Luceco Plc Regulatory News (LUCE)

30 July 2018

Luceco plc

("the Group")

First Half Trading Update

Luceco plc, the manufacturer and distributor of high quality and innovative LED lighting products, wiring accessories and portable power products, is today issuing the following trading update for the six months to 30 June 2018 ahead of announcing its interim results.

As previously reported, the Group entered the year with lower than expected gross margins following input cost inflation in Q4 2017. It has also previously highlighted the difficult conditions being experienced in H1 2018 in its UK consumer facing business as a result of retailer destocking and lacklustre consumer confidence. H1 UK retail sales are consequently nearly 20% lower than last year. Sales growth in the Group's overseas businesses has however remained strong.

As a result of these headwinds, the Group expects to report close to break-even adjusted operating profit in H1 2018.

The Group outlined in April its response to these conditions. This has now been put in place and will deliver increasing benefit in H2. Pricing has been successfully amended to better reflect input costs. Manufacturing costs and general overheads have been reduced. In June, the Group announced the closure of its loss-making US business early in Q3. The Group has hedged at considerably more favourable foreign currency rates in H2 than H1. The Group's Q3 retail order book is over 30% higher than Q2, reflecting an end to destocking in its UK retail business.

As a result, the Group expects to deliver year-on-year adjusted operating profit growth in H2 2018.

Net debt at 30 June 2018 was in line with expectations at £41m and is expected to reduce in the second half. The Group has recently agreed an extension to the maturity of its main credit facility to March 2020.

John Hornby, Chief Executive Officer, said:

"The retail environment in the UK remains challenging and has continued to impact trading which, along with the gross margin difficulties encountered in Q4 2017, have negatively impacted our financial performance in the first half of 2018. Following the actions taken to improve margins, the Group expects to deliver year-on-year adjusted operating profit growth in the second half of 2018. The Group's order book has improved and management remain confident in the Group's long term growth potential."

-ENDS-

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Notes to Editors:

Luceco is a rapidly growing manufacturer and distributor of high quality and innovative LED lighting products and wiring accessories 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:

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

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

- Masterplug: cable reels, extension leads, surge protection, timers and adaptor products; and

- Ross: television wall mounts, audio visual accessories and other items.

The Luceco LED lighting brand continues to benefit from the disruptive shift away from mature lighting technologies as a result of the material advancement in LED technology in recent years. The brand has continued to successfully leverage the Group's existing customer base and low cost Chinese manufacturing facility. Consequently, it remains well positioned to continue to deliver healthy organic growth. 

In the electrical wiring accessories market, Luceco's BG and Masterplug brands have continued to reinforce their market leading positions through further new product development initiatives, expanding into new product adjacencies and gaining market share.