The lockdown home improvement boom saw Luceco (LUCE) hold on to most of its sales despite first-half supply chain restrictions. The owner of the British General, Kingfisher and eponymous wiring and lighting brands is trading at over 190p, an almost 50 per cent increase year-to-date and a 334 per cent climb on its March low of 44p.
The company has kept selling online in the UK during the pandemic, and DIY demand helped make up for losses in office and project-based sales. Operating profit rose from £7.2m last year to £9m because of cost-cutting, including use of the UK government’s furlough scheme and the cancellation of bonus payments. There was also a staff pay cut, but this was paid back before 30 June.
Luceco chief executive John Hornby recognised the first-half conditions were unlikely to be repeated. “Whilst welcome in 2020, the unsustainably low cost of acquiring sales in H1, combined with government furlough income, are a challenging performance headwind to overcome in 2021,” he said.
While the commercial real estate sector is in poor health, Mr Hornby said Luceco’s sales to UK professionals had partly recovered in recent months, and the company has forecast “low-single digit” like-for-like revenue growth in the September quarter. The company also flagged interest in buying up struggling competitors.
Net debt came down £13.7m to £22.7m in the first half, as cash flow went into both paying off borrowings and reducing off-balance-sheet debt factoring by £3.5m, taking it to £1.5m.
Consensus forecasts see Luceco’s earnings per share climbing 52 per cent between 2019 and 2020, to 11.7p.
| LUCECO (LUCE) | ||||
| ORD PRICE: | 191p | MARKET VALUE: | £ 298m | |
| TOUCH: | 190-192p | 12-MONTH HIGH: | 196p | LOW: 39p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 35p* | NET DEBT: | 41% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 82.7 | 5.3 | 2.6 | 0.6 |
| 2020 | 71.6 | 8.4 | 4.4 | 1.5** |
| % change | -13 | +58 | +69 | +150 |
| Ex-div: | 17 Sep | |||
| Payment: | 23 Oct | |||
| *Includes £22m in intangible assets, or 14p per share **Final 2019 dividend of 1.7p will be paid alongside interim dividend | ||||
