Car production curbs hit TomTom amid chip shortage

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October 14 (Businesshala) – Dutch navigation and digital mapping company TomTom (TOM2.AS) warned on Thursday that supply chain problems in the auto sector could last into the first half of next year, as it faces a larger than expected quarterly core loss .

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Auto production has been hit by a global shortage in semiconductor chips, which has forced carmakers to halt production again while still recovering from last year’s coronavirus disruptions.

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“Collectively we have underestimated how large the supply chain issues, and in particular semiconductor shortages, have become or have become”, chief financial officer Taco Titular told Businesshala.

Titulaer said TomTom’s consumer and automotive revenue numbers will continue to be impacted by these challenges.

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The group said the recovery of its automotive division, which supplies maps and navigation software to car makers, fell behind expectations as it saw sales decline 21% in the third quarter.

The consumer business, which sells automotive hardware such as portable navigation devices, beat the consensus provided by the company, but still saw a 24% decline in the quarter.

The group’s enterprise business, which provides maps, traffic information and navigation software to tech firms such as Uber (UBER.N) and Microsoft (MSFT.O), saw an 8% increase in sales due to contract expansions from previous periods.

TomTom reiterated its 2021 revenue guidance, but said it would likely fall at the low end of the 500-530 million euro range. It also lowered its annual free cash flow guidance from about 5% to about 2% of total revenue.

The Amsterdam-based company reported third-quarter loss before interest, taxes, depreciation and amortization of 5.3 million euros ($6.1 million), missing analysts’ forecast of a 1-million-euro loss.

($1 = 0.8630 Euro)

Reporting by Anait Miridzanian Editing by Jacqueline Wong and Mark Potter

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