TomTom 2Q Net Profit Down 61%, Raises Cost Savings Target

Dutch navigation equipment maker TomTom NV (TOM2.AE) Wednesday said second quarter net profit fell 61%, and said it would increase its cost savings target by 50%, as the continued sharp fall in consumer spending continued to hit its business.

Net profit fell to EUR20 million in the quarter ending June 30 from a net result of EUR52 million a year earlier, beating analysts' expectations for net profit of EUR18.9 million.

"In the second quarter we delivered strong profitability and cash generation driven by new products, the expected seasonal uplift in PND sales and tight management of costs and working capital", Chief Executive Harold Goddijn said in a statement.

Earlier this month TomTom said it was confident that earnings before interest and taxes, or EBIT, would be in line with market expectations for the quarter, but it said the outlook for 2009 remains challenging.

Second quarter EBIT came in at EUR57 million, compared with EUR92 million in the same period last year, topping analysts' forecasts for EUR41 million.

The Amsterdam-based company's sales fell 19% to EUR368 million in the second quarter, compared with EUR453 million a year ago, again beating the EUR353 million forecast by analysts.

The company also said it is increasing its cost savings target to cut EUR90 million in operating expenses from the previous target of EUR60 million.

TomTom recently raised EUR430 million by offering new shares to investors.

TomTom raised the cash to ease the debt it took on when it acquired TeleAtlas for EUR2.9 billion in 2007. The EUR430 million comprises a EUR359 million rights issue and EUR71 million private placement.

Pro forma net debt stood at EUR672 million after the rights issue.

-By Robin van Daalen; Dow Jones Newswires; [phone]; [e-mail]