RS Group plc today issues a trading update for its first half ended 30 September 2022 ahead of publishing half-year results on 3 November 2022

A STRONG TRADING PERFORMANCE SUPPORTED BY ONGOING MARKET SHARE GAINS

LONDON, Oct. 6, 2022 /PRNewswire/ -- LINDSLEY RUTH, CHIEF EXECUTIVE OFFICER, COMMENTED: "We continue to grow market share, reflecting the strength of our people, our purpose-led culture and differentiated offer. Our active inventory management to support availability, coupled with a more commercial operating model and improved pricing, lead us to expect full year revenue and adjusted profit to be slightly ahead of consensus expectations¹. We remain mindful of the more challenging economic backdrop but believe we have built a strong, sustainable business that can withstand external headwinds and outperform the market. As such, we will continue to invest in our product and service solutions capability and customer experience to support our Journey to Greatness and drive profitable growth, capitalising on the significant market share opportunity we see."

Q2 revenue performance is underpinned by volume growth and reflects ongoing market share expansion

• Like-for-like revenue growth of 15% despite tough comparatives, macro headwinds and slowing economic growth.
• We estimate a 4% benefit to second quarter revenue from foreign exchange.
• Our industrial product ranges outperformed our electronics range, the former growing like-for-like revenue by 21%.
• EMEA delivered broad-based growth across the region, reflecting an improving customer mix and growth in share of customer wallet; evidenced by increased average order value and frequency.
• Americas' performance benefited from focused sales and digital campaigns and high customer demand. A strong inventory position supported availability to drive market share gains. Our acquisition of Risoul remains on track and we anticipate, subject to review by the Mexican competition authorities, it will be completed by late November.
• Asia Pacific's revenue growth was impacted by lack of single-board computing product. Excluding OKdo⁵, revenue growth was 14%. Our industrial product ranges continue to outperform our electronics range.
• Our own-brand, RS PRO, grew like-for-like revenue by 21%, due to greater availability and website personalisation.
• Web like-for-like revenue increased by 15%, with digital participation of 63%.

Ongoing margin and cost optimisation are offsetting cost inflation and operational investment

• Improvements to our pricing and discount model continued to benefit the gross margin.
• We have tightened our inventory commitments, ensuring investment is focused and reflects customer demand.
• Increased inflationary cost pressures are being offset by strong control and positive operating leverage.
• We continue to invest in operational and sustainable improvements to support our Journey to Greatness⁶.

Our first half performance leads us to expect full year profit to be slightly ahead of consensus estimates

Given our strong trading performance year to date we expect our full year revenue and adjusted profit before tax to be slightly ahead of current consensus estimates¹, albeit with a greater first half weighting than historically delivered. While we are expecting slower economic growth in the second half, we have several financial levers we can employ, if appropriate, to protect our profit. However, we remain confident in the strength of our people and proposition, especially in this environment, in 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 £2,858 million, adjusted operating profit of £364.9 million and adjusted profit before tax of £357.7 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 £11 million on revenue from fewer trading days in 2022/23 compared to 2021/22.  
5. OKdo is our technology solutions business focused on single-board computing, Internet of Things and education.
6. We have been awarded a platinum medal by EcoVadis, the independent provider of global sustainability ratings used by many large organisations to help support sustainable purchasing decisions.  

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     

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-oct22/

Participant dial in number:
United Kingdom:                  020 3936 2999
All other locations:              +44 20 3936 2999
Or dial-in online:                 www.incommuk.com/customers/online
Access code:                        653274

Conference call timing
Date: Thursday, 6 October 2022
Time: 8.00am UK time

SOURCE RS