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UPDATE 1-TomTom sees further decline in 2017 sales, shares fall
February 8, 2017 / 9:13 AM / 8 months ago

UPDATE 1-TomTom sees further decline in 2017 sales, shares fall

 (Writes through with context)
    By Wout Vergauwen
    Feb 8 (Reuters) - Dutch digital-mapping company TomTom
          forecast a further decline in annual revenue this
year, sending its shares down by seven percent on Wednesday.
    With its consumer electronics and satellite navigation
businesses threatened by smartphones, TomTom has focused on
doing deals with automakers and its telematics or car fleet
management business.
    Adjusted net profit in the last three months of the year
halved as a decline in sales at its biggest division, personal
navigation devices (PNDs), eclipsed strong growth in automotive
and telematics.
    Annual revenue was 987.3 million euros ($1.05 billion),
slightly above the company's lowered forecast of 980 million
euros made in October.             
    The Amsterdam-based company expects 2017 revenues in the
925-950 million euro range, down 4-6 percent year-on-year, while
forecasting a two cents increase in adjusted EPS to around 0.25
euros. 
    "The main thing you'll see happening this year is a
continuing shift from low margin consumer product income to high
margin software and service income," Chief Executive Harold
Goddijn told journalists on a call.
    Consumer revenues, which account for roughly 60 percent of
annual sales, are expected to continue their decline into 2017,
the company said, while the company expects its telematics and
automotive units to drive margins. The segments are expected to
grow by "around 10 percent" and "over 20 percent" respectively.
    In automotive, where TomTom has partnered with Uber
          and Apple          and competes with German digital
map maker HERE, annual sales were up 25 percent as past deals
with carmakers started to bear fruit.  
    TomTom said it closed the year with an automotive order
intake exceeding 300 million euros, up significantly on the 200
million euros the company reported as late as November.
               
    "We view the automotive business as the single largest
driver of upside over coming years," Morgan Stanley analysts
wrote in a note, adding that this mitigates any short-term
guidance disappointment.
    Consumer sales, which include PNDs, fell 13 percent to 152.3
million euros ($162.6 million) for the final quarter. 
    Adjusted net profit was 11.3 million euros in the quarter,
falling short of analysts' average estimate of 12.4 million
euros, according to a Reuters poll.
 ($1 = 0.9392 euros)

 (Reporting by Wout Vergauwen; Editing by Amrutha Gayathri/Keith
Weir)
  

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