“Our business units performed as expected during the quarter in tough market conditions. In the period we executed a restructuring programme designed to reduce costs and organise the company around its products.
The new product unit structure enables us to better adapt to the fast changing industries we operate in. It equips us better to bring new products to the market and to leverage our key map, traffic and navigation assets.
Looking to the coming year we will increase our focus on the growth parts of our business, in order to claim a leading position in the rise of the connected car, and to grow our position as a fleet management services and location and navigation content provider. At the same time, we will continue to fully leverage our leading position in the PND market.”
Outlook 2012
We expect continued growth in Automotive, Licensing and Business Solutions. In Automotive we will continue to roll out solutions with our partners into new models. In addition we expect to win new contracts that will drive revenue growth in future years. In Licensing we aim to grow revenue through new customer wins and by bringing new products to the market. Business Solutions is expected to continue to grow strongly, both by increasing its WEBFLEET subscriber base and by growing in areas beyond fleet management services.
The visibility in our core PND markets is limited as there remains great uncertainty about the rate of decline of customer demand for the category in the year ahead. This is exacerbated by an uncertain macro-economic climate in our core markets.
As a result we expect full year revenue of around €1.1 billion. We reduced operating expenses in 2011 to €538 million and we aim for around €500 million in 2012. We target full year capital expenditure of approximately €65 million. We expect to deliver adjusted earnings per share of around €0.35 (2011: €0.55). The adjusted earnings per share range assumes an effective tax rate of 22% (2011: 19%) and a full year EUR/USD currency exchange rate of 1.30 (2011: 1.40).
Note: We believe adjusted earnings provide a better view on the underlying performance of our business and a better measure for future cash flows. The adjustments reverse the effects on profits on a post-tax basis of non-cash acquisition related amortisation, exceptional items and other one-offs such as impairments and restructuring charges. The expected acquisition related amortisation charge for 2012 is approximately €55 million. In 2011 the adjustments were: non-cash impairment charge of €512 million, acquisition related amortisation of €64 million and one-off restructuring charges of €15 million.
Business review
The market size in Europe for PNDs was 3.2 million units compared to 3.5 million units in the same quarter of last year. The North American market size was 4.0 million units compared to 6.6 million units last year. The European and North American markets combined declined by 29% year over year.
Our PND market share in Europe was 47%, which is two percentage points up from the previous quarter. Our North American market share grew sequentially to 26% from 25%.
We introduced the GO LIVE 1005 WORLD in The Netherlands, Spain, Italy and the United Kingdom after the successful launch of the travel specific PND in the USA and Germany. The GO 1050 World and VIA series, with lifetime Maps, were made available at leading retailers and online in China.
With Ford we signed an agreement to sell the GO LIVE 1000 and GO LIVE 1005 models with a specifically designed cradle for Ford models in Europe.
TomTom Connect, a semi-integrated navigation solution including TomTom HD Traffic tailored specifically to Opel and Vauxhall cars was launched in the quarter. Our partner Fiat announced it will integrate our semi integrated navigation solution with TomTom HD Traffic on the New Daily, Iveco's new light commercial vehicle.
TomTom HD Traffic was rolled out in the Czech Republic and was available in 23 countries across Europe and North America at the end of the quarter. At the end of the year 1.5 million people around the globe were actively using our LIVE Services, compared to 690 thousand at the start of the year.
During the quarter, a number of partnerships were announced with local governments. In a partnership with PTV we will provide historical traffic data to the city of Zürich. The Province of North Holland was provided with historical congestion and flow information.
For geo-marketing agencies, insurance companies and other customers we introduced Custom Probe Counts, a traffic product providing an indicator of traffic density for roads globally. Custom Probe Counts can be used as an additional dataset for location based studies.
We gained full control of our map-making subsidiaries in India, Thailand and Indonesia. In order to reap the full potential in these emerging markets, we bought out the minority shareholders.
In the quarter we launched WEBFLEET Mobile, a smartphone app that
provides managers with essential information about their vehicle fleet
when they are travelling. A new feature launched in WEBFLEET was vehicle
maintenance planning, which enables our customers to optimise their
fleet's utility and as a result reduce carbon emissions. WEBFLEET’s
installed base grew by 34% to 180 thousand (end of 2010: 134 thousand).
We entered the private car lease market with our telematics solutions,
providing drivers with instant feedback on their driving behaviour and
fuel consumption.
