Marine Electronics Industry: Weathering the Storm
May 6, 2009 By: Stephen ColwellRed sky at morning, sailors take warning.
The 2009 consumer boat industry is under way. Although new boat sales are historically at a low, consumers are investing in upgrades to their existing crafts. The market for marine electronics is suffering, but a review of the major players indicates the companies are weathering the storm.
Of all the consumer product categories that GPS World monitors and reports on, the marine consumer electronics sector is probably the least covered, one reason being its seasonality. During late fall through winter, consumers who are buying GPS navplotters, navigation devices, fish-finders, or GPS emergency locators are from geographic areas that support warm weather. For the rest of us, it's armchair reading while the snow blows outside.
Other factors that tend to lead editors to overlook this important segment is the high visibility of the personal navigation device (PND) and outdoor recreational GPS use. Automobile navigation sales can typically result in multiple sales for the devices as consumers (usually North American) own between two and three three cars per household. That's a triple tap for the same advertising dollar invested, which mushrooms the potential market exponentially. The outdoor segment is very broad and remains steady in growth with the mini-verticals of hiking, bicycling, exploring, geocaching, camping, and others. All of these categories, like the PNDs, can result in multiple sales to the same families or individuals.
In contrast, on the marine side, consumer recreational boaters generally own a single watercraft. Further compartmentalized, targeting sail and powerboat users (more than 20 feet) would capture the bulk of the sales. The higher gas prices in summer 2008 also led to a downturn and lack of use and demand in recreational pleasure boating. For many of the larger firms like Raymarine, it's difficult to tease out the actual GPS products from their larger product lines. But a general review of two of the leaders indicates the overall health of their core businesses.
Raymarine
Raymarine PLC is a British company with U.S. headquarters in Merrimack, New Hampshire. Raymarine designs, manufactures, and distributes marine electronic products and services to the worldwide recreational and light commercial markets. Products include radar, GPS receivers, chartplotters, VHF radios, autopilots, instruments, fishfinders/sonar, and advanced navigation software.
Garmin International
Garmin is the easiest marine manufacturer of GPS-only products to monitor. Having released the 2008 annual report but a few days ago, they receive an honorable AA+ rating in their marine products division. Results tracked include the following:
Garmin made steady progress in 2008, expanding its marine product lines and increasing consumer awareness. Sales grew at a positive 1 percent, which is noteworthy where others are falling. 2009 is forecast to remain conservative with only a 1.1 percent decline in growth but still remains a bellwether indicator of a tightly run ship.
Furuno Electric Co., Marine Electronics
Furuno manufactures a variety of high-tech products that include radar, GPS, and other navigation devices; fish detectors, sonar, and other fishing devices; satellite communication systems, global maritime distress and safety systems, and other wireless communication devices; as well as seabed shape-sensing sonar, tidal measurement systems, and other marine study equipment.
Furuno Electric Co. Ltd. increased net profit 11.7 percent to 3.1 billion Japanese yen ($31.2 million) for the year ending February 29, 2008. The company declared an annual dividend of JPY 14 per share, up from JPY 13 per share the preceding year, and provides dividend guidance of JPY 15 per share for the year ending February 28, 2009. For the first half-year of fiscal 2009, the company expects revenue of JPY 49 billion ($493 million) and net profit of JPY 2 billion ($20,1 million). For the full-year, the company expects net profit of $33.2 million on revenue of $98.7 million.
Commercially Viable
The marine segment is important, as it was one of the first commercially viable vertical segments for GPS. Even with the various declines, it still remains healthy due to the fact the manufacturers in this segment are well experienced, having faced downturns from fuels costs, lack of consumer credit, weather, and adverse market economic conditions.
I’ll be spending more time in the coming months monitoring the marine industry, its players, and new products, which have begun to find their way out of R&D and onto dealer shelves.
Red sky at night, sailors delight.
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