Garmin Ltd. on Wednesday reported a 5.5 percent increase in its second-quarter profit and sharply raised its earnings forecast for the year.
The Switzerland-based company, which maintains its operating headquarters in Olathe, said earnings climbed to $182 million for the three months that ended June 28. That was up from earnings of $172.5 million for the same quarter a year earlier.
Revenue increased 12 percent in the quarter to $777.8 million thanks to a 79 percent boost in the sale of fitness-related products and an 11 percent gain in its aviation market.
Garmin, which uses GPS technology for its broad product line, said sales of its first fitness activity tracker along with biking and running gear helped revenue grow.
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Sales climbed 2 percent in its automotive and mobile segment, marine revenue increased 1 percent and outdoor-related product revenue fell 1 percent.
The company, which generates about 40 percent of its revenue from the sale of automotive and mobile tracking devices, said that business segment continues to be hit as consumers rely more on smartphones. Garmin said it maintains a “cautious” outlook for that market.
Garmin also lifted its outlook for the year, citing the strong first half. The company expects earnings per share of $2.95 to $3.05 on revenue of $2.75 billion to $2.85 billion. Previously the company expected earnings per share between $2.50 and $2.60 on revenue of $2.6 billion to $2.7 billion, according to The Wall Street Journal.
Garmin said its board of directors last week approved an “intercompany restructuring” that will move certain U.S. subsidiaries out from under control of its Taiwanese subsidiary. The company said the move will “provide access to historical earnings that were previously permanently reinvested and will allow us to efficiently repatriate future earnings to fund dividends, share repurchases and acquisitions.”
Because of the restructuring, Garmin said it will make one-time cash tax payments of about $300 million over the next year.
Shares in Garmin fell $3.17, or 5.51 percent, to $54.41.