TomTom trounces profit expectations as sales to automakers improve

By Mathias de Rozario and Elizaveta Zhuravleva (Reuters) -Dutch digital mapping specialist TomTom reported a strong earnings beat and confirmed its annual forecasts on Tuesday, boosted by a pick-up in demand from the embattled auto industry. That sent its shares rising more than 7% in the first hours of trading in Amsterdam. The location data pioneer, which started by providing a navigational tool for turn-by-turn directions, has gone through major restructuring and is now developing high-definition self-driving maps that integrate consumer data and advanced driver assistance systems. Its operating earnings were 8.4 million euros ($9.7 million) in the third quarter, well above analysts' average estimate of 2 million euros in a company-provided consensus. Last year, it had reported a loss of 4.1 million euros. "It's a combination of good automotive revenue … tied to cost control that started to deliver," CEO and co-founder Harold Goddijn told Reuters when asked about the strong earnings. TomTom has been able to control its costs thanks to standardization on certain customers' operating systems, allowing more predictability, Goddijn said. The company said in late June it would cut 300 jobs as part of an organizational realignment that includes use of artificial intelligence. The automotive location technology business, TomTom's biggest unit, posted a 2% increase in revenue — the only unit where sales grew. While uncertainty in the automotive market remains, Goddijn said he had seen an acceleration in decision making and investments as the industry adjusts to the situation. Automated driving technology is an active growth area where TomTom has seen renewed interest among automakers from Japan, China, Europe and the United States, he added. The group, which counts more than a million users on its navigation app, also expects growth in its user base over the coming years. TomTom's historical consumer-facing business has been affected by a continued slowdown in sales, but it is still profitable and helps the company to get direct feedback on its location technology, Goddijn said. ($1 = 0.8629 euros) (Reporting by Mathias de Rozario and Elizaveta Zhuravleva in Gdansk, editing by Milla Nissi-Prussak)

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