TomTom steers through another successful quarter - Automotive Business Review

location based services

Navigation products and services provider TomTom NV has posted its second largest-ever quarter results in its traditionally slowest period, as the GPS market continues to boom.

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For the first quarter ending March 31, it posted a 121% rise in net profits to 31m euros ($38.5m), from 14m euros ($17.4m) in the year ago period. The market had expected profits of 29.5m euros ($36.5m) to 41.8m euros ($52m).
Sales, however, beat the street after shooting up a staggering 288% to 256m euros ($318m) from 66m euros ($82m) in Q1 2005. Analysts had predicted sales of 194.7m euros ($241.6m) to 225m euros ($279m).
"Market demand continues to be strong and TomTom increased unit sales seven-fold compared to the first quarter of 2005," said CEO Harold Goddijn.
"In the first quarter we successfully secured the sell through of the current TomTom GO series ahead of the introduction of the new range," he added. "In Europe we strengthened our market leadership position and increased our market share. In the US we expanded our distribution strength through a substantial increase in the number of retail outlets we are present in."
In the first quarter TomTom shipped a total of 762,000 portable navigation devices, a 2% decrease from its seasonally strongest fourth quarter. The average selling price fell to 305 euros ($378) from 337 euros ($417) in the last quarter of 2005.
TomTom's slow performance in the US market during the first quarter is blamed on a lack of marketing as well as new products from rival Garmin Ltd. In February, Garmin slapped its European rival with a patent infringement lawsuit and accused the Dutch GPS developer of copying a number of its navigation innovations. TomTom rejected the claims and said it would vigorously defend itself.
Goddijn admitted that only 8% of revenues come from outside of Europe, with 16m euros ($19.8m) from North America. He promised that TomTom would launch an advertising campaign in the second quarter, which is usually a good quarter for TomTom as the market gears up for summer.
Looking forward, the Amsterdam, Netherlands-based company now expects full-year revenue to be in the 1.1bn euros ($1.36bn) to 1.3bn euros ($1.61bn) range, up from a previous guidance of 1bn euros ($1.24bn) to 1.1bn euros ($1.36bn). It also expects the volume of integrated units sold to more than double to 3.6 million to 3.9 million units, compared to an earlier guidance of 3.0 million to 3.3 million.
TomTom has good reason to be confident about growth prospects. Approximately 13% of the 200 million cars on the road in Europe have some form of navigation device, while in the US, there is only 7% penetration of the 220 million cars on the road