Lighting manufacturer issues profit warning as supply chain issues bite

LED lighting manufacturer and distributor Luceco says it expects revenue and profits to be substantially down this year as it begins to feel the effect of customers overstocking in 2021.

The company said turnover will fall around £15m and profits £10m this year. Q1 2022 revenue was 3% lower than Q1 2021. Meanwhile, Luceco said the first half of 2021 is proving to be “a tough comparative2 given the more favourable trading environment at the start of last year. There has been an “inevitable slowdown” this year in UK DIY activity, particularly impacting demand for higher margin wiring accessories. Despite the year-on-year decline, Q1 2022 revenue remained 21% higher than pre-COVID Q1 2019 levels, which included like-for-like revenue growth of 10%.

John Hornby, chief executive officer, said: “Luceco has progressed significantly during COVID by adapting rapidly to changing circumstances to make the most of volatile market conditions.

“One of the challenges presented by COVID was to maintain appropriate inventory levels amid unprecedented supply chain disruption. It is now clear that some of our customers have emerged from this period with surplus stock. We can directly control our own inventory levels, which I believe we did well and led to market share gains, but inevitably we have less visibility of, or influence over, stocking choices made elsewhere in our supply chain.

“The normalisation of customer inventory levels will hold back profits in 2022, which is disappointing, but I do not believe it diminishes either the progress we have made over recent years or our long-term potential. We emerge from the pandemic a better business with stronger positions in our existing markets and with significant growth potential in new markets such as EV charging. I remain excited by our long-term potential.”