REG - RS Group PLC - Trading Statement

RSAnnouncement

25/01/2024 07:00

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RNS Number : 8321A  RS Group PLC  25 January 2024

25 January 2024, 7.00am

 

RS Group plc today issues a trading update for the third quarter ended 31
December 2023

 

OPERATIONAL PROGRESS DESPITE CHALLENGING MARKETS

 

               Like-for-like revenue change(1)
 Region        Q1 to      Q2 to      Q3 to      9 months to

Jun 2023
Sep 2023
Dec 2023
Dec 2023
 EMEA          (3)%       (5)%       (5)%       (4)%
 Americas      (13)%      (15)%      (19)%      (15)%
 Asia Pacific  (19)%      (18)%      (13)%      (17)%
 Group         (7)%       (9)%       (10)%      (9)%

 

Weaker than anticipated markets in Q3

·      Revenue increased 1%, with 14% contribution from the acquisitions
of Distrelec and Risoul.

·      Like-for-like revenue down 10% reflecting weak industrial
sentiment as indicated in continuing soft PMI(2) data and slower unwinding of
customer surplus inventory particularly in electronics and associated
products.

·      Americas' performance reflected higher exposure to A&C(3) and
electronic products and small industrial manufacturers than the rest of the
Group.

·      Like-for-like revenue of our industrial ranges down 6% and
electronics declined 23%.

·      Like-for-like revenue in digital was down 7%, RS PRO grew 2% and
service solutions increased 4%.

·      Notwithstanding continuing geopolitical uncertainty, extended
holiday periods and extreme weather, trading in Asia Pacific is improving,
EMEA is stable and Americas remains challenging with Q4 comparators easing.

Underlying operational progress

·      Ongoing investment in growth accelerators on track.

·      We continue to see opportunities to drive improvements in
operational effectiveness.

·      Accelerated integration of Distrelec and the cost reduction
programme is ahead of plan.

 

SIMON PRYCE, CHIEF EXECUTIVE OFFICER, COMMENTED: "Q3 trading was challenging
reflecting the difficult economic backdrop, geopolitical uncertainty, weak
industrial and electronic markets and customer surplus inventory in
electronics. We are seeing good contributions from our growth accelerators,
with digital outperforming the broader business and RS PRO and service
solutions both growing. Accelerated integration of our acquisitions is
highlighting additional medium-term upside and the potential for significant
further operational improvement benefits over time.

We are making good progress on strategic and tactical actions to improve
operating leverage and drive outperformance. We remain confident in our
ability to accelerate value creation for all our stakeholders when our markets
return to growth and over the longer term."

 

Notes:

1.         Like-for-like revenue change is change 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.
2022/23 is converted at 2023/24 average exchange rates for the period.

2.         Purchasing manager index (PMI) is a survey-based economic
indicator designed to provide a timely insight into business conditions. The
PMI is widely used to anticipate changing economic trends in official data
such as GDP, or sometimes as an alternative gauge of economic performance and
business conditions to official data, as the latter sometimes suffer from
delays in publication, poor availability or data quality issues (Source:
S&P Global).

3.         Automation and control (A&C) product category.

4.         Our profit remains sensitive to movements in exchange rates
on translation of overseas profits. Average exchange rates for the year ended
31 March 2023 for euro and US dollar respectively were €1.158 and
$1.206 respectively. Every 1 cent movement in the euro has a c. £2.1 million
impact on annual adjusted profit before tax. Every 1 cent movement in the US
dollar has a c. £1.2 million impact on annual adjusted profit before tax.

5.         We expect to see a negative impact of around £24 million
on revenue from fewer trading days in 2023/24 compared to 2022/23.

 

 Enquiries:
 Lucy Sharma                      VP Investor Relations  020 7239 8427
 Martin Robinson / Olivia Peters  Teneo Communications   020 7353 4200

 

 

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