Luceco lights up revenue and earnings in 2019

The London-listed firm said it saw slower growth in the second half of the year ended 31 December, which it had expected, reflecting “tougher” comparatives and more hesitant UK demand due to what the board described as political and economic uncertainty.

It said it still saw healthy growth overseas, particularly in Europe.

Its 2019 adjusted operating profit was expected to be in the range of £17.5m to £18.0m, rising from £8.5m in 2018.

Strong profit growth was seen in the second half from further gross margin expansion, and “diligent control” of its overheads.

The company’s 2019 adjusted operating margin was set to be in the range of 10.2% to 10.5%, up from 5.2% year-on-year.

Luceco’s board said it saw strong cash conversion during the year, with adjusted free cash flow totalling around £18.0m, up from £7.7m.

Closing net debt was said to be around 1.0x adjusted last 12 months EBITDA, compared to 2.21x in the prior year, which would be “comfortably” at the lower end of the group's targeted range of between 1.0x and 2.0x.

Looking ahead, the directors said they were confident of further improvement in performance in 2020, saying they expected 2020 adjusted operating profit in the range of £20.5m to £21.5m.

“The group has made strong progress on a number of fronts in 2019 thanks to the hard work and dedication of the entire Luceco team,” said chief executive officer John Hornby.

“Our continued focus on margin expansion and cash generation against the backdrop of tough UK market conditions has more than doubled the group's profits and halved the group's leverage in 2019.”

Hornby said a more certain UK political environment should yield better market conditions in 2020, but added that the company was not building that into its expectations for the year at the current stage.

“We are confident that the actions we are taking to expand our profitability will contribute to another improved performance in 2020.”

Luceco said it would announce its 2019 full year results on 31 March.

At 1218 GMT, shares in Luceco were up 4.54% at 146.35p.