ZURICH (Reuters) -Logitech International’s profit margins will be hit by higher transport costs due to the Red Sea crisis, the computer peripheral maker’s CEO said on Tuesday.
The maker of computer keyboards, mice, speakers and webcams is among the first companies to warn of a margin hit from attacks by Houthi militants in Yemen.
The attacks are forcing shipping companies to avoid the Red Sea, a shipping route vital to East-West trade.
“It’s taking us about 30 days longer to get product from Asia into Europe so that will have an effect in the quarters ahead,” Hanneke Faber told Reuters in an interview after Logitech posted its third quarter earnings earlier on Tuesday.
Logitech expected an impact of around 100 basis points on its profit margin from the extra transportation costs, Faber said.
“You have to pay for 30 days more for stuff to be on the ship and there’s a little bit of inventory impact, so it’s more costly,” Faber said.
Logitech would also use more air freight to get around bottlenecks, she added, although it would not make a “radical shift” from the Swiss-American company’s normal arrangements.
Still, the executive, who took charge at Logitech in December after a stint leading Unilever’s nutrition business, said the crisis was not as severe as some feared.
“Some people are like oh my gosh this is worse than COVID, but that really is not the case for us,” Faber said.
“It mostly affects Europe, and Europe is not our entire business – it’s about 30%. Secondly during COVID there was no capacity, but now there is shipping capacity to help mitigate some of the impact.”
(Reporting by John Revill; Editing by Kirsten Donovan and Tomasz Janowski)
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