TomTom reported revenue from its consumer segment, which includes hand held personal navigation devices sold by many sporting goods retailers, declined 23 percent to €225 million ($318 mm) in the third quarter endeded Sept. 30. The Amsterdam-based company said total group revenue, which includes revenue from its automotive unit, declined 10 percent to €336 million ($475.6 mm).
TomTom reported net income of €29 million, up 50 percent from the year earlier quarter, but down nearly 500 percent from the second quarter.
The company now expects to deliver full year results towards the upper end of its guidance for revenue of between €1.22 billion and €1.28 billion and EPS of between €0.25 and €0.30, excluding impairment and restructuring charges.
“The nature of our industry is changing and we will adapt our organization accordingly,” said TomTom’s CEO Harold Goddijn. “We have started a restructuring program which will focus our organization on the areas where wesee the greatest potential for growth, of which Automotive and Content & Services are clear examples. The program, which was initiated in the third quarter, includes a headcount reduction which will only be partially achieved through attrition. The reduction of the workforce is a regrettable but necessary step to adapt the company to the changed conditions in the markets we operate in.
“We will continue to invest in the quality of our global map database, in our navigation technologies and our leading traffic service. This will enable us to grow our position in the expanding markets of location and navigation and to continue our transition into a broader based company.”
Outlook and restructuring
TomTom expects full year revenue towards the upper end of guidance of between €1.22 billion and €1.28 billion and earnings per share at the upper end of guidance of between €0.25 and €0.30, excluding impairment and restructuring charges.
“We have reduced our operating expenses this year,” said Goddijn. “We expect full year operating expenses to be around €540 million, excluding impairment and restructuring charges. We expect full year capital expenditure to be around €80 million. In 2012 we expect additional savings of around €50 million.”
Further details about the restructuring program will be provided towards the end of the current quarter. The market size in Europe for PNDs was 3.0 million units compared to 3.4 million units in the same quarter of last year. The North American market size was 2.1 million units compared to 2.9 million units last year. The European and North American markets combined declined in line with our guidance by 19% year over year.
TomTom’s PND market share in Europe was 45%, which is the same as in the prior quarter. North American market share grew sequentially from 21% to 25%.
Consumer announced the introduction of the VIA range of PNDs for the nascent Indian market. The VIA range was also introduced in Mexico and Argentina. A new GO LIVE range was launched with travel-specific apps which include Expedia, TripAdvisor and Twitter. The take up rate of our LIVE Services increased in the quarter to 28% compared to 21% last year.
Our latest map release covers 35 million kilometer of navigable roads in over 100 countries. Licensing announced a number of traffic information related contracts, amongst others with the Flemish government and Mappy. As a group we showed our commitment to reducing congestion by launching our Traffic Foundation which is dedicated to fostering collaboration and nurturing talent in the field of traffic management. TomTom Places was launched on the iPhone and made available in 5 countries in Europe.