TomTom earnings drop but beat expectations
Hit by decline in consumer spending, the GPS maker reports second-quarter earnings drop of 61 percent, but sales and earnings were higher than in the first quarter.
Netherlands-based GPS maker TomTom reported on Wednesday that earnings for the second quarter were 20 million euros ($28 million), a drop of 61 percent from 52 million euros ($74 million) in the same quarter a year ago. Sales fell 19 percent to 368 million euros ($523 million).
But analysts surveyed by Thomson Reuters had expected a net gain of only 13 million euros ($18 million). And despite the decline, both sales and earnings were higher than in the first quarter, when TomTom was hit with a 39 million euro ($55 million) loss on sales of 213 million euros.
"In the second quarter we delivered strong profitability and cash generation driven by new products, the expected seasonal uplift in (personal navigation device) sales and tight management of costs and working capital," Chief Executive Officer Harold Goddijn said in a statement.
Times have been tough for TomTom. The company noted that it's picked up market share in Europe, where it's the largest auto GPS vendor, but it lost business in the U.S., where it ranks behind main competitor Garmin.
TomTom took on quite a bit of debt last year when it acquired digital-mapping company Tele Atlas. It also recently came to terms with Microsoft over a patent dispute.
TomTom said it's now looking to cut 90 million euros ($128 million) in operating expenses this year, up from its previous target of 60 million euros ($85 million). The company has already paid off some of its debt and recently offered new shares to the market to further pay down the remaining debt.