Rs Group Plc · LSE:RS1
Rs — H1 2024/25 Earnings Presentation
39 slides from Rs's earnings presentation, Nov 7, 2024
Slide 1: Half Year Results 2024/25
HALF YEAR RESULTS 2024/25 7 November 2024
Slide 2: The RS safety and values moment
The RS safety and values moment. Our purpose Our vision Our values Why we exist Where we’re going How we do business Making To be the first choice for all our stakeholders amazing WE ARE WE DELIVER ONE happen for a TEAM BRILLIANTLY better world People Customers WE DO THE WE MAKE RIGHT EVERY DAY Supp
Slide 3: Introduction
Introduction Simon Pryce Chief Executive Officer 3 RS Group plc – 2024/25 Half Year Results
Slide 4: Executing at pace, positioning well for when markets improve
Executing at pace… PERFORMANCE PROGRESS IN NUMBERS Revenue Adj. EPS – Markets tougher than anticipated – Customers – Sales per day has stabilised – Products and suppliers £1,441m 18.7p Change: (0)% Change: (16)% – Continued investment, enhancing – Solutions (3)% LFL proposition – Experience Adj. ope
Slide 5: Soft markets but sales per day stabilised
01. WELL POSITIONED IN GROWTH MARKETS Soft markets…. AVERAGE ORDER FREQUENCY* (#) 11 40% RS Group LFL revenue growth Weighted PMI 80.0 10 9 30% 70.0 8 20% 7 60.0 6 10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 20/21 21/22 22/23 23/24 H1 24/25 0% 50.0 AVERAGE ORDER VALUE* (£) (10%) 40.0 2
Slide 6: Financial review
Financial review Kate Ringrose Chief Financial Officer 6 RS Group plc – 2024/25 Half Year Results
Slide 7: H1 2024/25 performance
H1 2024/25 performance… Revenue Adj. operating Adj. operating Adj. profit Adj. earnings (£m) (3)% LFL profit (£m) (13)% LFL profit margin (%) (1.3) pts LFL before tax (£m) (16)% LFL per share (p) (16)% LFL 1,447 1,441 156 10.8 143 22.3 134 9.3 119 18.7 H1 23/24 H1 24/25 H1 23/24 H1 24/25 H1 23/24 H1
Slide 8: Revenue broadly flat
Revenue broadly flat… (£m) 1,447 (45) 45 (25) 23 1,441 (4) 1,400 1,200 , 1,000 H1 2023/24 Volume & mix Price Acquisitions FX Days H1 2024/25 inflation annualisation impact …with market decline offset by acquisitions 8 RS Group plc – 2024/25 Half Year Results
Slide 9: Reduction in costs
Reduction in costs…. (£m) Restructuring Restructuring Organic & integration & integration (550) Acquisitions Management Inflation FX investment costs 1 benefits annualisation 1 action DC exit (12) 5 (500) (3) (5) 13 (16) 7 5 (500) (477) (483) (450) (400) (350) (300) H1 2023/24 H1 2024/25 H1 2024/25
Slide 10: Operating profit margin
Operating profit margin… As expected, inflation benefit unwinding in Volume/ mix H1 11% 10.8% (0.8%) Gross margin (1.0%) Operating 10% leverage FX Acquisition 0.5% (0.1%) 9.3% annualisation (0.1%) 9% 8% 7% 6% H1 2023/24 H1 2024/25 …reflects expected unwind of inflation benefit 10 RS Group plc – 2024
Slide 11: EMEA: inflation unwind impacted H1
EMEA: As anticipated, inflation unwind impacted H1… HIGHLIGHTS Like-for-like Revenue performance reflects: H1 2024/25 H1 2023/24 Change change – Weak industrial production activity, Revenue £879m £861m 2% (3)% especially DACH1 Operating profit £95m £114m (16)% (17)% – RS PRO and service solutions ou
Slide 12: Americas: strong cost discipline
Americas: Strong cost discipline… HIGHLIGHTS Like-for-like Revenue performance reflects: H1 2024/25 H1 2023/24 Change change – Market weakness in US and Canada Revenue £452m £476m (5)% (3)% – Strong market and service offer in Mexico Operating profit £42m £47m (9)% (7)% – Softer trading from larger
Slide 13: Asia Pacific: stable revenue performance
Asia Pacific: Stable revenue performance… HIGHLIGHTS Like-for-like Revenue performance reflects: H1 2024/25 H1 2023/24 Change change – Ongoing economic pressure across region Revenue £110m £110m 0% (2)% – Industrial sector remained in growth Operating profit £3m £2m 72% 100% – Slow electronics marke
