Garmin results beat expectations, shares rise

(Reuters) - No. 1 U.S. navigation device maker Garmin Ltd (GRMN.O) posted a quarterly profit that handily beat market expectations as sales of personal navigation devices (PND) picked up, sending its shares up about 25 percent.

With retailers restocking inventory and the pressure on Garmin to offer price protection easing, analysts were expecting PND unit shipments and margins to see a significant sequential rise.

The company sold 3.7 million units in the second quarter, with PND unit growth in both North America and Asia, it said in a statement.

Profit fell to $161.9 million, or 81 cents a share, from $256.1 million, or $1.19 a share a year ago. Excluding items, profit was 83 cents a share.

Sales fell 27 percent to $669.1 million. However, sequentially, sales grew 53 percent with all segments posting higher sales and margins.

Analysts on average were expecting earnings of 51 cents a share, before special items, on sales of $670.5 million, according to Reuters Estimates.

Shares of the company rose to $34.20 in trading before the bell. They closed at $27.18 Tuesday on Nasdaq, having gained about 46 percent so far this year.

Garmin's results mirror those of its chief rival, Dutch navigation device maker TomTom (TOM2.AS), which also beat market expectations as it sold more devices at higher prices than expected. TomTom said it saw signs that markets had bottomed even as conditions continued to be "challenging.

Garmin had called its first quarter its "most challenging quarter since becoming a public company" and said the quarter marked the low point for falling sales and margins for the year.

Gross margin in the second quarter was 52.6 percent, with all four segments posting year-over-year margin improvement.

Margins at its auto/mobile segment grew to 45 percent from 39 percent, driven by higher average selling prices sequentially, foreign currency fluctuations and cost cut benefits.

However, this is first time in 10 quarters that the outdoor/fitness segment has posted a dip in sales on a year-over-year basis.

Garmin said it does not expect its high-margin aviation segment to show a pick up in sales until the overall market conditions show consistent stabilization.

(Reporting by Savio D'Souza in Bangalore; Editing by Jarshad Kakkrakandy)