(Reuters) – Shares in Dutch mapping and navigation company TomTom jumped as much as 6% on Wednesday after it reported quarterly results ahead of analysts’ forecasts, boosted by strong automotive sales in a recovering industry.
The location technology company, whose customers range from major car companies to leading global tech firms, saw sales in its automotive unit, which supplies maps and navigation software to automakers, grow 19% year-on-year while earnings fell across its other businesses in the third quarter.
TomTom’s finance chief, Taco Titulaer, predicted further growth for automotive in the fourth quarter, citing improved car production as the sector recovers from global lockdowns that shuttered showrooms and brought traffic to a halt.
Industry data showed new European car sales down just 18% in August compared to the previous year, after falling 24% in July and 78% in June.
TomTom also forecast a reported revenue of 530 million euros ($622 million) for 2020, down 25% and slightly below consensus estimates.
Independent Minds analyst Andrew Hayman noted “an energetic performance in a difficult environment,” while ING said the final quarter would include “relatively high” deferred revenues in automotive.
ING added that TomTom’s contract extension with Uber, which it announced on Tuesday, is a positive implying a deeper data relationship and support from a major player.
TomTom has been shifting towards its digital mapping services rather than the portable navigation devices which made it a household name.
The group’s consumer and enterprise divisions, which sell portable satnavs and location technology to government bodies and tech firms, saw sales fall 38% and 4% respectively.
The group reported earnings before interest, taxes, depreciation and amortisation (EBITDA) of 3.9 million euros ($4.58 million), down from 15.9 million a year earlier, but beating analysts’ estimates of an EBITDA of 1 million euros.
By 0900 GMT, TomTom’s share price was up 3.8% after gaining more than 6% in early trading. It had previously lost around a fifth of its value over the course of 2020.($1 = 0.8516 euros)
Reporting by Sarah Morland in Gdansk; Editing by Louise Heavens and Keith Weir