Shares in Luceco PLC's (LSE:LUCE), maker of lighting, wiring and electric vehicle chargers, fell on Tuesday as it reported a fall in revenues but higher profits and improved momentum in recent months.
Revenues for the first six months of the year fell 5% to £101.1 million and adjusted operating profit 6.1% to £10.8 million, with both better than its July trading update, with revenue hit by a slowdown seen in the residential repair, maintenance and improvement (RMI) market but the decline has been less than expected.
Customer stocking "has appeared to return to normal levels" at the end of June following post-pandemic destocking, it said, which echoed reports from DS Smith about destocking today.
In other signs of "improving momentum", Luceco reported non-residential demand continuing a positive trend, along with easing material and freight cost pressures.
The EV charger business was reported to have "grown further, with a strong pipeline of new products", helped by the introduction of a new 22kw charger developed in-house to sell into the commercial and higher-end residential market.
With trading since July ahead of expectations, guidance was improved to expect “clear progress on last year” and to exceed the top end of current market expectations, which was a range of £19.2-21.9 million.
Broker Peel Hunt said: "The consensus looks likely to move up by 3-5%, restrained by concerns over the broader UK economy.
"The stock trades on an attractive FCF yield of nearly 10%, and should move higher on the back of management confidence. We find it difficult to envision that earnings does much more than recover to its peak of FY22, and that may be challenging given the uncertainty over Resi."