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RS Group warns of slowdown after year of solid growth

By Josh White

Date: Tuesday 23 May 2023

RS Group warns of slowdown after year of solid growth

(Sharecast News) - Industrial products company RS Group reported a 17% rise in revenue in its final results on Tuesday, to reach £2.98bn, though it warned of a slowdown in trading in the first weeks of the new fiscal period.
The FTSE 100 company put the growth down to a combination of factors, including a 10% like-for-like revenue increase, a 2% contribution from acquisitions, and a 5% currency benefit.

Adjusted operating profit jumped 26% to reach £402.2m for the 12 months ended 31 March, which the firm attributed to strong sales performance, effective cost management, and operational efficiency.

RS Group experienced a one percentage point expansion in its adjusted operating profit margin to 13.5%.

Its adjusted profit before tax saw a substantial increase of 25% to £390.7m, while it recorded growth of 24% in adjusted earnings per share, reaching 63.5p.

The company's operating profit was £383m, representing growth of 24% year-on-year, while its profit before tax expanded 23% to reach £371.5m.

RS Group achieved 24% growth in earnings per share as well, reaching 60.4p.

The board announced a 16% increase in the full-year dividend, amounting to 20.9p per share, after proposing a final dividend of 13.7p.

Looking ahead, RS Group acknowledged the presence of a more uncertain economic environment and aggressive competition in the electronics sector.

However, it said it was confident in its ability to perform well in the industrial market, particularly in the Europe, Middle East and Africa (EMEA) region.

While the first seven weeks of the current fiscal year showed a slowdown in industrial growth, RS said it was comfortable with the current consensus profit expectations for 2024.

The firm said it expected performance to be more heavily weighted toward the second half of the year.

"RS delivered a strong performance in 2023 despite a more challenging macroeconomic backdrop in the second half," said chief executive officer Simon Pryce.

"This reflected our on-going operational excellence initiatives, geographical, industry and product mix, inventory availability and strong pricing.

"Together with the efforts of our people this resulted in good financial results."

Pryce noted that the firm also acquired Domnick Hunter and Risoul and, after the year end, agreed to acquire Distrelec.

"After 30 days in the role, I am excited about the opportunity I see for RS going forward.

"We have a solid business, a sound strategy and great people. We are transitioning to an omni-channel operator in a large and fragmented market.

"We are supplier and increasingly customer focused, who see the value we bring as we move from being a product distributor to a solutions provider."

The company was continuing to invest in operational improvement, customer experience and digital and technical capabilities, Simon Pryce added, and was extending its relevant product offer and value-added service solutions.

"While we are mindful of near-term external challenges, we remain comfortable with current consensus profit expectations for 2024 and have the tools, proposition, financial capacity and roadmap to deliver significant outperformance over time and capitalise on further strategic opportunities to accelerate growth and value creation."

At 0953 BST, shares in RS Group were down 4.5% at 814p.

Reporting by Josh White for


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