May 3, 2018 / 7:27 AM / a year ago

Logitech could raise profitability target in future: CEO

ZURICH (Reuters) - Logitech International (LOGN.S) could increase its profitability target in the future, Chief Executive Bracken Darrell said on Thursday, after the computer peripheral and mobile speaker maker hit the upper end of its range in its fourth quarter.

Chief Executive Bracken Darrell of the computer peripherals maker Logitech is seen during an interview with Reuters in Zurich, Switzerland March 6, 2018. REUTERS/Arnd Wiegmann

Logitech, 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 an interview. “Every year we perform well and operate in that range, and there are areas where we are at the top end.”

“There is potential to do better than we are doing for sure,” he added.

For the moment, though, Logitech was prioritizing sales growth rather than upping its margin target corridor, he said.

He was speaking after Logitech reported sales rose 16 percent in the three months to March 31, beating expectations from analysts polled by Reuters.

The company’s shares rose more than 7 percent in early trading. Its stock had gained 8.9 percent in the last year, outpacing the 6.3 percent improvement in the Stoxx Europe 600 Technology Index.

Darrell said Logitech’s growth trend could be maintained, pointing to long-term developments in the gaming and video conferencing segments.

The company’s sales from video collaboration products increased by 41 percent during the fourth quarter, while gaming increased by 77 percent, although mobile speakers remained a trouble spot with sales down 65 percent.

Logitech makes ultra-fast keyboards and gaming mice as well as headsets for players of games like League of Legends and Fortnite which are played competitively in so-called e-sports tournaments.

“Gaming is on a secular growth run,” Darrell said, comparing its increasing popularity to the growth of American football in the Super Bowl era.

“We are at the same stage with the e-sports - we are only at the beginning of this trend now.”

Reporting by John Revill; Editing by Michael Shields

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