Logitech increases outlook after first-quarter beats forecasts

Reuters News
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Posted: Jul 25, 2017 3:25 AM

By John Revill

ZURICH (Reuters) - Logitech International raised its profit outlook for the year after strong sales of its gaming and video collaboration products helped the computer peripheral maker beat forecasts in its first quarter.

The Swiss-U.S. company said it now expects operating income of $260 million to $270 million, up from its previous view of $250-260 million.

Logitech made a good start to its financial year, Chief Executive Bracken Darrell said, with around two percentage points of growth expected to come from the acquisition this month of Astro, a maker of headsets for console gamers.

"We feel good about the year and that's why we raised our guidance," he told Reuters.

"Our game plan is to go aggressively after growth and profitability."

Logitech's PC Gaming business -- specialized keyboards and mice for people who play games online -- had a strong quarter, with sales up 38 percent.

"Will it continue at nearly 40 percent? Probably not, but PC gaming is on fire," Darrell said. "There are more and more people playing video games on PCs, with keyboards and headsets.

"In online gaming, people want faster keyboards and every little edge counts," he said.

Sales of accessories for tablet computers like detachable keyboards, previously a laggard, also increased, although this reflected an easy comparison with last year's figures, Darrell said.

But the PC speakers and earphones business struggled, with sales down 11 percent, as the company's Jaybird wireless earphones business underperformed.

Logitech increased sales to $530 million during the three months ended June 30 from $480 million a year earlier, beating forecasts of $512 million in a Reuters poll.

Net profit increased to $37 million, ahead of estimates of $26 million.

The company would use cash for its ongoing $250 million share buy-back, dividends and acquisitions, Darrell said, although it was unlikely a purchase would be bigger than the $85 million acquisition of Astro.

The company's stock has been one of the strongest performing tech stocks in Europe, gaining 47 percent in 2017. The shares opened 4 percent higher in Switzerland.

"Logitech's business model proves to work once again with solid growth despite one disappointing category and solid margin structures allowing to boost growth further," said Vontobel analyst Michael Foeth, who rates the stock "buy" and raised his price target to 43 francs from 39 after the result.

(Reporting by John Revill; Editing by Michael Shields)