in a statement. "Our results thus far give us confidence in raising our outlook for the remainder of the year."
Net income for the 13-week period ended July 1, 2017, rose 6.1% to about $171.0 million from $161.1 million in the 13-week period ended June 25, 2016. Net sales inched up 0.6% to $816.9 million from $811.6 million. A consensus of analysts' mean estimates had forecast net income of $153.57 million on sales of $806.67 million, according to S&P Capital IQ.
On a pro forma basis, taking into account gains and losses on foreign-currency movements, earnings per diluted share increased to 91 cents from 85 cents, based on generally accepted accounting principles.
Revenue jumped 46% in Garmin's outdoor category, driven by strong demand for the fenix 5, a multisport GPS wristwatch. Aviation posted a 15% increase in revenue fueled mainly by aftermarket sales and demand for original products. These offset a 15% drop in revenue in the fitness business due to a decline in the market for activity trackers. The auto segment, where revenue also reversed 15%, was hurt by a contraction in the market for personal navigation devices.
Garmin said its guidance upgrade reflected a stronger outlook for outdoor and aviation products, which would be partially offset by lower expectations for fitness.