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Mapmaker TomTom lowers forecasts as chips shortage weighs

TomTom cuts 2021 outlook as chip shortage threatens auto revenues
TomTom cuts 2021 outlook as chip shortage threatens auto revenues   -   Copyright  Thomson Reuters 2021
By Reuters

-Dutch navigation and digital mapping company TomTom on Thursday cut its 2021 outlook, amid a global shortage in semiconductor chips that has disrupted auto supply chains and could eat into its revenues from carmakers.

TomTom now anticipates revenues of 500-530 million euros ($592-$627 million), compared to the 520-570 range it had previously guided, and cut its free cash flow guidance from around 6% to around 5%.

The company, which has posted a quarterly net loss for the last two years, reported a loss of 23.6 million euros – deeper than the 15 million analysts had predicted.

“When we gave our guidance early this year we knew the semiconductor shortage could have an effect, but it is very difficult to know when the worst part is over and we start to see recovery,” finance chief Taco Titulaer told Reuters in an interview.

Titulaer now expects it will take until at least the end of the year for automotive supply chains to start normalising, though the situation should improve from the third quarter.

The shortage has had the twin effect of cutting car production, he added, and pushing manufacturers to prioritise simpler cars which use fewer chips.

In the second quarter, TomTom nevertheless saw revenues from its automotive business jump 18% compared to last year, when a first wave of lockdowns shut down large parts of the industry.

Major carmakers have again had to cut back production this year due to the coronavirus-sparked chips shortage – including major TomTom customers such as Stellantis.

Titulaer said that though volumes of car sales were showing strong improvement on 2020, the previous year had been “quite dire”.

With volumes still below 2019 levels, he said it could take a couple quarters for these to get back to normal.

($1 = 0.8452 euros)