Luceco Europe boss sells as shares climb

Lighting company Luceco (LUCE) is on a strong run, making it through the Covid-19 sales dip as many people used the first lockdown to fix up their houses.

While this didn’t fully make up for a drop in business sales, cost-cutting saw the the owner of the British General, Kingfisher and eponymous wiring and lighting brands increase its operating profit in the first half. Now the company is forecasting full-year sales to be flat or better than 2019, at £172m-£176m. 

Investors have taken notice; Luceco’s share price has almost doubled since the start of the year, and is trading close to its all-time high of 260p, from 2017. 

It was in this frothy environment that managing director of the European division, Wayne Hill, sold £649,502-worth of shares. He would have banked £235,000 for the same number of shares just six months earlier. The company declined to comment on Mr Hill's share disposal.

Mr Hill was among a group of four top executives at Luceco to receive shares as a bonus mid-year, when he was handed 145,599 shares under the 2017 incentive plan. This was at the same time Luceco was repaying workers who had taken a pay cut during the height of Covid-19 uncertainty, as part of a company-wide effort. 

As Covid-19 hit, Luceco cut worker hours in office roles and reduced "production headcount" in China, while also using the government furlough scheme, saying this resulted in a reduction in overall costs. “We made appropriate use of government job retention schemes, generating £1.2m of benefit,” the company said in its half-year results. 

Luceco handed investors a half-year dividend as well as the suspended final 2019 dividend last month, and has increased its payout policy from 20-30 per share of adjusted earnings per share to 40-60 per cent.  Many companies to receive state aid paid it back before handing out dividends. The combined payout of just under £5m dwarfs the £1.2m in furlough cash received. 

The dividend policy increase looks to hand investors a sizeable payout from this year onwards. There are risks from the current lockdowns in Europe, but the company has already shown its resilience. Buy at 253p.