2022 full year trading update

RNS Number : 1968N

Luceco PLC

19 January 2023

 

19 January 2023

LUCECO PLC

2022 full year trading update

Profit at the upper end of guidance - record cash generation

Notice of Results

Luceco plc ("the Group", "the Company" or "Luceco"), the supplier of wiring accessories, EV chargers, LED lighting and portable power products, provides an update on trading for the year ended 31 December 2022 ("2022"). It confirms that it expects to report Adjusted Operating Profit at the upper end of the previously guided range of £20-22m, with record cash generation.

Q4 2022 trading

The Group traded in line with expectations in Q4 2022. Revenue was 22% lower than in Q4 2021 and 10% higher than pre-COVID Q4 2019. As previously guided, destocking by Retail and Hybrid customers accelerated in Q4, accounting for nearly all of the Group's year-on-year reduction in revenue.

Underlying demand from the residential construction market in Q4 2022 was c.10% lower than last year in volume terms. Demand from the non-residential construction market remained buoyant and higher than last year, with higher energy prices driving increased interest in LED lighting retrofit projects.

Gross margin improved as expected, from 34% in the first half to c.37.5% in the second half, reflecting the full benefit of recent selling price increases.

The Group generated exceptionally strong free cash flow of c.£21m in Q4, adding to the £11m generated in Q3, driven by inventory optimisation and disciplined cash collection.

2022 full year results

The Group expects to report full year revenue of c.£206m and Adjusted Operating Profit at the upper end of the previously guided range of £20-22m.

We expect to report pre-IFRS 16 net debt at 31 December 2022 of £24m (30 June 2022: £53.9m), equal to 0.8x Adjusted EBITDA (30 June 2022: 1.4x). This significant deleveraging was driven by record full year free cash flow of c.£30m.

Update on customer destocking

The Group's major customers reduced their inventory levels by £20m in 2022, as forecast. We continue to expect a further c.£5m reduction in 2023.

Update on cost inflation

Our estimate of the total impact of cost inflation emerging from the pandemic has reduced in recent months as key cost drivers such as sea container prices and currency rates have moved in our favour. At current prices, this would lead to a reduction in our annual cost base between 2022 and 2024 once existing inventory has been sold through and current hedging arrangements mature.

Impact of COVID in China

Most of our Chinese workforce have now experienced COVID and, we are pleased to report, recovered from it. There have been no cases of serious illness. We have seen minimal operational disruption at our own manufacturing site and across our supply base.

Notice of Results

The Group's final results for the year ended 31 December 2022 will be released on 21 March 2023.

There will be an in-person meeting for analysts on the day, alongside a live webinar hosted by John Hornby, Chief Executive Officer and Matt Webb, Chief Financial Officer.

Please email [e-mail] to register your interest.

Commenting on trading, John Hornby, Chief Executive Officer of Luceco said:

"Whilst our overall result for 2022 was inevitably held back by customer destocking activity, I am pleased with the way we ended the year.

Our increased share of the professional contractor market, which we have focused on building over recent years, has undoubtedly helped to mitigate the slowdown in consumer-led construction activity. I am also pleased with our improving gross margin and strong cash generation, which underline the strength of our business model. A healthy balance sheet enables us to plan with confidence.

We remain appropriately cautious about near-term prospects until the unusually wide range of macroeconomic outcomes for 2023 begins to narrow. However, solid progress at the end of 2022 serves to underline that our robust business model and operational platform mean that we are well positioned to prosper as market conditions improve."

- ENDS-

For further information, please contact:

Luceco plc	Contact
John Hornby, Chief Executive Officer	020 3128 8990 (Via MHP Communications)
Matt Webb, Chief Financial Officer	020 3128 8990 (Via MHP Communications)
MHP Communications	Contact
Tim Rowntree	020 3128 8990
Ollie Hoare	020 3128 8276

This announcement is released by Luceco plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR). It is disclosed in accordance with the Company's obligations under Article 17 of MAR. Upon the publication of this announcement, this information is considered to be in the public domain.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of Luceco plc by Matt Webb, Chief Financial Officer.

Note to Editors

Luceco plc - Bringing Power To Life

Luceco plc (LSE:LUCE) is a supplier of high quality and innovative wiring accessories, EV chargers, LED lighting and portable power products for a global customer base.

For more information, please visit www.lucecoplc.com .

The forward ‑ looking statements reflect the knowledge and information available at the date of preparation of this announcement and the Company undertakes no obligation to update these forward ‑ looking statements. Nothing in this announcement should be construed as a profit forecast.

 

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