Switzerland-based computer peripherals company Logitech International SA LOGI reiterated its fiscal 2016 guidance and threw some light on its growth expectations for fiscal 2017 as well.
Logitech’s third-quarter fiscal 2016 earnings results were better than expected, and the company looks poised for sustained growth in the coming quarters as well.
In the latest results, Logitech had increased its guidance for fiscal 2016 non-GAAP operating income to approximately $170 million, up from the previous expectation of around $150 million. The company expects strong growth of 7%–9% in constant currency in its Retail Strategic sales.
For fiscal 2017, the company expects to generate $185 million to $200 million in non-GAAP operating income, with retail sales growth in the mid-single digits (in constant currency terms).
Logitech has been benefiting from its robust business model that focuses on maximizing profit in PC peripherals and expanding into new business categories. The company’s third-quarter fiscal 2016 results were driven by strong growth in its mobile-speaker business and online gaming peripherals. Also, its video collaboration devices registered remarkable growth.
Accordingly, Logitech expects the momentum in its Gaming category to continue on the back of a strong product portfolio. Additionally, the company anticipates its Logi BLOK cases family and other innovative product offerings to contribute to growth in the near future.
The company has been working on strengthening its core business, and has recently exited the market in which it supplied mice and keyboards to PC makers.
Also, as part of its efforts to focus on its high-growth segments, Logitech recently spun off its struggling Lifesize video conferencing business. Apart from streamlining its videoconferencing hardware business, the company is also progressing successfully in exiting its OEM business. However, Logitech’s Tablet and other accessories segment continues to decline significantly, and could peg back its profitability somewhat.
Also, Logitech is dedicatedly following its three-year turnaround plan to reduce costs while driving up profits and margins significantly. Under the plan, the company is working on the designing, manufacturing and distribution system of its core business to improve the operational efficiency. Logitech plans to reduce its overall cost structure by slashing product, overhead and infrastructure costs. This will help the company in improving profitability and expanding margins.
However, Logitech’s Tablet and other accessories segment continues to decline significantly, and could peg back its profitability somewhat.