The worldwide ban of office workers to the home office gave Logitech records. The computer accessories manufacturer is now hoping for “hybrid” working – and is doing more to keep up the momentum under its own steam.
Logitech business in Hong Kong: Production in China has not yet been affected by the lockdowns.
Some bad news turns out to be good news. This is the case with Logitech, the Swiss-American manufacturer of computer accessories. When the corona pandemic broke out in 2020, the company’s immediate concern was the possible factory closures and the problem of how to ensure the production of computer mice, keyboards and gaming controllers.
But as it quickly became apparent, nothing better could happen to Logitech than Corona: Lockdowns and the need to work from home catapulted the company’s sales to an unprecedented level: from less than 3 billion to more than 5 billion francs. Logitech not only maintained this level in the second Corona year, but increased it slightly.
No end to video conferencing
With the pandemic abating in numerous countries, the question now arises of how the momentum can be maintained – and how what is actually good news, namely the end of the health emergency, does not turn into bad news for the company.
Slight skid marks are already visible. Although the company was able to increase sales by 4 percent to a record high of 5.48 billion dollars in the past fiscal year, as Logitech announced on Tuesday. But from January to March, sales already slipped back by 20 percent compared to the same period last year. That’s understandable because it’s simply unrealistic to be able to sustain record growth forever. For example, sales of video conferencing equipment that quarter were down more than a third from the prior-year period. But before that, it had more than doubled in size.
The dip doesn’t mean that Logitech is losing faith in video conferencing — quite the opposite. The head of the company, Bracken Darrell, sees a great opportunity in the return of employees to the offices. “Hybrid work will remain,” he told analysts with conviction. It is difficult to imagine how companies would want to work without video conferencing in the future. The equipment of the home workplaces also remains an issue. “Even I’m constantly experimenting with my work environment,” said Darrell, who has been at the helm of the company for about ten years.
In addition to accessories for computers and video conferencing, Logitech continues to see significant potential in the gaming segment. According to Darrell, the increasing popularity of computer games is an unstoppable trend. Social interaction with other players is becoming more important – and this also requires input and communication devices. Gaming has been Logitech’s most recent revenue growth, more than doubling over the past two years.
spend money to make money
But the Lausanne-based company recognizes that customers are no longer automatically rushed into its arms by a pandemic. That’s why Logitech invested almost 30 percent more in product development in the past fiscal year, but also around a third more in marketing. Due to the higher expenses, the profit also fell by almost a third to 645 million francs.
Meanwhile, Logitech is trying to deal with the new concerns that have replaced the pandemic. The company is reacting to the problems in the supply chains by maintaining high levels of warehousing, which it can easily finance thanks to its solid balance sheet. The important plant in China, the largest production site, has not been affected by the local lockdowns so far. Logitech does not expect any sales in Russia and Ukraine in the current financial year; the forecasts for global operating profit and sales have therefore been lowered slightly.
Logitech’s sales are now expected to increase by 2 to 4 percent by the end of March 2023. This is a gentle blaze compared to the Corona fireworks. But observers think Logitech is well positioned to benefit from digital trends even without a pandemic.
You can refer to Benjamin Triebe, Editor for Business and Business Twitter follow.