By John Revill
Zurich (Reuters) -Logitech International will mitigate the impact of the pricing policy of US President Donald Trump by shifting a certain production of his computer mice and other peripherals far from China.
The CEO Hanneke Faber said that it would adopt an active approach to the management of commercial barriers, a particularly worrying question for Logitech, which produces all its products outside the United States, although the country is its largest market with 35% of sales.
“We are going to play the offense while exercising a strong cost discipline and acting with agility,” said Faber to analysts after the webcam and the keyboard manufacturer have declared income in the fourth quarter slightly lower than estimates.
The Swiss-American company currently makes around 40% of its products sold in the United States in China, creating a difficult situation after Washington imposed import rights of 145% on the goods of Beijing.
Logitech now wants to reduce the share of products manufactured in China shipped to the United States to 10%, passing more from its production to Vietnam, Taiwan, Thailand, Malaysia and Mexico, where it has provisions with contract manufacturers.
“We are in the lucky position we have invested in a truly diverse manufacturing footprint,” said Faber. “So, even if I will not say that it is easy to change volume, our team does a fantastic work to change volume quickly to mitigate the pricing impacts.”
The other measures included the rise in prices in the United States of around 10% to compensate for the prices, while the company would also remain focused on the rest of the world where it obtains 65% of its sales.
In addition, costs would be reduced, for example by delaying hiring and reducing travel expenses and other expenses
The plan has been unveiled, because Logitech said that operating profit not in accordance with PCGRs dropped from $ 16% to $ 133 million during the closed quarter, the estimation of missing analysts of $ 134 million.
The quarterly sales were stable at $ 1.01 billion, below $ 1.03 billion estimates, the consensus of analysts compiled by Visible Alpha.
The analyst of the Vontobel bank, Michael Foeth, was encouraged by the Logitech plan, while the action exchanged 1.5% higher at the start of negotiation in Zurich.
“Since a competitive and financial position of strength and with a very agile production configuration, the company has a convincing assessment to successfully compete in difficult times,” said Foeth.
(Report by John Revill, Janaki Venugopalan and Mrinmay Dey in Bengaluru; edition by Shailesh Kuber and Christian Schmollinger)
