Logitech cuts 2023 outlook as feels impact of Ukraine crisis

[May 03, 2022]    By John Revill

(Reuters) -Logitech cut its 2023 outlook as a result of the Ukraine conflict on Tuesday, marking a rare downgrade from the computer mouse and webcam maker, which grew rapidly during the COVID-19 pandemic, and prompting its shares to fall.

Logitech logo and stock graph are seen in this illustration taken, May 1, 2022. REUTERS/Dado Ruvic/Illustration

The Swiss-U.S. company has halted its activities in both Ukraine and Russia, where it generates around 1.5% to 2% of its sales according to analysts, and has removed the figures from its calculations for next year's performance.

Logitech, whose products have been bought by people equipping their home offices, said it now expects sales growth in constant currency of 2 to 4% in the 12 months to the end of March 2023, from a previous mid-single digit increase forecast.

The more cautious assessment was unusual for Logitech, which upgraded its guidance twice during the last year, and its shares were down 3.6% in Switzerland.

Logitech also expects non GAAP operating income to be $875 million to $925 million in the year ahead, down from $900 million to $950 million it previously forecast.

During the three months to March 31, Logitech, whose keyboards and headsets are used by gamers and esports participants, reported a 20% drop in sales to $1.23 billion as it lapped high comparisons with the year before.

Non GAAP operating income fell 52% to $156 million as the company spent more developing new products.

China, a much bigger market for Logitech and where it has its main factory, could also be a headache after COVID-19 triggered new lockdowns.

Analysts, however, pointed to the quarter being better than expected as Logitech cut operating expenses.

"The days of turbocharged growth during the pandemic may be over for Logitech ... But they are holding on to most of their gains, which is encouraging," Zuercher Kantonalbank analyst Andreas Mueller said.

Mueller added that Logitech could still gain from "people buying equipment as they move to hybrid working, e-gaming and creating their own content".

(Reporting by John Revill in Zurich and Rhea Binoy in Bengaluru; Editing by Subhranshu Sahu, Uttaresh.V and Alexander Smith)
 

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