Better-than-expected profits and a bumper EV charging performance were not enough to stop investors marking the shares down.
Luceco (LSE: LUCE) shares fell 5% on Tuesday even as the electrical products group lifted its full-year profit guidance, with investors seemingly unmoved by a doubling of sales in its EV charger business. The wiring accessories, LED lighting and EV charging specialist reported revenue up 13.4% to £142.6m for the six months to 30 June, with adjusted operating profit rising 14.5% to £15.8m. Its interim dividend was raised 17% to 2.1p.
The drop came despite Luceco's fast-growing Energy Transition arm, dominated by EV chargers, delivering revenue growth of 120%, dwarfing the 6.5% rise from its more established core product lines. The company also flagged that regulatory changes were trimming the per-charger revenue earned through its 'demand flexibility' scheme, which pays for adjusting charging patterns to help balance the electricity grid and now covers more than 30,000 devices, a caveat investors appear to have latched onto.
Statutory operating profit was flat over the period, weighed down by one-off costs including expenses tied to a change at the top, with Dr Thorsten Müller stepping in as chief executive this month.
On the back of the half-year performance, Luceco said it now expects full-year adjusted operating profit to come in ahead of market expectations, an upgrade that would normally be expected to lift a stock trading, as the company noted, on a fairly modest valuation multiple.
The share price reaction suggests investors are focused on the softening economics of the demand flexibility scheme rather than the headline growth, and attention will now turn to whether Energy Transition revenues can sustain their pace as regulatory changes bed in and the new chief executive sets out his priorities.
This report is based on Luceco’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full markets calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: CHUTTERSNAP on Unsplash.
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