Logitech harmed by Red Sea Crisis

Logitech International, a Swiss-American computer peripheral maker, has warned of a margin hit due to the Red Sea crisis. The company's CEO, Hanneke Faber, stated that the attacks by Houthi militants in Yemen have forced shipping companies to avoid the Red Sea, a shipping route vital to East-West trade.

The Red Sea crisis has caused a 30% increase in shipping costs, which is expected to reduce Logitech's profit margin by 100 basis points. The company is facing 30-day delays in getting its products from its factories in Asia to Europe due to the crisis. The attacks by Houthi militants in Yemen have forced shipping companies to avoid the Red Sea, a shipping route vital to East-West trade. Logitech is among the first companies to warn of a margin hit from the crisis. The company expects an impact of around 100 basis points on its profit margin from the extra transportation costs.

Logitech will use more air freight to get around bottlenecks, although it will not make a "radical shift" from the Swiss-American company's normal arrangements. The company would also face a little bit of inventory impact, so it's more costly. The crisis was not as severe as some feared, according to Faber. "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," she said.

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