Strategic priorities

Business review

In 2014, we made good progress towards becoming a multi-category Consumer business. We continued to strengthen our offering in the world of navigation, while also successfully expanding our presence in the world of sports.

DRIVE

We completed the transition of our PND range onto our new NavKit software platform in 2014. We also expanded our GO range, bringing lifetime maps and traffic to more geographies around the world.

We launched the all-new TomTom START, making navigation accessible to more drivers at an entry-level price. Our line-up was simplified in 2014, giving people an easier way to select the right device based on map view, traffic option and screen size.

With the launch of TomTom Bridge, we expanded our Consumer product offering to the B2B market. TomTom Bridge is a programmable driver terminal that combines our navigation technology with customised applications, to help businesses manage their vehicle fleets more efficiently.

Bridge includes a developer portal with an open platform, offering the flexibility to create tailor-made applications for specific business needs.

SPORTS

We continued to diversify and innovate within our sports business in 2014.

The launch of Runner Cardio, with a built-in heart rate monitor, made it easier for athletes to train in their optimal heart rate zone, by eliminating the need for a separate chest strap.

We also introduced TomTom Golfer, a GPS sport watch that helps golfers improve their game.

A golfer can see key golf course data like distance to hazards and green, and keep track of the score, distance and time of their round. TomTom Golfer uses GPS technology to automatically recognise nearby courses.

Course updates are delivered wirelessly via a smartphone app, giving golfers the most up-to-date information for more than 34,000 courses around the world.

Financial review

Key figures overview
Excel

(€ in millions, unless stated otherwise)

2014

2013

y.o.y. change1

Consumer products

548.4

567.0

–3%

Automotive hardware2

70.7

84.8

–17%

Total revenue

619.1

651.8

–5%

EBITDA

55.3

56.7

–2%

EBITDA margin (%)

9%

9%

EBIT

36.2

33.2

9%

EBIT margin (%)

6%

5%

Key PND market data

Market size Europe
(# units sold in millions)3

7.7

8.4

–9%

TomTom market share (%)

52%

51%

Market size North America
(# units sold in millions)

4.0

5.2

–23%

TomTom market share (%)

15%

17%

  1. Change percentages are based on non-rounded figures.
  2. Reporting structure for the Automotive business unit was reclassified in 2014. The hardware component of previously developed in-dash hardware sales to automotive clients is now reported in Consumer business unit, in order to clearly identify automotive revenue which comes from CNS components.
  3. Europe refers to EMEA17: AT, CH, DE, BE, NL, FR, IT, GB, ES, PT, TR, CZ, PL, DK, SE, FI, ZA.

Total Consumer revenue for the year was €619 million, a decline of 5% compared to last year (2013: €652 million). The year on year decline was mainly driven by lower PND and Automotive hardware revenue, partly offset by strong growth in sports revenue. Automotive hardware revenue was €71 million in 2014 (2013: €85 million).

PND was the biggest revenue contributor for Consumer in 2014. The European PND market rate of decline slowed to 9% in 2014 (2013: -14%). We saw market growth in the second half of the year in our core European PND markets, Germany and the UK. The North American PND market declined by 23% in 2014 (2013: -27%).

Our PND business developed better than the market. We improved our market share and ASP in Europe partially offset by lower unit sales in North America.

Our sports business developed strongly in 2014. Full year sports revenue amounted to €50 million in 2014, an increase of 73% compared to last year (2013: €29 million) and we achieved our milestone of 500,000 GPS sport watches shipped in 2014.

Consumer generated EBITDA of €55 million in 2014, slightly below last year (2013: €57 million). EBIT amounted to €36 million in 2014, 9% higher compared to last year (2013: €33 million). This translates into the EBIT margin of 6% in 2014, compared to 5% in 2013. In 2014, Consumer generated higher gross margin on their hardware products, partially offset by increased investments in marketing and R&D to fuel further diversification.

Business outlook

In 2015, we will continue to diversify our Consumer business into new areas.

Our aim is to become a leading sports electronics brand. The sport-focused wearables tech market is expected to continue to grow in 2015. We will continue to capitalise on our success and make further inroads into the sports business. We will continue to develop easy-to-use, fit-for-purpose sports products that make it easier for everyday athletes to improve their performance.

Within our drive business, our aim is to unlock the daily relevance of a TomTom navigation device. We will capitalise on the strength of our traffic information and routing software to help millions of commuters find the fastest way to work and home. We will also focus on new market opportunities in different categories. Our new TomTom RIDER was specifically developed for bikers, showcasing our continuous commitment to designing products that meet the needs of consumers in different categories.