Luceco PLC First half trading update (4349F)

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RNS Number : 4349F

Luceco PLC

16 July 2021

16 July 2021

Luceco plc

First half trading update

Full year guidance ahead of market expectations

Luceco plc ("the Group" or "Luceco"), the manufacturer and distributor of wiring accessories, LED lighting and portable power products, is pleased to provide the following update on trading for the six months ended 30 June 2021 ('H1 2021') and to offer full year guidance that is ahead of current market expectations.

Our trading performance has continued to improve throughout the second quarter. Demand has been stronger and broader than expected. We continue to be successful in protecting our margins from the impact of increasing inflationary pressure on raw material and freight prices.

We now expect to report H1 2021 revenue of GBP108m and Adjusted Operating Profit of GBP19m, versus previous guidance of GBP105m and GBP18m respectively.

As a result of a strong order book and the fact that seasonality normally results in second half revenue being ahead of the first half, we now expect full year 2021 revenue of at least GBP220m and Adjusted Operating Profit of at least GBP39m, ahead of current market expectations.

H1 2021 performance

   --      Revenue of GBP108m, 51% higher than H1 2020 and 31% higher than H1 2019: 

o Strong growth versus 2019 underlines the extent of our ongoing market share gains, particularly during COVID

o Residential demand continues to be strong, with revenue boosted by new business wins, superior channel access and continuing high levels of home improvement activity

o Commercial and institutional demand continues to improve, with confidence returning to the LED project market

o Superior and improving product availability in a tight market, as a result of our vertically integrated manufacturing model, has accelerated our market share gains toward the end of the half

o Revenue performance by sales channel:

 
                                              % of Group                    % growth                     % growth / 
              Sales channel                 revenue H1 2021               versus H1 2020                 (decline) 
                                                                                                       versus H1 2019 
-----------------------------  ----------------------------  ---------------------------  ---------------------------- 
 
            Retail                               32%                           44%                          27% 
            Hybrid                               26%                           64%                          70% 
            Professional 
             Wholesale                           29%                           60%                          34% 
            Professional 
             Projects                            13%                           22%                          (8)% 
 
            Total                                100%                          51%                          31% 
 
   --      Gross Margin of 38.5%, 0.1 percentage points higher than H1 2020: 

o Gross margin successfully protected from significant industry-wide cost inflation to date

o Inflationary pressures have increased since our last update. Our estimate of the annualised cost impact has increased from GBP15m to GBP20m. Inflationary headwinds will increase in the second half, however we expect our mitigating actions to broadly maintain current margin levels

   --      Adjusted Operating Profit of GBP19m and Adjusted Operating Margin of 17.6%: 

o High sales growth, protected gross margin and controlled overheads resulted in Adjusted Operating Profit more than doubling against H1 2020

   --      Net debt to LTM Adjusted EBITDA at 30 June 2021 of 0.5x 

Full year 2021 outlook

   --      Revenue of at least GBP220m, 25% higher than 2020 and 28% higher than 2019 

-- Adjusted Operating Profit of at least GBP39m, 30% higher than 2020 and more than double 2019

-- Adjusted Operating Margin of 18%, 1 percentage point higher than 2020 despite inflationary pressures

-- Net debt is expected to be approximately 0.25x LTM Adjusted EBITDA at year-end (before any M&A activity)

-- Cash conversion is expected to improve in H2, as extra inventory held in H1 to compensate for supply chain disruption is progressively released

John Hornby, Chief Executive Officer, said:

"I am pleased to report that Luceco continued to trade strongly throughout the second quarter. New business wins, superior channel access and record levels of product availability from our agile in-house manufacturing allowed us to capitalise on healthy construction RMI markets, which we overwhelmingly serve. It is pleasing to see demand return to our commercial LED project businesses, further diversifying our sources of growth. Buoyant markets have created inflationary pressures and freight capacity issues across our industry, but I am confident we can continue to navigate these transitory issues satisfactorily. I expect us to continue to make the most of healthy market conditions throughout the second half, yielding another year of record results for Luceco."

- ENDS-

For further information, please contact:

 
Luceco plc                     Contact 
=============================  ====================================== 
John Hornby, Chief Executive   020 3128 8572 (Via MHP Communications) 
 Officer 
Matt Webb, Chief Financial     020 3128 8572 (Via MHP Communications) 
 Officer 
 
MHP Communications             Contact 
=============================  ====================================== 
Tim Rowntree                   020 3128 8572 
James Bavister                 020 3128 8572 
Florence Mayo                  020 3128 8572 
 

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 Group'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.

Business summary

Luceco is a manufacturer and distributor of high quality and innovative wiring accessories, LED lighting and portable power products for a global customer base.

The Group supplies trade distributors, retailers, wholesalers and project developers with a wide range of products which broadly fall into the following market recognised brands:

-- British General ("BG"): wiring accessories including switches and sockets, circuit protection and cable management products;

-- Luceco and Kingfisher Lighting: energy efficient LED lighting products and associated accessories; and

-- Masterplug: cable reels, extension leads, EV chargers, surge protection, timers and adaptor products.

Luceco's long-established BG brand commands a loyal following amongst professional electrical contractors in both the UK and overseas. It is synonymous with quality, safety, innovation and value for money. The production of BG wiring accessories is the main focus of the Group's Chinese manufacturing facility, allowing it to control product quality, cost and availability.

The Luceco and Kingfisher LED lighting brands combine to present a comprehensive range of indoor and outdoor LED lighting solutions. The range focuses largely on professionally installed products with an emphasis on performance and quality. The Group is able to support these products by offering customers access to its in-house installation design team.

Masterplug is the market leading brand in the UK Portable Power category. It is sold largely to consumers through retail distribution and online. Its products are offered in a wide range of global electrical standards and they are sold in every territory in which the Group operates.

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 Group has no obligation to update these forward-looking statements. Nothing in this announcement should be construed as a profit forecast.

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July 16, 2021 02:00 ET (06:00 GMT)