*Justin* schreef op 30 oktober 2012 09:08:
TomTom (Buy):
Very solid quarter despite weakness in AutomotiveThe facts: TomTom reported 3Q12 results.
Our analysis: Revenue was in line with our estimates but a bit lower than Reuters consensus. Consumer did a better than expected which suggests that the market in the larger Northern countries in Europe is stabilising or actually increasing as market sell out in Europe increased from 2.0m in 1Q12, to 2.4m in 2Q12 to 2.6m in 3Q12 despite weakness in Southern Europe. That, combined with stable prices, is positive despite the decline in the US market.
Automotive was impacted more than assumed by the lower production at Renault and FIAT due to much lower unit sales while new contract (extensions) did not contribute meaningful revenue yet. License was in line as was Business Solutions, which grew subscribers to 223,000, which is close to our full year number, showing that that unit continues to grow very fast.
Gross margins came in well ahead of our and consensus estimates even though we had taken into account a higher proportion of services and content. There was a one off impact from the release of provisions that had a 3% impact meaning that the ‘clean' gross margin was modestly below our estimate but above Reuters consensus and also better than last year.
Operational expenses were much lower than assumed at EUR 118.5m versus EUR 123.1m with marketing and R&D being the main drivers of this decline. Because of the higher gross margin and lower operating expenses (TomTom says that savings are ahead of plan), EBIT came in at EUR 32m versus our estimate of EUR 24. If we adjust for the 3% gross margin impact, EBIT would have come in in at EUR 24m, exactly in line with our estimate but well better than Reuters consensus.
Due to the weakness in Automotive TomTom revises its revenue guidance from EUR 1.1bn to EUR 1.05bn while it maintains its EPS guidance of an adjusted EPS of at least EUR 0.35. Given the year to date EPS of EUR 0.28, that target will be easily achieved.
As expected, no statements from TomTom with regards to the scenario that we outlined in our report dated 15 Oct 2012 "The case for a P2P with Apple's help".Conclusion & Action: A solid quarter for TomTom with a good performance from Consumer and Business Solutions and a weak Automotive. Cost savings are ahead of the plan (also due to the change in Automotive strategy), which drive EBIT even if we adjust for one-offs. All in all, despite the modest revenue guidance revision, a solid if not strong quarter.