Supply chain problems hits the computer mouse maker Logitech

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Logitech International SA shares plunged 6%. This is after the computer peripherals maker reported a steep fall in operating profit. They stated that it was facing unprecedented supply chain problems. The maker of keyboards, mice and headsets became the latest company to warn about the difficulties getting enough semiconductor chips. Swiss engineering firm ABB and Sweden’s Ericsson flagged problems getting enough parts to make their products.

Logitech Chief Executive Bracken Darrell said that this supply chain challenge will continue throughout the rest of this year. This refers to the company’s financial year which runs to the end of March 2022. He also added that this will have some issues delivering at the levels of demand that are out there. On the logistics side, they just have to do the best. The time to air-freight components has increased. Darrell said that this is while costs have spiralled. Logitech was reacting by adding more suppliers.

They also build up its inventory of components to satisfy the demand due to the pandemic. During its quarter, Logitech sales rose 4% to $1.31 billion. This is by beating a forecast of $1.25 billion. The figure was 82% above the comparable pre pandemic figure. Darrell said that he did not think the work from home trend had been exhausted. Because many customers are now upgrading their home office computer equipment. The Swiss-U.S. company is also spending more on promotions and marketing in stores, when compared to last year.

As a result, non-GAAP operating income declined 40% to $211 million. Net profit fell 48% to $139.5 million. Shares were down 6.5%. Logitech maintained its outlook for the financial year through March 2022. They are still expecting full-year non-GAAP operating income of $800 million to $850 million. Zuercher Kantonalbank analyst Andreas Mueller said that he thought the share price reaction seemed exaggerated. He also said that they are well prepared with plenty of inventory into the Christmas season. And they can afford it given the healthy balance sheet.

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