TomTom reported the slide at its Consumer division, which powers Nike’s sports watches and launched its owned branded sports watches last year, slow by half in 2013.
The Dutch company said its Consumer revenues reached €567 million for the full year ended Dec. 31, 2013, down 11 percent compared with 2012, when they had declined 23 percent. In the fourth quarter, revenues reached €165 million, down 11.8 percent from the year earlier quarter.
The Dutch company entered the fitness market by partnering with Nike in 2012 to launch the Nike+ Sportwatch Powered by TomTom and followed up last year by launching its own branded watches for running and multisport. It fitness initiatives are part of a broader strategy aimed at offsetting rapidly declining sales of personal navigation devices, or PNDs, which are rapidly being displaced by smartphones.
TomTom Group revenue, which includes sales from its Automotive, Licensing and Business Solutions segments, reached €268 million during the quarter, down 7.3 percent compared with the fourth quarter of 2013. Gross margin improved 100 basis points to 54 percent, while EBIT margin jumped 700 basis points to 2 percent. Cash flow from operating activities reached €51 million compared with €91 million. For the full year, Group revenue slipped 8.9 percent to €963 million, gross margin increased 200 basis points to 54 percent and EBIT margin fell 400 basis points to 3 percent. The company reported adjusted EPS, which excludes acquisition-related amortization and a gain on a post-tax basis, of €0.26, compared with €0.40 in fiscal 2012. TomTom is forecasting adjusted EPS of €0.20 on revenues of around €900 million in 2014.
