Luceco PLC Q3 2020 Trading Update (5396C)

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RNS Number : 5396C

Luceco PLC

20 October 2020

20 October 2020

Luceco plc

Q3 2020 Trading Update

Luceco plc ("the Group" or "Luceco"), the manufacturer and distributor of high quality and innovative wiring accessories, LED lighting and portable power products, is pleased to provide the following update on trading for the quarter ended 30 September 2020 ("Q3 2020").

Both Q3 2020 performance and current trading are ahead of previous expectations and as a result we increase our guidance for full year 2020 Adjusted Operating Profit from at least GBP23m to between GBP28m and GBP30m.

The background to this increase in expectations is as follows:

Q3 performance

Revenue

   --      Q3 revenue growth of 7.5% was better than the low single digit growth previously forecast: 

o We experienced better than expected demand from online / multi-channel customers and DIY markets . Aggregate quarterly sales to UK pure-play online, hybrid and DIY customers were 25% higher than last year.

o The UK professional channel continued to recover , returning to low single digit growth in the quarter. This was led by strong demand for wiring accessories from wholesalers and market share gains in the circuit protection category. The project LED channel has been slower to recover, with organisations continuing to spend their capex cautiously.

o European revenue grew rapidly in Q3, boosted by demand deferred by the Q2 COVID lockdown. Sales remained encouragingly strong throughout the quarter despite the recent reintroduction of tighter social distancing measures in some markets.

-- With revenue growth in early Q4 stronger than Q3, we now expect full year 2020 revenue to at least equal last year's GBP172.1m , with ground lost to COVID in H1 fully recovered in H2.

Gross margin

-- Q3 gross margin was better than expected, with higher sales volumes driving more efficient utilisation of manufacturing overheads.

   --      We now forecast H2 2020 gross margin of 41% . 

Overheads

-- Overheads increased as expected between Q2 and Q3 as employees returned to work to create and service increased demand. However, tight control of discretionary expenditure should leave H2 2020 Adjusted Overheads no higher than last year's GBP22.6m despite growth in activity levels.

Profit

-- Renewed growth, expanded gross margins and tight control of overheads allowed the Group to deliver Q3 2020 Adjusted Operating Profit 60% higher than last year .

Full year 2020 outlook

-- Assuming no major COVID-related disruption to our distribution operations, strong momentum throughout Q3 and a healthy order book for Q4 covering approximately half of the Group's expected revenue for the quarter allow us to increase guidance for full year 2020 as follows:

o Revenue of between GBP172m and GBP176m

o Adjusted Operating Profit of between GBP28m and GBP30m

o Adjusted Operating Margin of between 16% and 17%

o Adjusted Earnings Per Share of between 13.5p and 15.0p

John Hornby, Chief Executive Officer, said:

"Ongoing improvement in gross margin, tight control of overheads and a relatively buoyant UK home improvement market combined to deliver record profits in the third quarter.

Although we start the final quarter with a degree of uncertainty from the impact of a second wave of COVID and recently reintroduced social distancing measures in our key markets, strong trading momentum and a healthy order book mean that we now expect significant additional progress to be made in full year Adjusted Operating Profit and Adjusted Operating Margin, as reflected in our latest guidance."

- 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 
 

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, sockets), circuit protection and cable management products;

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

   --    Masterplug: cable reels, extension leads, surge protection, timers and adaptor products; and 
   --    Ross: television wall mounts, audio visual accessories and other items. 

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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October 20, 2020 02:00 ET (06:00 GMT)