RS Group PLC Shares Results for Year Ending March 31, 2023

Summary

May 23, 2023 - Simon Pryce, CEO, commented, “RS delivered a strong performance in 2022/23 despite a more challenging macroeconomic backdrop in the second half. 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. We also acquired domnick hunter and Risoul and, after 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. We continue to invest in operational improvement, customer experience and digital and technical capabilities, and are extending our 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 2023/24 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.”

 
Strong financial performance driven by availability, inflation and improved adjusted operating profit conversion

• Revenue growth of 17% includes 10% like-for-like, 2% acquisition contribution and 5% currency benefit
• Industrial products, 76% of Group revenue, grew like-for-like revenue by 16% with electronics products, 23% participation, growing 1%
• Adjusted operating costs grew 18%, 13% like-for-like, reflecting inflation, ongoing strategic investment of c. £20 million and c. £10 million of ad hoc payments to support our people during more difficult times
• Adjusted² operating profit margin grew 1.0 pts to 13.5%, with adjusted operating profit conversion³ of 29.7%
• Final dividend increased to 13.7p; full-year dividend of 20.9p

 
Ongoing investment in operational and strategic improvements

• Enhanced product and content management work to develop our proposition
• Freight and distribution optimisation work as our model becomes more local, regionalised and sustainable
• Detailed customer analysis to understand our customers better and improve our service offer

Good financial management and cash generation supporting organic and inorganic investment

• Adjusted free cash flow of £264 million despite inventory investment
• Net debt of £113 million includes £234 million for acquisitions, with net debt to adjusted EBITDA of 0.2x (0.9x proforma post Distrelec)
• Return on capital employed remains strong at 30.8%, due to profitability and maintained financial discipline
• Acquired domnick hunter and Risoul and announced agreement to buy Distrelec post year end⁴ 

Current trading and outlook

We continue to outperform in the industrial market, especially in EMEA, although trading over the first seven weeks of 2023/24 reflects a slowing in industrial growth, as indicated by PMI data, and continued weakness and aggressive competition in electronics. Despite this more uncertain economic environment and the strong comparator period last year, we are comfortable with current consensus profit expectations⁵ for 2023/24, albeit with performance more weighted to the second half.

About RS Group

RS Group plc provides product and service solutions that help our customers design, build, maintain, repair and operate industrial equipment and operations, safely and sustainably. We stock more than 750,000 industrial and electronic products, sourced from over 2,500 leading suppliers, and provide a wide range of product and service solutions to 1.1 million customers.