Luceco (LUCE) returned to revenue growth in 2019, growing UK sales by 5.8 per cent to £138m. The manufacturer and distributor of wiring accessories, LED lighting and portable power products derives four-fifths of its total revenue from the domestic market. Gross profit jumped by 30 per cent to £65m with a 7.2 percentage point margin expansion to 37.5 per cent. This was driven by lower cost product designs and manufacturing efficiencies, as well as the full-year impact of price increases implemented in 2018.
Further headway was made on the working capital front, improving stock management and the time taken to collect customer payments – inventory days reduced from 112 to 105. Given nearly all of its products are sourced from China, this level of inventory helped mitigate supply chain disruption from Covid-19 in the first quarter of 2020.
With production now up to full speed, demand has been hit. Second quarter revenue has dropped to 50 per cent of normal levels, although management says portable power products sales – such as extension cords – have held up better as people require such items when working from home.
Liberum expects pre-tax profit and EPS will fall to £7.3m and 3.7p in 2020, rising to £13.1m and 6.7p in 2021.
| LUCECO (LUCE) | ||||
| ORD PRICE: | 82.8p | MARKET VALUE: | £ 131m | |
| TOUCH: | 82.7-82.9p | 12-MONTH HIGH: | 154p | LOW: 39p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 30p* | NET DEBT: | 58% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 103 | 8.3 | 4.2 | nil |
| 2016 | 134 | 9.1 | 4.6 | 0.3 |
| 2017 | 168 | 12.3 | 6.2 | 0.8 |
| 2018 | 164 | 3.0 | 0.9 | 0.6 |
| 2019 | 172 | 17.1 | 8.3 | 0.6** |
| % change | +5 | +470 | +822 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes 22.6m assets of £22.6m, or 14p a share, **Interim dividend only, no final dividend declared | ||||
