Luceco, which manufactures and distributes LED lighting products and wiring accessories, has been forced to issue a profit warning after discovering errors in valuing the company’s stock which have seen its group financial controller resign
The Shropshire-based company, which operates globally, put out a trading update for the year to 31 December 2017, which said the group has seen gross margins weaken during the second half of the year and will now deliver gross margin of approximately 33%, leading to a £3.5m reduction in profit after tax to £13.2m, versus current market expectations of £16.7m.
A statement to the London Stock Exchange said: ‘Regrettably, the gross margin weakness was not identified sooner due to an incorrect assessment of the value of the group's stock.
‘The group's financial controller has resigned as a result of this error. System improvements are being put in place to make sure this issue does not recur.
‘The principal reasons for the gross margin weakness have been the strengthening of the Chinese RMB versus the US Dollar, alongside the ongoing weakness in GBP and increased commodity costs.’
The group said it expects to mitigate some of these headwinds through internal efficiency savings and overhead reductions. It also intends to increase its foreign exchange and commodity price hedging activities with particular focus on the Chinese RMB versus the US Dollar.
Luceco's revenue forecasts for 2017 and 2018 remain in line with market expectations.
Report by Pat Sweet
