June 1 (Reuters) – TomTom TOM2.AS will cut hundreds of jobs due to improvements to the automation of its mapping business, the Dutch digital navigation company said on Wednesday, adding that the cuts would represent around a tenth of its global workforce.
“Unfortunately, this will have an expected impact on approximately 500 employees in our Maps unit,” the company said in a statement. “The full assessment of the financial implications of the Maps unit reset is underway.”
The layoffs are expected to hit relatively lower-paid workers, according to ING analyst Marc Hesselink, adding that savings and restructuring charges for the company are expected to balance out at around 30 million euros each.
“In recent years, TomTom has been striving to achieve the Holy Grail of a fully automated card manufacturing process”, and the investment campaign launched this year seems to have paid off, added Marc Hesselink.
Higher levels of automation would create higher quality and larger maps, allowing TomTom to address a wider market among its car and tech customers, chief executive Harold Goddijn said.
TomTom stock rose slightly in Amsterdam in early trading, but has lost more than a quarter of its value since the start of the coronavirus pandemic, hit by supply chain shortages that have forced automakers from world to reduce their production.
The company said it would provide an update on the situation when it announces its quarterly financial results on July 15.
(Report Sarah Morland; French version Alizée Degorce, edited by Kate Entringer)