Amsterdam, The Netherlands: TomTom has cut its full-year revenue forecast, citing falling sales of its built-in car navigation devices in Europe.
Europe”s largest navigation device maker and one of the top three digital map makers globally is trying to increase sales of its navigation gadgets and services to carmakers to offset the declining popularity of personal sat-navs.
But the European car market has been shrinking as a result of the region”s debt crisis, with sales in September falling at their fastest pace in the last 12 months as government spending cuts bite and unemployment rises.
TomTom said it now expected 2012 revenue to be around EUR 1.05bn, down from an earlier forecast of EUR 1.10bn.
“The European economic situation is having a significant impact on the automotive industry. We expect our automotive revenue to remain under pressure in the coming quarters,” chief executive Harold Goddijn said in a statement.
TomTom customers, including PSA Peugot Citroen, Renault and Fiat, have suffered some of the biggest declines in car sales in Europe.
TomTom reported a 23 per cent fall in third-quarter net profit to EUR 22m, beating forecasts as the firm cut costs.SNS Securities analyst Martijn den Drijver said TomTom”s car division was hit more than he expected due to much lower sales at Renault and Fiat, combined with new contract extensions not yet contributing to revenue.
Group revenue fell 19 per cent from the same period last year, with a 24 per cent fall at the consumer unit and a 16 percent drop at the automotive division.
Its shares have fallen from a record high of EUR 56 in 2007 to EUR 3.9 as smartphones with cheap or free navigation software curb demand for its personal navigation devices.
TomTom competes in the PND market with Garmin and in the commercial digital map market with Google and Nokia.
Source: The Guardian