TomTom sticks to its revenue and cash flow forecasts, which makes the stock price go up.
(Reuters) -On Friday, the Dutch digital mapping company TomTom confirmed its revenue and cashflow guidance for 2022 and 2023. This made its shares go up, even though it had just reported a bigger-than-expected loss for the second quarter, which it blamed on high inflation and tight supply chains.
The confirmation of TomTom’s guidance helped push the company’s shares up more than 12 percent, putting them on track for their best day in almost four years. This year, the shares have lost about a fifth of their value.
“OK results despite difficult circumstances,” said Marc Hesselink, an analyst at ING. He also said that the confirmation of guidance was reassuring.
The global chip shortage has hurt the company, whose customers include Volkswagen (ETR:VOWG p), Renault (EPA:RENA), and Microsoft (NASDAQ:MSFT). The shortage has caused problems in the automotive and electronics industries and forced automakers to cut production.
“We are not sure that the chip shortage will get better this year. “There is no evidence to support that yet,” CEO Harold Goddijn told Reuters, pointing out that predictions show the shortage will last until the first half of 2023.
TomTom also said that there were a lot of unknowns because Russia had invaded Ukraine and prices were going up.
In a statement, the company said, “These could affect our supply chains, costs, and general macroeconomic activity, as well as how we value our assets and liabilities on our balance sheet.”
TomTom started reorganising its maps business in June. The company said that the plan caused its operating costs to go up by 31 million euros in the third quarter.
It said that most of the cash outflows related to the restructuring are likely to happen in the second half of the year, with about a third of the total costs expected in 2023.
“We expect the first effects of the reorganisation to show up in the third quarter of this year, and the benefits will be clear in the fourth quarter of 2022 or in the first quarter of 2023,” Goddijn told Reuters.
He said that the reorganisation would affect about 20 TomTom sites around the world, mostly in Europe, and that the company was still talking with trade unions.
The Amsterdam-based company, whose products are used by major automakers and top tech companies around the world, had an operating loss of 55.5 million euros ($55.7 million) for the third quarter. This was more than the average loss of 20 million euros that analysts had predicted.
($1 = 0.9972 euros)
