“Market conditions were challenging during the quarter, exacerbated by the destocking of the channel by distributors and retailers. Although sell in was difficult end user demand was in line with our expectations and it was encouraging that the market in North America continued to grow”, said TomTom’s CEO, Harold Goddijn.
To face its financial problems, TomTom has continued its effort to streamline its operation; during this quarter operating expenses have been reduced by 30% sequentially and 24% year-on-year.
TomTom has not been willing to update is 2009 outlook at this time. “[…]given the continued macro economic uncertainty visibility in our business remains limited. Therefore, we have decided not to update our 2009 full year guidance at the current time. If visibility in the market improves to a point where we feel it is prudent to offer full-year guidance, we will consider it at that time”, said the press release.
“In the first quarter we saw end user demand for PNDs develop as expected with a decline of the European market year over year of approximately 13% and a growth of 12% in North America”, said TomTom. “The European market size was 3.3 million units (Q1 2008: 3.9 million) and the North American market size was 2.5 million units (Q1 2008: 2.1 million). We grew our market share on a comparable basis both in Europe and North America to 44% and 19% respectively (Q1 2008: 42% in Europe and 18% in North America).”
This quarter has seen a lot of destocking happening which means despite the fact retailers sold around 2 million TomTom units to end users, TomTom’s sell-in (to the channels) was only 1.4 million units, a decrease of 69% against the previous quarter, and 29% year on year. At the end of the first quarter the stock situation went back to a normal level which means sell-in and sell-out should be about the same in the second quarter.
The average selling price of TomTom’s PNDs was €99, pretty stable against the previous quarter (€100) and down 15% on a year on year comparison (€117). “The relatively stable sequential ASP development is the result of a change in the product mix offset by less promotional activities compared to the previous quarter”, explained TomTom’s press release.