REG - RS Group PLC - Trading Statement

RSAnnouncement

10/01/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230110:nRSJ1477Ma&default-theme=true

RNS Number : 1477M  RS Group PLC  10 January 2023

 
10 January 2023, 7.00am

 

RS Group plc today issues a trading update for the third quarter ended 31
December 2022

 

ONGOING GROWTH FROM PROFITABLE MARKET SHARE GAINS

 

DAVID EGAN, ACTING CHIEF EXECUTIVE OFFICER, COMMENTED: "Our differentiated
proposition continues to resonate as we grow market share with our core
industrial customer base, prioritising our efforts on where we can add
greatest value. We have continued to outperform thanks to the strength of our
high-performing people who are focused fully on delivering our strategy. Tight
control of our pricing, costs and inventory indicates that our full year
adjusted profit will be towards the top end of consensus estimates(1). We are
delighted to welcome Risoul into our Group as we continue to accelerate our
growth opportunities both organically and inorganically. We are mindful of the
more challenging economic backdrop but believe that this also presents
opportunities to drive further profitable market share growth as we continue
our Journey to Greatness."

 

               Like-for-like revenue growth(2)
 Region        Q1 to      Q2 to      Q3 to      9 months to

Jun 2022
Sep 2022
Dec 2022
Dec 2022
 EMEA          16%        14%        12%        14%
 Americas      24%        19%        6%         16%
 Asia Pacific  13%        6%         (8)%       3%
 Group         18%        15%        8%         14%

 

Q3 revenue performance remains solid

·      Like-for-like revenue growth of 8% despite a tougher economic
backdrop and strong comparatives.

·      Industrial products, c. 77% of Group revenue, grew like-for-like
revenue by 15% with low single digit volume growth.

·      Electronics products' like-for-like revenue fell 4%, reflecting
the slower market.

·      EMEA's growth remained strong as our differentiated proposition
resonates with customers, with UK and Ireland performing the best within the
region. We continue to focus on developing our service solutions offer and
working more closely with strategic suppliers to broaden our range while
improving our customer service levels further.

·      Americas is trading against very strong comparative growth (of
37%). Our revenue per day remains strong due to investment in our people,
product range, digital and operational capabilities. Our strengthened
proposition, deeper relationships with customers and suppliers and improved
sales initiatives are delivering market share growth.

·      Asia Pacific's performance continues to be affected by greater
exposure to electronics (c. 35% of region's revenue), low availability of
single-board computing (SBC) product, a challenging geopolitical backdrop and
tough comparatives. Like-for-like revenue excluding SBC was down 2% with
industrial products' like-for-like revenue growing 10%. We continue to focus
on profitable revenue growth and developing our industrial product and service
solutions, helped by our acquisition of domnick hunter.

·      RS PRO like-for-like revenue grew 19% due to greater brand
equity, focused campaigns and better marketing tools.

·      Web like-for-like revenue increased by 9%, with digital
participation of 64%.

Inflationary cost headwinds are being offset by margin optimisation and tight
cost control as we continue to invest

·      Our gross margin continues to benefit from margin optimisation
work and an improved pricing and discount model.

·      Our inventory turn has increased from H1 as our purchases reflect
faster-turning lines and customer demand.

·      Despite inflationary pressures, we are managing costs tightly
while continuing to invest in growth opportunities.

Our performance leads us to expect full year profit to be towards the top end
of consensus estimates

On 3 January 2023 Risoul became part of RS Group and our teams are now working
closely together in developing product and service solutions further across
Americas, including our own brand, RS PRO. We continue to deliver profitable
market share growth, focusing our proposition where we can generate the
greatest value and drive future opportunities. Given our performance year to
date we expect our full year adjusted profit before tax to be towards the top
end of current consensus estimates(1). We continue to be mindful of a more
challenging backdrop but remain confident in the strength of our people and
differentiated proposition. We are focused on driving further market share
gains to generate stronger revenue and high-quality, profitable growth.

 

 

Notes:

1.         Consensus for the year ending 31 March 2023 is revenue of
£2,930 million (range of £2,709 million - £3,043 million), adjusted
operating profit of £373.5 million (£356.8 million - £384.1 million) and
adjusted profit before tax of £365.5 million (£350.4 million - £374.9
million). Source: rsgroup.com/investors/analyst-coverage.

2.         Like-for-like revenue growth is growth in revenue adjusted
to eliminate the impact of acquisitions and the effects of changes in
exchange rates and trading days year on year. Acquisitions are only included
once they have been owned for a year, at which point they start to be included
in both the current and comparative periods for the same number of months.
2021/22 is converted at 2022/23 average exchange rates for the period.

3.         Our profit remains sensitive to movements in exchange rates
on translation of overseas profits. Average exchange rates for the year ended
31 March 2022 for euro and US dollar were €1.176 and
$1.366 respectively. Average exchange rates for the half year ended 30
September 2022 for euro and US dollar were €1.174 and $1.216 respectively.
Every 1 cent movement in the euro has a c. £1.8 million impact on annual
adjusted profit before tax. Every 1 cent movement in the US dollar has a c.
£0.7 million impact on annual adjusted profit before tax.

4.         We expect to see a negative impact of around £10 million
on revenue from fewer trading days in 2022/23 compared to 2021/22.

 

 Enquiries:
 David Egan                       Acting Chief Executive Officer  020 7239 8400
 Lucy Sharma                      VP Investor Relations           020 7239 8427
 Martin Robinson / Olivia Peters  Tulchan Communications          020 7353 4200

 

Conference call details

There will be a conference call for analysts and investors today at 8.00am UK
time. A recording of the conference will be provided shortly after the event
via the investor relations page of the RS Group website:
www.rsgroup.com/investors (http://www.rsgroup.com/investors)

Please find the registration link below to join digitally. It is advisable to
pre-register early to avoid any delays in joining the conference call. To ask
a question, participants will need to be connected by phone.

Pre-registration link: https://webcast.openbriefing.com/rsgroup-jan23/
(https://webcast.openbriefing.com/rsgroup-jan23/)

Participant dial in number:

United Kingdom:                  020 3936 2999

All other locations:              +44 20 3936 2999

Access code:                        039451

Conference call timing

Date: Tuesday, 10 January 2023

Time: 8.00am UK time

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTEAKFNESSDEFA