Q1 2022 TRADING UPDATE

RNS Number : 1941K

Luceco PLC

04 May 2022

 

4 May 2022

LUCECO PLC

Q1 2022 TRADING UPDATE

Luceco plc ("the Group" or "Luceco"), the manufacturer and distributor of wiring accessories, EV chargers, LED lighting, and portable power products, provides the following update on trading for the three months ended 31 March 2022 ('Q1 2022').

The Group has previously highlighted the challenge of repeating 2021's record results, which delivered Adjusted Operating Profit more than double pre-COVID 2019 levels, including a particularly strong H1 2021 performance.

Last year's unusually buoyant markets disrupted the normal function of global supply chains, leading to some customers ordering more product than it now appears they needed to meet demand. We expect that the reversal of this position this year will lead to a £15m shortfall in 2022 revenue compared to our previous expectations. The shortfall in 2022 Adjusted Operating Profit will be approximately £10m due to the lower revenues being in the Group's higher margin Wiring Accessories category.

Notwithstanding any future changes in market demand, profit progression in 2023 should be made easier by the temporary nature of the supply chain rebalancing expected in 2022.

Q1 2022 performance

Q1 2022 revenue was 3% lower than Q1 2021. As indicated in our 2021 results announcement, H1 2021 is proving to be a tough comparative given the more favourable trading environment at the start of last year. There has been an inevitable slowdown this year in UK DIY activity, particularly impacting demand for higher margin Wiring Accessories. Despite the year-on-year decline, Q1 2022 revenue remained 21% higher than pre-COVID Q1 2019 levels, which included like-for-like revenue growth of 10%.

As highlighted above, we have also seen a decrease in sales this year due to customers overstocking their supply chains in 2021. We estimate the impact in 2022 will be a reduction in full year revenue by £15m, of which £5m occurred in Q1.

We continue to benefit from our growing presence in healthy non-residential RMI markets, with both Kingfisher Lighting and DW Windsor experiencing strong order intake.

Inflation and supply chain

Our estimate of the annual impact of input cost inflation remains at £25m, which will be fully offset by selling price increases. We will receive the full benefit of these increases in Q2 2022.

We are targeting Adjusted Gross Margin of 37% during H2 2022, representing the full pass through of input cost inflation. We are confident that the margin will improve thereafter as elevated input costs recede and our sales mix of Wiring Accessories normalises after destocking.

China COVID update

There have been no COVID cases amongst the Group's workforce in China and we are proud of the actions being taken by our local management team to protect the health and safety of our employees whilst continuing to serve our customers. We continue to monitor the evolving situation closely but new social distancing rules implemented by the Chinese authorities in response to low regional case numbers have not materially impacted our performance to date, nor that of our key suppliers.

EV charging

Sync EV, which we acquired at the end of March 2022, is being swiftly integrated into the Group and we remain confident in the growth opportunity this provides. Our new range of chargers has now been launched, branded jointly under the Sync EV and BG brands for maximum market appeal, and will be available for sale to the Group's contractor community from the middle of May 2022.

John Hornby, Chief Executive Officer, commented:

"Luceco has progressed significantly during COVID by adapting rapidly to changing circumstances to make the most of volatile market conditions.

One of the challenges presented by COVID was to maintain appropriate inventory levels amid unprecedented supply chain disruption. It is now clear that some of our customers have emerged from this period with surplus stock. We can directly control our own inventory levels, which I believe we did well and led to market share gains, but inevitably we have less visibility of, or influence over, stocking choices made elsewhere in our supply chain.

The normalisation of customer inventory levels will hold back profits in 2022, which is disappointing, but I do not believe it diminishes either the progress we have made over recent years or our long-term potential. We emerge from the pandemic a better business with stronger positions in our existing markets and with significant growth potential in new markets such as EV charging. I remain excited by our long-term potential."

- 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
James Bavister	020 3128 8170

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 manufacturer and distributor 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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