Navigation device maker TomTom 2Q earnings fall 61 percent but beat expectations

Navigation device maker TomTom 2Q earnings fall

AMSTERDAM — TomTom NV, the Dutch maker of navigation devices for cars, reported Wednesday a 61 percent fall in net profit for the second quarter, better than analysts had feared.

Net profit was euro20 million ($28.4 million), down from euro52 million in the same period a year earlier. Sales fell 19 percent to euro368 million.

Both figures were significantly better than in the first quarter of 2009, when the Amsterdam-based company posted a euro39 million loss on sales of euro213 million. Analysts polled by Thomson Reuters had forecast profit of euro13 million.

TomTom has been suffering trouble from all sides, as the economic downturn coincided with a period of sharp price erosion of its main product under competition from U.S. and Asian rivals.

In addition, TomTom has been laboring under a heavy debt load incurred during its euro2.9 billion acquisition of digital mapmaker Tele Atlas last year.

Shares closed at euro6.285 on Tuesday, down from above euro15 a year ago and from above euro50 when the Tele Atlas deal was announced.

TomTom paid its net debt down by around euro50 million in the quarter, leaving it with euro1.01 billion. More significantly, the company also sold euro340 million of new shares in an offering last week, diluting investors’ stakes but putting the company on better financial footing. TomTom will use the money raised to further pay down debt.

“Market conditions continue to be challenging but so far … demand has been in line with our expectations,” said Chief Executive Harold Goddijn in a statement.

He said the stronger balance sheet would allow the company to focus on its business.

Average selling prices of its navigation devices were down 14 percent from a year ago to euro112 apiece. But in the first quarter they were selling for euro99 apiece.

The company said it gained market share in Europe, where it is already the largest vendor of navigation devices for cars, but lost share in the U.S., where it trails Cayman Island-based Garmin Ltd.