TomTom, Europe's largest maker of portable navigation devices, reported an unexpected loss in the first quarter because of declining consumer spending and a drop in sales of devices to carmakers

The €1.5 million loss compares with a profit of €10.6 million a year earlier, and analysts' expectations for profit of €1.28 million.

Sales fell 12 per cent to €233 million euros, compared with analysts' average estimate of €235 million.

"The economic headwind in southern Europe impacted consumer and automotive revenue in the quarter," chief executive Harold Goddijn said in a statement. "We saw consumer discretionary spending decline," and car manufacturers responded by reducing production."

The company, which once dominated the navigation industry before Google and Apple took market share with similar services on smartphones, is trying to boost sales of built-in navigation systems for vehicles as well as electronic maps and other software.

Mr Goddijn initiated an overhaul last year that includes cutting 457 jobs, or about 10 per cent of the workforce, aiming to save €50 million in 2012. The company reiterated its forecast for 2012 of sales falling to about €1.1 billion from €1.27 billion in 2011 and adjusted earnings per share declining to about 35 cents per share from 55 cents.

TomTom climbed 6.7 per cent to €3.48 in Amsterdam yesterday, paring the stock's 12-month decline to 45 per cent.

Bloomberg