UPDATE 2-TomTom profit returns but investors focus on weaker H2 margins
Microsoft Corporation MSFT | 0.00 | |
Uber Technologies,Inc. UBER | 0.00 |
Recasts throughout, adds share move in paragraph 2, analyst comments in pagraph 4, 6-7
July 15 (Reuters) - Dutch digital mapping specialist TomTom TOM2.AS said on Wednesday it expected weaker margins in the second half of the year, sending its shares down 10% despite returning to operating profit in the second quarter.
The company, whose customers include Microsoft MSFT.O, Uber UBER.N and Volkswagen VOWG.DE, posted a first-half operating margin of 8% but reaffirmed full-year guidance of around 3%, implying a sharp slowdown in profitability in the second half.
Earnings before interest and taxes (EBIT) turned positive at €8.5 million, beating a consensus of €8 million as cost cuts boosted profitability.
Revenue fell 8% in the second quarter to €134.6 million ($153.8 million), compared with €135 million expected by analysts in a company-provided consensus.
The first-half performance implies second-half margins will be close to break-even, ING analyst Marc Hesselink told Reuters.
He said lower capitalisation was expected to weigh modestly on margins, partially reversing the first-half overperformance.
TomTom's free cash flow swung to an outflow of €8 million in the second quarter from an inflow of €14 million a year earlier.
Hesselink said the deterioration in free cash flow was largely driven by working capital movements and did not alter his longer-term view.
TomTom confirmed its full-year revenue outlook and sees a return to growth in 2027 after a year of transition between old and new contracts.
($1 = 0.8754 euros)
