Logitech to shift some production from China to counter Trump tariffs
By John Revill
ZURICH:
Logitech
International
will mitigate the impact of U.S. President Donald Trump's tariff policy by shifting some production of its computer mice and other peripherals away from China.
Chief Executive Hanneke Faber said she would take an active approach to handling trade barriers, an issue of particular concern for Logitech, which produces all of its products outside the United States, though the country is its biggest market with 35% of sales.
"We are going to play offence while exercising strong cost discipline and acting with agility," Faber told analysts after the webcam and keyboards maker reported fourth-quarter earnings slightly below estimates.
The Swiss-American company presently makes roughly 40% of its products sold in the United States in China, creating a difficult situation after Washington imposed import duties of 145% on goods from Beijing.
Logitech now wants to reduce the share of China-made products shipped to the U.S. to 10%, by switching more of its production to Vietnam, Taiwan, Thailand, Malaysia and Mexico, where it has arrangements with contract manufacturers.
"We're in the fortunate position that we have invested in a really diversified manufacturing footprint," Faber said. "So while I won't say it's easy to shift volume, our team is doing a fantastic job at shifting volume fast to mitigate tariff impacts."
Other moves included raising prices in the United States by around 10% to compensate for tariffs, while the company would also remain focused on the rest of the world where it gets 65% of its sales.
In addition costs would be reduced, for example by delaying hiring, and cutting back on spending on travel and other expenses
The plan was unveiled as Logitech reported non-GAAP operating profit fell 16% to $133 million in the quarter ended March, missing analysts' estimate of $134 million.
Quarterly sales were flat at $1.01 billion, below estimates of $1.03 billion, the consensus of analysts compiled by Visible Alpha.
Bank Vontobel analyst Michael Foeth was encouraged by Logitech's plan, while the stock was trading 1.5% higher in early trading in Zurich.
"From a position of competitive and financial strength and with a highly agile production set-up, the company has a convincing track record to compete successfully in difficult times," Foeth said.
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