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Navigation firm TomTom posts operating loss as auto sales slow

by Staff GBAF Publications Ltd
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Navigation firm TomTom posts operating loss as auto sales slow

By Gaelle Sheehan and Mathias de Rozario

(Reuters) -Digital mapping company TomTom’s operating result turned to a wider-than-expected loss in the first quarter, hit by slower car sales and higher investments in AI and automated driving, it said on Wednesday.

Its shares fell 12.5% to 6.37 euros per share by 0802 GMT.

“New car sales were slightly disappointing. We saw quite weak numbers on the sales side in Europe and North America for automobiles,” CEO Harold Goddijn told Reuters.

In November, European automobile manufacturers association ACEA forecast a slowdown in new car sales in the European Union.

TomTom’s automotive business, which generates around 60% of its total sales, reported a 6% drop in quarterly operational revenue.

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.

TomTom flagged higher research and development costs as it invested more into generative AI to improve user experience on the road, and into automated driving solutions.

In January, TomTom said it was collaborating with Mitsubishi Electric to develop solutions that would provide precise navigation data needed for automated driving.

It posted a loss before interest and taxes of 4.9 million euros ($5.2 million) for the first three months of 2024, versus a profit of 2.6 million euros last year.

Analysts were expecting a loss of 2 million euros on average, a company-compiled consensus showed.

Revenue fell 1% to 139.3 million euros, missing expectations of 144 million euros.

“Q1 was a little bit of a slow start, but we are confident we can deliver what we have set our outlook,” Goddijn said, though he remains cautious over the tough economic environment.

TomTom reiterated its revenue outlook of 570-610 million euros for 2024.

($1 = 0.9414 euros)

(Reporting by Mathias de Rozario and Gaëlle Sheehan in Gdansk; editing by Milla Nissi and David Evans)