By Federica Mileo and Augustin Turpin (Reuters) – Dutch navigation and digital mapping company TomTom on Friday cut its cash flow target for 2023, citing inflationary pressures and economic uncertainty, sending its shares tumbling 12% despite better than expected third-quarter performance. The Amsterdam-based group, whose customers range from major car companies to global tech firms, […]
By Federica Mileo and Augustin Turpin
(Reuters) – Dutch navigation and digital mapping company TomTom on Friday cut its cash flow target for 2023, citing inflationary pressures and economic uncertainty, sending its shares tumbling 12% despite better than expected third-quarter performance.
The Amsterdam-based group, whose customers range from major car companies to global tech firms, forecast free cash flow at break-even for next year, compared with a previous outlook for an inflow of at least 5% of revenues.
“High energy prices, high interest rates and inflation pressure give us quite a bit of uncertainty if we look at the mid term,” Chief Executive Officer Harold Goddijn told Reuters.
TomTom, which counts Volkswagen, Renault and Microsoft among its clients, has also been hit by the global chip shortage that has disrupted the automotive and electronics industries.
The group said the supply chain strains were easing but would continue to restrict production in the fourth quarter.
The increased car production and strong location technology sales drove the third-quarter revenue to 136.3 million euros ($132.6 million), above analysts’ 126-million-euro estimate and up 7% on the year.
“We don’t see disruption of the supply chain so much,” Goddijn said, pointing to “slightly higher” production numbers in the quarter.
“So I think the direct impact of the war (in Ukraine) is limited,” he said.
The company raised 2022 revenue outlook to 505-520 million euros, including 410-425 million from its core location technology business, against its previous guidance of 470-510 million in total revenue.
It expects free cash outflow of around 2% of the revenue this year, excluding the restructuring of its Maps unit.
“The beat is driven by automotive clients ramping up production volumes now that supply-chain issues ease. At the same time the company became more cautious on 2023,” ING analyst Marc Hesselink says.
($1 = 1.0281 euros)
(Reporting by Federica Mileo and Augustin Turpin in Gdansk; editing by Milla Nissi and Tomasz Janowski)
