H1 2022 Trading Update

RNS Number : 8845S

Luceco PLC

19 July 2022

 

19 July 2022

LUCECO PLC

H1 2022 TRADING UPDATE

Luceco plc ("the Group" or "Luceco"), the supplier of wiring accessories, EV chargers, LED lighting, and portable power products, provides the following update on trading for the six months ended 30 June 2022 ('H1 2022').

The Group has traded broadly as expected since our last update at the end of Q1. We expect to report revenue of c.£106m (H1 2021: £108.2m) and Adjusted Operating Profit of c.£11.5m (H1 2021: £19.2m) for H1 2022. This follows record results in 2021 and a particularly strong H1 2021 performance.

Revenue

On a like-for-like basis, we expect first half revenue to be 17% lower than H1 2021, but 13% ahead of the Group's H1 2019 pre-COVID performance.

The trading performance relative to the strong prior year comparatives reflects buoyant residential RMI market conditions boosted by COVID lockdowns in 2021 and destocking by our distributor customers in 2022, as previously reported.

We estimate that customers reduced their inventory levels by £7m in H1, with a similar amount to follow in H2.

Normalising for the impact of destocking, underlying demand from Retail and Hybrid distributor customers slowed as the half progressed as consumers spent less on DIY. Demand from Professional Wholesale customers proved more resilient, with professional contractors benefiting from project backlogs brought into the year. Demand for LED installation projects from the non-residential sector strengthened.

Gross margin / supply chain

We expect to report H1 Adjusted Gross Margin of 34%. This is slightly lower than H2 2021's performance of 36% due to customer destocking causing a reduction in higher margin Wiring Accessories sales.

Input cost inflation remains well controlled, with associated selling price increases fully implemented during Q2. The run rate for gross margin at the end of the first half was approximately 36.5%. We continue to expect second half margin to reach approximately 37% as we benefit from recent cost deflation, particularly in sea container rates.

Our operations in China have not been materially impacted by governmental COVID control measures.

Electric vehicle ('EV') charging

Sync EV, acquired by the Group in March 2022, is now fully integrated.

We launched a new range of EV chargers in Q2, branded jointly under BG and Sync brands, which are selling well. We expect EV charger sales to increase from £1m in 2021 to c.£7m in 2022, which includes nine months of Sync EV ownership, at an operating margin well above the Group average.

Balance sheet

We expect to report net debt equal to 1.4x (31 December 2021: 0.7x) LTM Adjusted EBITDA at 30 June 2022 on a pre-IFRS 16 basis and pro-forma for acquisitions, in the middle of our target leverage range. We expect net debt to reduce in the second half as inventory levels adjust to normalising supply chain conditions and lower activity levels.

Outlook

Consumer spending on home improvement continues to slow as disposable incomes reduce in the face of rising inflation.

A continued slowdown in consumer demand at rates similar to that experienced to date, combined with broadly stable professional demand, would leave 2022 Adjusted Operating Profit at the bottom end of current analyst expectations. The final outcome will largely depend upon how consumers and our distributor customers react to macroeconomic developments in the second half of the financial year.

- 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 .

Forward-looking statements

This announcement contains forward ‑ looking statements that are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries, sectors and markets in which the Group operates. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated. No assurances can be given that the forward ‑ looking statements in this announcement will be realised.

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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