TomTom Net Result Down 37%; Dollar Blamed

TomTom Net Result Down 37%; Dollar Blamed
TomTom today released its financial results for the third quarter of the year, announcing 3 percent revenue growth to €375 million against the same quarter last year; however net result was €19 million against €31 million in the third quarter last year, a 37 percent decrease.

The EBIT margin was 15% against 19% last year. This lower margin is explained by foreign exchange rate (high dollar rate versus Euro) and product mix during the period.

The adverse foreign exchange rate - in a period where TomTom buys components to build products for the high volume holiday season - resulted in a financial charge of €20 million.

The product mix also had effect on margin, because, according to TomTom’s CEO Harold Goddijn: “in Q3 this year, new devices (carrying higher margin) started later in the quarter. This had some effect and explains partly our growth margin decline in Q3.”

Revenue from the consumer unit was €293 million (flat against last year), while automotive grew 48% at €41 million, licensing decreased 18% at €28 million and business solutions (TomTom Work) increased 37% at €13 million.

Across the four divisions, hardware sales represented €284 million, a 2 percent growth and content and services €90 million, a 6% growth and 24% of total revenue.

TomTom’s CEO Harold Goddijn
TomTom’s CEO Harold Goddijn
PND business
In the quarter, TomTom’s PND market share in Europe grew from 45% to 48% compared to the same period last year. The market size in Europe was 3.4 million units (Q3 2009: 3.8 million; Q2 2010: 3.1 million). In North America TomTom’s market share grew from 20% last year to 25%. The North American market size was 2.8 million units (Q3 2009: 3.1 million; Q2 2010: 3.4 million).

TomTom’s CEO Harold Goddijn said he sees “bigger demand for larger screens in the PND market. 3.5 inch are declining while 4.3 inch and 5 inch are growing. It creates more clear water between what we can do between mobile phones and PNDs.”

TomTom also said there were over 1 million active live services users at the end of the quarter.

Although TomTom did not provide many specifics about their expectations for the fourth quarter, TomTom’s CFO Marina Wyatt said: “We are targeting high market share in North America in the Fourth quarter”. It is very likely that TomTom has already secured important deals for Black Friday in the United States, but the Dutch PND maker did not confirm if it signed a deal with Wal-Mart as last year.


Wednesday, October 20th 2010

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