Geneva (awp) – The computer peripheral specialist Logitech continued to normalize its activities in the third quarter, after the surge in sales of keyboards and webcams last year in the midst of the telework boom. Despite this widely anticipated slowdown, management raised its targets for the full year, delighting investors.
In the third quarter of its staggered 2021-2022 financial year (October-end December), which includes the crucial Christmas sales period but also the promotional days of Black Friday and Cyber Monday, the Vaud group’s turnover fell by 2% to $1.63 billion, according to a statement released Tuesday. The group had to deal with bottlenecks that weighed down 3 to 4 percentage points on revenue.
This slowdown comes after a 75% jump in sales over the 2020-2021 financial year, due to very strong demand during the coronavirus pandemic and the rise of teleworking.
The group’s historical products – mice and keyboards – continued to grow, as did video game accessories. Webcams and video collaboration tools, on the other hand, have marked time, after a strong surge last year. Sales of portable speakers and headphones also fell sharply.
Quarterly downturn in sight
Profitability also stalled, with operating profit (Ebit), under the non-Gaap accounting standard, dropping 37% to $302 million. Net profit for its part stood at 262.8 million, down 37.9% over one year. The group explains this significant decline by the planned investments in marketing and innovation.
These figures remain higher at all levels than the forecasts of analysts consulted by AWP.
Despite the slowdown, management raised its objectives for the current year as a whole. Turnover should now evolve between +2% and +5% excluding the exchange rate effect, against a range of -5% to +5% in its previous estimates. Ebit (non-Gaap) should meanwhile be between 850 and 900 million dollars, while the group was counting so far on 800-850 million.
Capital expenditures are expected between $80 and $90 million.
For UBS analysts, the increase in annual forecasts by Logitech management, however, implies a drop in sales of 18% to 28% in the last quarter of the company’s staggered fiscal year. Ebit should fall by 60% over one year to 127 million dollars. “We are experiencing solid growth momentum,” he said.
Driven by the trend
“As expected, we experienced strong growth with products such as keyboards, mice and gaming offerings and gained market share across all of our core businesses,” Logitech chief executive Bracken Darrell said at the time. during an interview with AWP. The leader says he is confident for the fourth quarter and beyond.
“Historically, Logitech’s growth has been driven by several long-term trends that we’ve been tracking since long before the pandemic began,” Darrell explained. In the future, people will be recording or consuming videos at an increasing rate, everywhere. In addition, the development of electronic sports should continue and give rise to gigantic events.
Finally, we now work from everywhere, and mainly from home. “These trends will continue and I am very confident about our long-term development,” Darrell said.
Moderate impact of supply issues
The problems of supply of electronic chips for products manufactured by Logitech as well as the worries of logistics are limited. The company has experienced teams capable of dealing with these issues, the general manager said. It also has its own production capacities in the field of semiconductors. “In the fourth quarter, however, we would have sold more if the components had been better available,” he conceded.
Logitech shareholders should also benefit. “We are growth-oriented and our investors know that. We have consistently increased our dividends in the past,” Logitech’s chief executive said. The Board of Directors will decide next summer on the amount of dividends to be paid for the 2021/22 financial year.
On the stock market, Logitech shares ended up 6.15% at 70.46 Swiss francs, in an SMI up 0.54%.
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