February 12, 2015 / 7:47 AM / 3 years ago

TomTom wins second contract with Volkswagen, this time in Europe

AMSTERDAM, Feb 12 (Reuters) - TomTom, the Dutch navigation company, said on Thursday it had won a second big contract with Volkswagen, this time to supply traffic software for the German carmaker’s European fleet.

TomTom said the deal would be to deliver real-time traffic information to Volkswagen cars “across Europe,” beginning with Audi and Volkswagen models.

The company did not supply financial figures, but a similar deal in January led to a reappraisal of the Dutch company’s prospects by many analysts.

On Jan. 6 TomTom struck a deal with Volkswagen to supply maps for its in-dashbord navigation systems in its cars in the United States, replacing Nokia.

TomTom shares have risen 30 percent over the past year, compared with a rise of 16 percent in the benchmark AEX index of leading 25 Dutch companies.

Volkswagen sells around 350,000 cars in the United States annually, and around 3 million in Europe.

Analyst Marc Zwartsenburg of ING equity research said the deal announced Thursday was equally important.

“What we said in January is ‘once you’re in, you’re in’, and this is the evidence.”

He estimated that TomTom’s traffic software sells for only a quarter as much as its mapping software, but Volkswagen’s European market is much larger and at first glance the two deals were roughly comparable in terms of importance.

He said it also raised the hope of a deal with Volkswagen for maps in cars outside the United States.

ING rates TomTom shares a buy.

Also on Thursday, TomTom reported fourth-quarter earnings that showed an adjusted net result of 9.7 million euros ($11 million), down from 13.6 million in the same period a year earlier. Sales fell 8 percent to 172 million euros.

The company forecast an unspecified sales increase in 2015.

$1 = 0.8839 euros Reporting by Toby Sterling; Editing by Mark Potter

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