TomTom beats 1st quarter expectations

TomTom, Amsterdam
TomTom headquarters in Amsterdam. August 28, 2012. (photo: Gerd Fahrenhorst/Wikimedia). (TomTom headquarters in Amsterdam. August 28, 2012. (photo: Gerd Fahrenhorst/Wikimedia))

Tom Tom has beat expectations and improved the forecast for 2014 by increasing their net profit in the first quarter to €8 million. 

The surprising net profit is thanks to a tax windfall that is also the most important reason for the tighter profit expectations that the company gave for the whole of 2014. Because the windfall is a one-time phenomenon, Tom Tom CEO Harold Goddijn clarified that these figures are not a prediction for the coming quarters.

At this point, Tom Tom is expecting an amended profit per share of €0.24. This was earlier predicted at €0.20. Of this increase, €0.04 is thanks to the tax windfall. In total, the expected turnover comes to "at least" €900 million. A similar amount was predicted by the company.

Despite the worrisome horizons, Goddijn does see this strong start to the year as an encouraging sign. The turnover did not drop further for the first time in years. This is not only thanks to higher incomes from the business market where Tom Tom sees great potential for growth, but also to a rise in consumer sales.

Consumer products such as navigation systems and sport watches was good for €125 million (plus 1 percent), on a total turnover of €205 million (plus 2 percent). Goddijn wants to keep his feet firmly on the ground, however, and does not want to talk about a trend.

The turnover of the Telematics component, which deals with fleet management for businesses, rose to €25 million with 29 percent. Tom Tom announced on Wednesday that the division will expand with the take-over of the French DAMS for an unknown price.

According to CEO Goddjin, the contribution that DAMS will offer will be "modest." For him, the step that the business arm of the company will take into the European core market is much more important as it will provide 27,000 French clients.

Analysts from SNS Bank and Rabobank are advising investors to "hold" stock with Tom Tom if they have any.