Logitech: exceptional results

Logitech has announced much better-than-expected results for its second fiscal quarter (which ended at the end of September). Despite an 8% year-on-year drop in sales, the Vaud-based technology company managed to increase its operating profit by 17%! This feat is the result of an exceptional gross margin of 42% (up 340 basis points on last year), thanks to much lower costs and promotional activities. Obviously, this is not sustainable in the longer term. Reductions in R&D (-3%) and especially marketing expenditure (-14%) are at the expense of long-term growth.

In terms of products, Logitech reported growth of 3% in pointing devices, and especially 17% in tablets and accessories. On the other hand, the divisions that had benefited most from COVID – video collaboration (-15%), games (-12%) and webcams (-14%) – are still in decline.

As a follow-up to these good results, the company has raised its expectations for fiscal year 2024 (ending March). Revenues should be in the range of $4.0 – $4.15 billion (vs. $3.8 – $4.0 previously), which would imply a drop in sales of between -12% and -9% for the fiscal year. The company would not return to sales growth until 2025.