May 3, 2018 / 9:41 AM / 3 months ago

UPDATE 1-Logitech shares hit 10-year high after strong Q4

(Recasts with CEO comment, market reaction, background)

By John Revill

ZURICH, May 3 (Reuters) - Logitech shares were the biggest gainers in Europe on Thursday after the computer peripherals and mobile speaker maker reported better-than-expected sales and profit and its chief executive said it could maintain the upward momentum.

The Swiss-U.S. company’s stock surged as much as 10.5 percent to its highest in a decade after it reported its best ever annual sales, driven by booming sales of fast keyboards, mice and headphones used by online gamers.

Strong growth from video collaboration devices and a revival in demand for accessories for tablet computers also helped Logitech counter a decline in its wireless speaker business during the three months ended March 31.

Chief Executive Bracken Darrell said the improvement reflected the investments Logitech has made in innovation and design.

“As long as we keep innovating, we can keep performing,” Darrell told Reuters in an interview. “We have had five years of growth, two years of double-digit growth, and I am very optimistic.

“I wouldn’t be here if I didn’t think we could keep growing,” he added. “We have lots of opportunities and lots of capabilities.”

He pointed out continuing growth in categories like video conferencing and gaming segments, where ultrafast keyboards and mice are popular among players of games like League of Legends.

The former Whirlpool and Procter & Gamble executive has led a turnaround at Logitech, which was in the doldrums when he took over in January 2013.

Since then the company’s share price has increased by more than 450 percent, outpacing the Stoxx Europe Technology Index that has gained 91 percent in the same time.

On Thursday Logitech reported sales of $592 million, beating the $566 million estimate by analysts in a Reuters poll. Net profit of $34 million also beat forecasts.

Analysts were positive about the results, highlighting the broad-based sales development and the strong increase in operating cash flow. “These were a very good set of results from Logitech, which shows it is keeping up its growth momentum. The operating cash flow nearly doubled during the quarter, and the growth was broad-based across several categories,” said Andreas Mueller, an analyst at Zuercher Kantonalbank.

“Although the results were supported by the weaker dollar, that doesn’t tell the whole story. The company has a tight grip on costs and three product lines that are doing very well.”

Logitech, the world’s biggest maker of computer mice, could also increase it profitability target in future, Darrell said.

The company, which aims for gross profit in the 35 to 37 percent bracket, reported a gross margin of 36.4 percent during its fourth quarter.

“There is a possibility of raising that,” Darrell said in the interview. “There is potential to do better than we are doing for sure,” he added.

For the moment, though, Logitech was prioritising sales growth rather than upping its margin target corridor, he said. (Reporting by John Revill; Editing by Michael Shields)

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