Logitech is confident about the Christmas business
Published: Tuesday, Oct 22nd 2024, 16:10
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Demand for gaming and tablet accessories as well as keyboards has brought Logitech another quarter of growth. The computer accessories manufacturer increased both sales and profits in the second quarter of the financial year 2024/25 and is now looking ahead to the important Christmas quarter with confidence.
"We are ready for the holidays," CEO Hanneke Faber was quoted as saying in Tuesday's press release. Growth was broad-based across all regions and almost all categories. Demand has improved and business with both private end customers and business customers has grown.
"Overall, the strong results give us a positive outlook for the future," the Logitech boss continued during a conference call. The first weeks of the third quarter had gone well, but it was still very early days, added the new CFO Matteo Anversa.
The third business quarter, which runs until the end of December, with important holidays such as Christmas and Black Friday, is traditionally more focused on consumers and promotions, it said.
Sales and profit increase
In the months from July to September, Logitech's turnover increased by 6 percent to 1.12 billion US dollars. In addition, operating profit (EBIT, non-GAAP) adjusted for costs in connection with acquisitions and restructuring increased by 5 percent to 192.8 million dollars.
Meanwhile, EBIT (GAAP) improved by 3 percent to 160.9 million. Logitech achieved a significant improvement in its gross margin, which increased by 210 basis points to 43.6 percent (GAAP) and 44.1 percent (non-GAAP) respectively.
On the bottom line, Logitech achieved an unadjusted net profit (GAAP) of 145.5 million dollars. This was an increase of 6 percent. Overall, however, analysts' expectations were not quite met. While the margin and the adjusted key figures surprised positively in some cases, the profit lagged behind expectations.
Regional and category growth
Looking at the individual regions, all three reported growth. The EMEA region in particular saw strong growth thanks to the launch of innovations in Europe. However, the Americas also recorded growth again, while the Asia-Pacific region only moved sideways.
In China in particular, Faber is positive about future development. "We have strengthened the team and increased marketing expenditure, but the market is highly competitive," she admitted. In general, Logitech is investing a little more in marketing, sales and product development in order to strengthen growth.
Almost all categories reported an increase in net sales, for example the largest division, Gaming, by 7 percent to just over 300 million dollars. Here alone, 18 new products were launched. Keyboards and equipment for conference rooms (video collaboration) also saw an increase. The somewhat smaller segment for tablet accessories saw particularly strong growth, while sales of webcams declined.
Outlook raised again
Logitech is once again raising its outlook for the full year 2024/25. The Group is now targeting revenue of 4.39 to 4.47 billion US dollars, which would correspond to growth of 2 to 4 percent. Non-GAAP operating profit is expected to reach 720 to 750 million - an increase of 3 to 7 percent.
The company had previously forecast sales of USD 4.34 to 4.43 billion and a non-GAAP operating profit of 700 to 730 million. The gross margin is expected to be in the range of 42 to 43 percent.
The early gains quickly melted away on the stock market, and by the afternoon the share was clearly down 6 percent. According to the market, the figures were rather mixed and the higher outlook was still partly below analysts' expectations.
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