Luceco Reports Steady Improvement Post-Lockdown

Luceco plc (“the Group”), the manufacturer and distributor of high quality and innovative wiring accessories, LED lighting and portable power products, is pleased to provide an update on trading for the six months ended 30 June 2020 and reinstate guidance which has been suspended since the emergence of COVID-19.

Our performance has continued to improve since we last updated the market ahead of our Annual General Meeting on 4 June 2020, as detailed below.

H1 2020 performance

• Revenue 14% lower than H1 2019 with demand steadily improving as lockdown conditions have eased. Outperforming the UK market thanks to our disproportionate share of online / multi-channel capable customers and consumer/DIY markets, where demand has been more resilient. Sales stabilising at circa 90% of prior year levels by period end.

• Adjusted Gross Margin 3.5% better than H1 2019 at circa 38.5%. Increased margins arising from better sourcing, improved manufacturing efficiency and more favourable currency rates. Further modest margin enhancement targeted for H2 2020.

• Adjusted Overheads 15% lower than H1 2019, matching the reduction in revenue and reflecting the COVID mitigating actions set out in our 2019 Full Year results.

• Adjusted Operating Profit of circa £9.0m, £1.8m better than H1 2019 with gross margin improvement and stringent control of overheads sufficient to more than offset COVID-related disruption. Adjusted Operating Margin of circa 12.5%, in the middle of the Group’s targeted range of 10-15%.

• Adjusted Free Cash Flow doubled to circa £10.0m, sufficient to reduce net debt and off-balance sheet debt factoring by £4.7m and £3.5m respectively. Closing net debt of £22.7m equal to circa 0.8x LTM Adjusted EBITDA. The Group is not making use of any government lending or tax deferral schemes.

• Given the Group’s strong profitability and healthy liquidity, the Board considers it likely that dividends will be reinstated at interim stage. A final decision will be announced in the 2020 Interim Results.

Full Year 2020 outlook

• Assuming no widespread COVID-driven lockdown in the UK or supply-side disruption in China in H2, we expect full year 2020 Adjusted Operating Profit to be materially ahead of current analyst expectations and to at least equal our 2019 performance of £18.0m.

• Our experience in H1 suggests that a further COVID-driven UK lockdown in H2 of similar scale would reduce full year Adjusted Operating Profit by circa £0.75m per month of lockdown.

John Hornby, Chief Executive Officer, said:

“Growing our profit, improving our margin and doubling our free cash flow amidst the unprecedented challenges of COVID are, I believe, a fitting testament to the Group’s forward planning, resilience and agility whilst further underlining our long-term potential. We look forward to making further progress in the second half whilst remaining vigilant to the ongoing macroeconomic risks. I would like to extend my sincere thanks to the entire Luceco team for their invaluable contribution to this strong performance.”

Source : Luceco PLC

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