By Maaike Noordhuis - Oct 24, 2011 3:22 PM GMT+0700
TomTom NV (TOM2), Europe’s biggest maker of portable navigation devices, climbed as much as 24 percent in Amsterdam, the biggest advance since June 2009, after profit beat analyst estimates and the company raised its forecast.
Third-quarter net income rose 50 percent to 28.9 million euros ($40.1 million) compared with the 16 million-euro average forecast of seven analysts surveyed by Bloomberg. Full-year revenue and earnings per share are predicted toward the upper end of a guidance range for sales of 1.23 billion euros to 1.28 billion euros and earnings per share of 25 cents to 30 cents, the Amsterdam-based company said in a statement today.
The results are “much better than I expected thanks to a strong euro, and more services and content revenue,” Martijn den Drijver, an analyst at SNS Securities, said by phone.
TomTom started a restructuring plan in the third quarter, including job cuts, which is intended to deliver savings of about 50 million euros in 2012. Chief Executive Officer Harold Goddijn has been trying to increase sales of built-in navigation systems for cars as well as electronic maps and other software. The company announced deals this month to install its products in Ford Motor Co. cars and Iveco SpA trucks.
The shares traded 18 percent higher at 3.61 euros as of 10:20 a.m., giving the company a market value of about 801 million euros.
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“We need to be faster and less complex,” Goddijn said in a telephone interview today, adding that the number of job cuts has yet to be determined. The company currently employs more than 3,500 people.
The plan “will focus our organization on the areas where we see the greatest potential for growth,” Goddijn said in the statement, citing the automotive and content and services businesses as examples.
Before today, the stock declined 61 percent this year as the company slashed its sales forecast after U.S. demand for portable devices fell faster than anticipated and consumers opted for cheaper navigation systems.
“We’re in continued talks with carmakers,” Goddijn said today, adding that clients such as Renault SA are implementing TomTom systems in more car models.
Total revenue declined 10 percent to 336 million euros in the quarter. Automotive sales rose 43 percent to 59 million euros, while revenue from content and services advanced 19 percent to 107 million euros. Consumer sales declined 23 percent to 225 million euros.
To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
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