TomTom Reports Fourth Quarter and Full Year 2013 Results

Change percentages are based on non-rounded figures

TomTom’s Chief Executive Officer, Harold Goddijn

“2013 was a solid year for us, both operationally and financially. We launched important new products, such as our new PND range and our first TomTom own branded GPS sports watches, and we increased the velocity and productivity of our development activities. We delivered a strong gross margin and generated significant cash from operations.

We achieved a net cash position mid-way through the year and built on this through to the end of the year. In the year ahead we plan to step up our investments in our new map making platform and navigation software, which will further strengthen TomTom’s capabilities and its competitive position.”

Outlook 2014

For the group we expect full year revenue of around €900 million.

In the Consumer market, our strategy is to maximise value from the PND category and to diversify into other product categories that have a natural fit with our brand, distribution and product design capabilities.

In fleet management (Business Solutions), we achieved market leadership in Europe and our strategy is to continue to grow through a combination of organic growth and targeted acquisitions.

Revenue development in Automotive in 2014 will be muted as we transition ourselves to a pure content and software supplier. Our strategy going forward is to offer individual connected navigation system components, such as maps, traffic services and navigation software, as well as a complete pre-integrated connected navigation system.

In the Licensing segment, which includes mobile device vendors, government organisations and internet service providers, we are working to licence a wider portfolio of products and to capitalise on our flexible approach to partnering.

We expect the gross margin to stay strong, we will maintain tight control on operating costs and we expect to deliver adjusted earnings per share of around €0.20.

Our capital investments are expected to increase to more than €100 million, as we invest at a higher level in our map and navigation software and we continue to target acquisitions in the fleet management area.

Financial and business review

We generated revenue of €268 million in the fourth quarter, a decline of 7% compared to €289 million in Q4 '12. On a full year basis, our revenue, although lower year on year, performed well relative to market trends. The net result for the year was €20 million, which translates to adjusted earnings per share of €0.26 for 2013.

Consumer

Consumer revenue for the quarter was €165 million, a decline of 12% compared to the same quarter last year (Q4 '12: €187 million). PND is the main revenue contributor in the Consumer segment.

The PND market size in Europe3 was 2.2 million units in the fourth quarter, 14% lower compared to Q4 '12. For the full year, the PND market size in Europe equalled 8.4 million units, 14% lower compared to 2012. Our European PND revenue declined less than the rate of market decline because of increased market share and strengthening of our ASP. We estimate our European market share for the quarter at around 53%, up by three percentage points compared to Q4 '12.

The PND market in size in North America was 1.8 million units in the fourth quarter, 27% lower compared to Q4 '12 and remains a challenging market for our PNDs. The PND market size in North America equalled 5.4 million units in 2013, 26% lower compared to 2012. We estimate our North American market share for the quarter at around 15%, down by four percentage points compared to Q4 '12. We will introduce our new PND range in North America during the first quarter of 2014.

Automotive

Our Automotive business generated revenue of €46 million in the fourth quarter, which is 3% higher compared to €44 million in Q4 '12. This increase was driven by higher revenue from systems sales.

Automotive revenue in 2013 was €192 million, a decline of 9% compared to €212 million in 2012. Our Automotive business unit is in transition. Although we will continue to manufacture previously-developed in-dash hardware, when quoting for automotive contracts, we focus on maps, traffic and navigation software.

Licensing

Our Licensing revenue declined to €32 million in Q4 '13 from €37 million in Q4 '12. On a full year basis, Licensing reported total revenue of €119 million, which is €14 million lower compared to €133 million in 2012. This decline mainly resulted from the phasing out of a major contract, which has not yet been fully replaced by new contract wins, and lower GIS Licensing revenue.

In the quarter, we announced a partnership agreement with Clear Channel (Total Traffic + Weather Network) in North America. The agreement combines TomTom’s real-time and predictive traffic flow data with Total Traffic + Weather Network’s traffic incident, construction and congestion data to create the most comprehensive traffic solution available in North America. The combined data offering will be available across multiple platforms including radio, television, automotive, online and mobile.

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