Growth across the board
Luceco Plc (LON:LUCE) has reported a strong first-half trading update, according to Zeus Capital, with revenue and profit both moving higher despite a challenging economic backdrop.
The industrials group delivered £143m of revenue in the first half, up 13% year on year, while adjusted operating profit rose 14% to £15.8m. Growth accelerated through the period, with second-quarter revenue increasing 15% compared with 11% in the first quarter.
Zeus Capital said the main driver was Luceco’s energy transition business, where revenue jumped 120% year on year in the first half. That segment now includes EV charging and demand flexibility revenue. Even so, the company’s core business also performed well, posting 6% growth, which the broker said showed resilience in a difficult trading environment.
The update led Zeus Capital to improve its outlook for the business. It raised its forecast for FY27 by 5% and rolled its model forward to include FY28 estimates. The broker’s central valuation now stands at 254p per share, compared with a current share price of 255p. Zeus Capital also kept a low-case valuation of 206p and an upside case of 266p.
Balance sheet remains supported
Zeus Capital said Luceco’s bank net debt edged up to £69.6m as the company invested in inventory ahead of the second half. The broker noted that bank net debt to EBITDA was 1.5 times at the end of the quarter, with the movement mainly reflecting seasonal working capital changes.
The company’s net borrowing position, after IFRS 16 adjustments, was £59.9m. Zeus Capital said Luceco continues to retain significant flexibility around capital allocation because leverage remains within its stated 1-2 times range.
That financial profile sits alongside Luceco’s reputation for steady cash generation. The broker highlighted the group’s integrated production and distribution model as a source of cash flow, as well as a history of accretive acquisitions and consistent earnings growth.
Outlook points to continued momentum
Looking ahead, Zeus Capital said management expects strong demand across product groups and sales channels to continue. The firm also said changes to the regulated mechanics of demand flexibility have begun to crystallise, while recurring revenue per EV charger is expected to moderate towards a more sustainable level early in the second half.
Although Luceco is not providing formal guidance, management expects adjusted operating profit to come in ahead of market expectations in 2027, according to the broker. Zeus Capital said this reflects the strength of the trading update and management’s improved outlook.
The broker’s valuation work is based on a discounted cash flow approach using an 8.9% discount rate. In its central case, Zeus Capital assumes healthy core business performance and continued strong growth in portable power, driven by energy transition products such as EV charging.
Zeus Capital’s profit and loss model shows sales rising from £271.4m in 2025 to £314.6m in 2026, £341.3m in 2027 and £346.5m in 2028. It also forecasts EBITDA of £49.6m in 2026, £54.2m in 2027 and £56.9m in 2028, while earnings per share are expected to rise from 17.2p in 2026 to 19.5p in 2027 and 20.4p in 2028.
The broker’s broader view remains constructive, pointing to Luceco’s position in UK electrification products and systems, exposure to long-term decarbonisation trends, and the potential for continued demand from energy efficiency policies and product innovation.
Summary: Luceco designs and manufactures electrification products and systems for residential and commercial customers, including wiring accessories, LED lighting and portable power products.
