RS Group Plc
RS Group Plc is a global provider of product and service solutions for designers, builders, and maintainers of industrial equipment and operations.
The company distributes over 700,000 stocked products, including electronic components, electrical, automation and control, test and measurement equipment, and engineering tools and consumables, sourced from over 2,500 supplier brands.
They operate across three regions – EMEA, Americas, and Asia Pacific.
Employees: 7,600
Revenue: £2,554m for FY2022
HQ Location: London, England, U.K.
What they do:
They support customers with a broad range of industrial and electronic products and solutions that are essential for the successful operation of their business. They also have their own product brand called RS PRO.
They make customers’ lives easier by offering their skills and capabilities across both digital and supply chains as well as helping them to make key decisions led by data.
Their purpose:
‘Making amazing happen for a better world drives our people to inspire to make a difference, innovate to make more possible and deliver to make it happen. Every day’ - Lindsley Ruth outgoing CEO
They aim to provide an unrivaled choice of industrial and electronic products
Solve problems with innovative solutions
Deliver best-in-class customer service making it easy to do business with them.
Their Future Plan:
Their Strategic Priorities
Their Business Goals
Things to know right now
Rebranding Continues to RS Group
Over the last six months, they have rebranded the company to RS Group. IESA and Synovos have become RS Integrated Supply. Needlers and Liscombe, the acquisitions that they did a little while ago now operate under the brand RS Safety Solutions.
CEO Steps Down
Lindsley Ruth stepped down as Chief Executive Officer of RS Group. CFO David Egan will continue as acting CEO and Ruth will remain available to the company board over the next 12 months.
Risoul acquisition welcomed by RS Group.
The RS Group is looking forward to the opportunity Risoul brings to drive stronger revenue growth within the Americas, especially with the move toward onshoring being seen in the region. Risoul is a major distributor of industrial and automation products and service solutions in Mexico.
Allied in the Americas becomes RS in February
This month their business in the Americas, Allied becomes RS, providing even greater cohesion and consistent brand recognition across the group. They remain confident in the strength of their people and differentiated proposition to turn challenges into opportunities, drive further market share and generate stronger revenue and high-quality profitable growth.
New business Domnick Hunter welcomed to the group
Domnick Hunter is a leading distributor and service provider of major air compression, purification, and filtration products based in Thailand. This business acquisition is expected to expand the RS Group’s products and service solutions offered geographically and are expected to exceed the Group's cost of capital by the third year.
Business Segments:
EMEA
Americas
Asian Pacific
Their Competitors
Brammer
Real Components
MAI/ Primeparts
Axon’ Cable North America
Their financial calendar
Q1: April-June- Earnings 7th July 2022
Q2: July-September - Earnings 6th October 2022
Q3: October-December - Earnings 10th January 2023
Q4: January-March - Around mid-April 2023
Next Earnings Report:
Mid -April 2023
Financial highlights for the first half of the year 22/23
First half revenue performance has been strong, with 16% like-for-like growth
Gross margin of 45.5%, up year-on-year, due to product pricing and tighter discount policy
Adjusted operating profit margin of 13.4%, with adjusted operating profit conversion of 29.6%
Adjusted free cash flow generation strong at £111.9 million with inventory investment supporting growth
Positives from the last earnings report:
Revenue increased by 8% compared to this 3rd quarter last year.
Industrial products, which account for approximately 77% of aggregate revenue, remained strong, delivering 15% growth, including low single-digit volume growth. They continue to gain market share within this area, as evidenced by conversations with their suppliers, industrial production data, and peer reports.
Their main own-brand product range RS PRO revenue increased by 19%, driven by enhanced brand recognition, phone product launches, such as their energy efficiency range, and better marketing tools that have driven greater conversion rates.
Web revenue increased 9% with digital accounting and 64% of overall growth revenue.
Their average order value from loyal customers is growing, reflecting the strength of their proposition. They continue to pivot their proposition and service towards higher-value customers but are developing a more cost-effective service, such as using central sales teams or increased automation to provide a more profitable buffer to both lower-spending customers.
RS Integrated Supply is delivering strong growth, reflecting increasing demand for their service as businesses look to consolidate spending through trusted suppliers with transparent pricing.
Positive regional results include:
EMEA
EMEA, which accounts for 61% of group revenue grew like-for-like revenues by 12%, outperforming their industry peers. They have done this by enhancing their strategic supplier relationships, which enabled them to broaden their product range on offer. They spent time focussing on their corporate and key customer base - their core areas of profitability. They also developed their service solution propositions further with strong growth in their paid-for services offered.
Their strongest performing area is the U.K. and Ireland, accounting for roughly 40% of the region's revenue. This is where their go-to-market strategy is the most developed and they have a lower proportion of electronics revenue and therefore are less impacted by the slowing market and product shortages.
Revenue in the DACH region, which is Germany, Austria, and Switzerland, despite having above-average electronics participation delivered revenue growth marginally ahead of the group as a whole. The strength versus the underlying market reflects the investments they have made to their commercial and operating model.
Americas
Their revenue per day remains strong and they continue to drive their transformation within the region from a supplier of components to an industrial solutions provider with improvements in their focus areas of growth in their B2B customer base and increased average order value within their key and corporate customers due to improved sales force initiatives.
Asian Pacific
Although China is less than 2% of their group revenue, it accounts for approx 15% of the Pacific's regional revenue. They are developing their industrial products offer, which grew 10% this quarter. They are taking market share and are concentrating on more profitable revenue opportunities.
Challenges from the last earnings report:
Electronics revenue fell by 4% during quarter three, reflecting the slowing market with industrial and electronics outperforming more consumer-related electronics.
Revenue from single-board computing products, which account for less than 2% of group revenue and is sold largely within OKdo almost halved due to the lack of supply.
Regional challenges include:
Americas
For the Americas, which accounts for 31% of growth revenue. Like-for-like growth was 6%, against very strong comparatives of 37% last year.
Asian Pacific
Asia-Pacific accounts for 9% of group revenue. Like-for-like revenue fell by 8%. Their revenue performance continues to be affected by several factors such as the slow electronics market, which is 35% of Orient Capital, the lack of single-board computing products due to a global chip shortage, tough comparatives, and the more challenging backdrop in China with COVID lockdown, difficult economic conditions, and the chip export ban.