Navigational device maker Garmin Ltd said it will open a third factory in Taiwan as it tries to keep up with consumers wanting to put the devices in their cars and trucks.
Speaking to shareholders at the company's annual meeting, Kevin Rauckman, the chief financial officer, said the third facility comes after Garmin opened its second facility in Taiwan last year.
"We thought it was going to be a longer-term expansion plan, but in fact we're already in need of additional spaces, so we're just days away from closing [a deal on] our third factory," Rauckman said, adding that the factory would cost around US$90 million.
He said a formal announcement would be coming soon.
Garmin saw sales of its automotive devices surge 170 percent to US$1.09 billion last year. The devices use global positioning satellite technology to provide turn-by-turn directions. Some models now include MP3 players and weather forecasts and can direct users around traffic jams or toward restaurants.
Total company sales increased by 73 percent to US$1.77 billion and profits rose 65 percent to US$514.1 million.
Comparing the first quarter of last year with the first quarter of this year, automotive sales have grown from 46 percent to 64 percent of the company's overall business, Rauckman said.
The company told shareholders to expect automotive device sales to continue to be strong, growing by 50 percent this year, followed by estimated 20-percent gains for its marine, aviation and outdoor/fitness sectors. Overall, the company said it expects earnings to exceed US$2.70 per share on US$2.5 billion in revenue.
Analysts surveyed by Thomson Financial predicted earnings of US$2.85 on sales of US$2.57 billion.
Despite the good feelings, company officials acknowledged that demand for automotive devices has brought many new players to the market, which will erode profit margins for the business over time as Garmin tries to compete on price.
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"We are proud of the many accomplishments in 2006," Kao said. "However, we do not make the mistake of underestimating our competition or the challenges for the future."
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