RS GROUP PLC RESULTS FOR THE HALF YEAR ENDED 30 SEPTEMBER 2022

A STRONG FIRST HALF PERFORMANCE WITH CONTINUED MARKET SHARE GAINS

LONDON, Nov. 7, 2022 /PRNewswire/ --

DAVID EGAN, ACTING CHIEF EXECUTIVE OFFICER, COMMENTED: "We have delivered a strong revenue and profit performance in the first half as our differentiated proposition continues to resonate with all our stakeholders. Our performance has been driven by our people who are aligned to our purpose-led culture and are working hard to improve our customer experience and commercial focus further. We continue to invest in our Group to become stronger, more profitable and to take greater market share. While mindful of a slowing economic backdrop, we remain optimistic that we will continue to outperform the market."

Outperformance reflects the strength of our people, purpose-led culture and differentiated offer

• Our people are the most powerful driver of our success, delivering our strong revenue and profit performance
• Employee engagement score of 78 (2021/22: 75), placing us near the upper quartile of top performing companies
• Ongoing increase in average order value as our proposition gains traction with our core customers
• Industrial products, 74% of Group revenue, grew volumes c. 8% with total like-for-like growth of 21%
• Net Promoter Score of 48.5 (rolling six month⁴), with all regions increasing slightly, remains a Group-wide focus
• Awarded Platinum medal with EcoVadis: we are committed to being net zero in our operations by 2030
• All employees are empowered and aligned to our Journey to Greatness through a share-based award⁵

Margin accretion driven by a tighter commercial focus and operating leverage while investing strategically

• Revenue growth of 21% includes a 16% like-for-like contribution and a 5% currency benefit²
• Gross margin of 45.5%, up 1.8 pts year on year, due to improved pricing and tighter discount policy
• One-off payment of c. £5 million to financially support our employees during these more difficult economic times
• Adjusted³ operating profit margin of 13.4% benefits from gross margin gains and strong operating cost leverage
• EMEA operating profit margin of 15.4% includes ongoing targeted investment in our operating model
• Americas operating profit margin of 17.0% reflects strong operational leverage on the underlying base
• Asia Pacific operating profit margin of 16.4% due to growing scale and a tighter commercial focus
• Adjusted operating profit conversion of 29.6%

Rigorous financial management and balance sheet strength supports organic and inorganic growth opportunities

• Adjusted free cash flow generation was strong at £111.9 million with inventory investment supporting growth
• Modest net cash position, with proforma net debt to adjusted EBITDA of c. 0.6x upon acquisition of Risoul⁶
• Return on capital employed of 31.4%, a 6.7 percentage point increase year on year due to strong profitability
• Increased sustainability-linked loan to £400 million and maturity extended to five years at similar terms
• Acquisitions of domnick hunter, Thailand, and Risoul⁶, Mexico, enhance our product, service and market offer
• Strong pipeline of acquisition opportunities and strict financial, strategic and cultural discipline being maintained

Current trading and outlook
Overall, trading over the first four weeks of the second half has been in line with our expectations. Despite the more difficult economic backdrop, our performance in EMEA remains broadly in line with the second quarter driven by our strong industrial offer, greater proportion of service solutions revenue and improving service levels. Americas continues to deliver strong revenue, against toughening comparatives, as we maintain our investment in our operational capabilities after a period of exceptional growth. Trading in Asia Pacific continues to be affected by the slower electronics market and reduced availability of single-board computing product as well as a more challenging geopolitical backdrop and lockdowns resuming in China.

Notwithstanding the tougher global economic environment, trading remains in line with our and consensus expectations for the full year.

1. Consensus for the year ending 31 March 2023 is revenue of £2,919 million, adjusted operating profit of £372.4 million and adjusted profit before tax of £364.9 million. Source: rsgroup.com/investors/analyst-coverage.
2. Like-for-like change excludes the impact of acquisitions and the effects of changes in exchange rates on translation of overseas operating results, with 2021/22 converted at 2022/23 average exchange rates for the period. Revenue is also adjusted to eliminate the impact of 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. Currency movements increased revenue by £48.7 million and fewer trading days decreased revenue by £8.0 million during the period. Currency movements increased adjusted profit before tax by £5.8 million.
3. Adjusted excludes amortisation and impairment of intangible assets arising on acquisition of businesses, acquisition-related items, substantial reorganisation costs, substantial asset write-downs, one-off pension credits or costs, significant tax rate changes and associated income tax. See Note 11 for definitions and reconciliations of all alternative performance measures.
4. Our customer key performance indicator is Group rolling 12-month Net Promoter Score (NPS). We have updated the methodology from 1 April 2022 to make it more representative of our customer base. The changes made are to weight NPS by percentage of orders; separate out business to business (B2B) from business to consumer (B2C) customers, with B2B becoming our primary metric; and customers that opted out of marketing can be included in the survey. As a result, we currently do not have the data to calculate a Group rolling 12-month NPS (see appendix in 2021/2022 full year results presentation for full details).
5. Awarded to all permanent and fixed-term employees and apprentices employed on 14 July 2022.
6. Acquisition of Risoul is subject to review by Mexican competition authorities and we anticipate it will be completed by the end of December 2022.

Notes to editors: 
RS Group plc is a leading global omni-channel industrial product and service solutions provider to customers who are involved in designing, building and maintaining industrial equipment and operations, safely and sustainably. We stock more than 700,000 industrial and electronic products, sourced from over 2,500 leading suppliers, and provide a wide range of product and service solutions to over 1.2 million customers. With operations in 32 countries, we trade through multiple channels and ship over 60,000 parcels a day.

We support customers across the product lifecycle, whether via innovation and technical support at the design phase, improving time to market and productivity at the build phase, or reducing purchasing costs and optimising inventory in the maintenance phase. We offer our customers tailored product and service propositions that are essential for the successful operation of their businesses and help them save time and money.

RS Group plc is listed on the London Stock Exchange with stock ticker RS1 and in the year ended 31 March 2022 reported revenue of £2,554 million.

Click here to view the full announcement.

SOURCE RS Group plc