REG - Luceco PLC - Q3 2022 Trading Update

LucecoAnnouncement

20/10/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221020:nRST4803Da&default-theme=true

RNS Number : 4803D  Luceco PLC  20 October 2022

20 October 2022

LUCECO PLC

 

Q3 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 three months ended 30 September 2022 ('Q3 2022').

 

The Group has traded in line with expectations in Q3 2022 and generated strong
cash flow. However, our order book now suggests our distributor customers will
destock faster in Q4 than we originally expected, resulting in Adjusted
Operating Profit for 2022 in the range of £20-22m, below previous estimates.
Our estimate of total destocking for 2022 and 2023 combined remains unchanged.

 

Q3 2022 trading

 

The Group has traded in line with expectations in Q3 2022 and delivered strong
cash flows.

 

Q3 2022 revenue was 11% lower than Q3 2021 and 14% higher than pre-COVID Q3
2019.

 

The trading performance relative to the strong prior year comparatives
reflects buoyant residential RMI market conditions in 2021 and destocking by
our distributor customers in 2022, as previously reported. Strong revenue
growth versus Q3 2019 underlines the good progress made by the business in
recent years.

 

Demand from the UK DIY market continued to slow in Q3, as expected.
Promotional campaigns run by some of our customers helped to stimulate demand
toward the end of the quarter and these continue in Q4.

 

Demand from professionals remains stronger than from consumers, particularly
for non-residential LED lighting projects.

 

The Group generated free cash flow of £11m in Q3 2022, which included the
benefit of ongoing inventory reduction. Pre-IFRS 16 net debt at 30 September
2022 of £43.5m (30 June 2022: £53.9m) equalled 1.3x LTM Adjusted EBITDA (30
June 2022: 1.4x).

 

We are on track to deliver H2 2022 free cash flow margin of at least 10% and
an inventory reduction of c.£10m. We expect year-end net debt leverage to be
similar to Q3 2022.

 

Update on customer destocking

 

Given that underlying demand is evolving as expected, our estimate of the
total destocking required to normalise our customers' inventory levels remains
unchanged.

 

We now have good visibility of orders due for shipment to these customers in
Q4. This confirms they plan to reduce their inventory by more than we had
originally expected in 2022, leaving less to do in 2023.

 

We now estimate that customers will reduce their inventory levels by c.£20m
in total for 2022 (previous estimate of c.£14m). At current activity levels,
this would leave a remaining reduction of up to c.£5m for 2023 (previous
estimate of £5-10m). The faster destocking profile in Q4 means that we now
expect 2022 Adjusted Operating Profit to be in the range of £20-22m.

 

Update on cost inflation

 

Our estimate of the total impact of cost inflation emerging from the pandemic
has reduced materially in recent weeks as key cost drivers such as sea
container and currency rates have moved rapidly 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.

 

2023 outlook

 

There is an unusually broad range of macroeconomic outcomes for 2023.

 

If pressure on residential RMI activity from reduced household disposable
income and fewer housing transactions continues as expected, this is likely to
lead to profits in 2023 being similar to 2022, with performance underpinned by
tailwinds from reduced customer destocking, growth in EV charger sales and
input cost deflation.

 

The Group's healthy balance sheet, strong cash generation and agile business
model will enable it to navigate this period with confidence.

 

- 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
(http://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.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTFFFFUUEESESS