RS Group's underlying profits slump 25%

22nd May 2024 07:15

(Sharecast News) - RS Group saw annual profits drop by a quarter, which the industrial and electrical products provider blamed on weakness in global industrial production and the unwinding of unusual post-pandemic trading tailwinds.

Adjusted operating profit slumped by 25% on a like-for-like basis to £312m in the 12 months to 31 March, as LFL revenues fell 8% to £2.94bn and the adjusted operating profit margin fell to 10.6% from 13.5%.

RS said 2023/24 was a "challenging" year, impacted by weak global industrial demand, with a peak to trough electronics cycle and geopolitical tension affecting customer confidence.

"In addition, a deeper analysis of our performance in 2021/22 and 2022/23 identified that RS was a major beneficiary of unusual post-pandemic trading tailwinds, particularly in electronics," the company said.

Revenues in the EMEA region were up 1% at £1.80bn but down 5% on a LFL basis due to the electronics downcycle and low levels of industrial production across the region. In the Americas, revenues fell 1% to £934m, slumping 13% LFL, while Asia Pacific revenues dropped 20% to £214m, falling 15% LFL.

The company kept its final dividend unchanged at 13.7p, increasing the full-year payout 5% to 22.0p.

Looking ahead, the company said that demand was stabilising but remains subdued, with limited short-term visibility - though indicators suggest some market improvement in the second half of 2024/25.

"We have aligned our strategic actions, simplified our operating model, enhanced our leadership team and clarified accountabilities," said chief executive Simon Pryce.

"We are also reducing our cost base and see the opportunity for significant efficiency improvements in the future. Furthermore, I am particularly pleased with the strategic acceleration our recent acquisitions are delivering."