Luceco revenue, profits rise in first quarter

The London-listed firm said its adjusted operating profit jumped 30%, benefiting from the cessation of destocking pressures experienced in the first half of 2023.

That improvement in profitability was further supported by a year-on-year increase in the adjusted operating margin, driven by strong operational leverage.

Luceco said it maintained a healthy balance sheet, with its covenant net debt-to-EBITDA ratio remaining at 0.8x, below the target range of 1x to 2x.

The board said the recent acquisition of D-line for £8.6m, plus contingent deferred consideration of £3.8m, at the end of February was expected to create synergies in both UK and international markets.

It said its strong balance sheet and cash flow generation provided flexibility for further mergers and acquisitions, aligning with its stated capital allocation policy.

The board proposed a final dividend of 3.2p, subject to approval at the annual general meeting, bringing the full-year dividend to 4.8p, representing a payout of 43% of 2023 earnings.

Looking ahead, Luceco said it was encouraged by the strong start to the year, and was performing comfortably in line with market expectations.

Despite ongoing monitoring of the copper price and developments in the Red Sea, hedging arrangements were in place to mitigate short-term risks.

Additionally, improvements in key industry metrics, although still in decline, provided optimism for the second half, the board added.

With a robust order book, Luceco said it anticipated achieving first-half like-for-like organic growth of around 5%.

“Luceco has performed strongly in the first quarter of the year and we are trading comfortably in line with expectations,” said chief executive officer John Hornby.

“Key industry metrics are starting to suggest more favourable conditions, and this provides optimism for the second half of the year.

“The group is continuing to identify new organic and merger and acquisition opportunities for investment, leveraging our market position and aided by our strong cash flow and balance sheet.”

At 1119 BST, shares in Luceco were up 3.18% at 175p.

Reporting by Josh White for Sharecast.com.