Luceco (LUCE) H2 2024 earnings summary

Executive summary

• Revenue increased 16% year-over-year to £242.5 million, with organic growth of 5.8% in a market down 2.4-2.5%, reflecting significant market share gains and driven by both organic expansion and acquisitions.

• Operating profit rose over 20% to £29 million, with margin up 0.5 percentage points to 12.0%, driven by operational leverage, product mix, and sourcing improvements.

• Strong performance in the UK RMI sector and rapid growth in the residential EV charging business, with Q1 EV sales up 100% and annual growth of 25.6%.

• Acquisitions of D-Line and CMD contributed £24 million to revenue and nearly £2 million to operating profit, with integration progressing well and synergy realization.

• Demand accelerated in Q4 2024, with positive momentum into Q1 2025.

Financial highlights

• Gross margin reached a record 40.1%, up year-over-year, with gross profit of £97.2m (+18.1%) despite higher raw material and freight costs.

• Adjusted EPS increased 12.6% to 12.5 pence; full-year dividend of 5 pence per share recommended, up 4.2%.

• Net debt ratio at 1.6x, within target range, after £38 million spent on acquisitions.

• Adjusted free cash flow was impacted by higher working capital, mainly due to strong Q4 trading and increased stock in transit from Red Sea disruptions; free cash flow at £3.5m.

• Return on capital invested: 20.2%.

Outlook and guidance

• Strong demand at the end of 2024 has continued into early 2025, with sales out of retailers up 10% year-over-year.

• Expectation of further growth from new product launches, especially in energy transition products (EV chargers, HEMS, batteries), with Home Energy Management System launch in Q2 2025.

• Free cash flow expected to improve after a one-off 2024 outflow, with usual seasonal working capital patterns anticipated in 2025.

• M&A remains a key growth driver, with capacity to invest £100 million by 2029 and a disciplined financial framework.

• Confident in further market tailwinds and operational leverage from integrated business model.