Slide 14: Cash flow improvements
Cash flow improvements… Adjusted free Working capital / Inventory turn £89m adjusted free cash flow: cash flow (£m) revenue (%) (x) 89 2.6 – Adjusted operating cash flow conversion of 103% 2.3 26.3 24.7 Working capital decrease due to: – Proactive monitoring of receivables and collection 26 – Invent
Slide 15: Second half 2024/25 considerations
Second half 2024/25 considerations – FY organic investment: – Likely lower end of guided range of £35m – £45m – Cost savings and efficiency program in-year benefit: – Expect H2 similar to H1 – Restructuring and integration costs: – Expect H2 similar to H1 – Cost inflation to continue at similar leve
Slide 16: Strategic progress, operational improvement
Strategic progress, operational improvement Simon Pryce Chief Executive Officer 16 RS Group plc – 2024/25 Half Year Results
Slide 17: Differentiated proposition driving market share gains
02. DIFFERENTIATED PROPOSITION DRIVING MARKET SHARE GAINS Continuing to invest… Customers Target high lifetime value customers who buy a broad mix of industrial MRO products in small volumes Operational Products and excellence suppliers Leverage efficient Focus on technically led First choice for ph
Slide 18: Focussing on higher potential value customers
02. DIFFERENTIATED PROPOSITION DRIVING MARKET SHARE GAINS Focussing on higher potential value customers… Customers WHY CORPORATE CUSTOMERS REVENUE GROWN BY 5% Strategic engagement, accelerated growth potential, tailored costs to serve WHAT WE’VE DONE (H1 2024/25) – Global customer relationship manag
Slide 19: Range expansion and curation
02. DIFFERENTIATED PROPOSITION DRIVING MARKET SHARE GAINS Range expansion and curation… Product and suppliers WHY Technical and associated product expansion, share of wallet growth, strategic supplier support WHAT WE’VE DONE (H1 2024/25) – Global product categorisation, curation pilots launched – La
Slide 20: Focussed service and solutions offering
02. DIFFERENTIATED PROPOSITION DRIVING MARKET SHARE GAINS Focussed service and solutions offering… Solutions WHY Deliver valued, scalable solutions, builds greater Revenue driven by eProcurement in EMEA (rolling 12 months) strategic engagement, drives product pull- through WHAT WE’VE DONE (H1 FY25)
Slide 21: Enhancing our customer experience
02. DIFFERENTIATED PROPOSITION DRIVING MARKET SHARE GAINS Enhancing our customer experience… Experience Operational excellence WHY Seamless customer engagement, increased loyalty, % of RS website searches in the UK returning a ‘null’ result greater insights WHAT WE’VE DONE (H1 2024/25) – Upgraded we
Slide 22: Driving operational excellence
02. DIFFERENTIATED PROPOSITION DRIVING MARKET SHARE GAINS Driving operational excellence… Operational excellence WHY Efficient physical, digital and process infrastructure, improved operating leverage and drop-through WHAT WE’VE DONE (H1 2024/25) WHAT WE’RE DOING (H2 2024/25) Physical: Physical: – D
Slide 23: Acquisitions on track to deliver ROIC>>WACC
04. DISCIPLINED ACQUISITIONS ACCELERATING GROWTH On track to deliver Acquisitions on track to deliver… ROIC>>WACC within 3 years WHAT WE’VE DONE (H1 2024/25) WHAT WE’RE DOING (H2 2024/25) – Expanded presence into Trinidad and Tobago – Grow solutions by establishing eProcurement – Rolled out transact
Slide 24: Increasing confidence in exciting future
Increasing confidence in exciting future Simon Pryce Chief Executive Officer 24 RS Group plc – 2024/25 Half Year Results
Slide 25: Medium-term targets and strong H1 underlying progress
05. SIGNIFICANT VALUE CREATION OPPORTUNITY FOR ALL STAKEHOLDERS As set out at our recent investor event… 1. Well positioned in growth markets MEDIUM-TERM TARGETS 2. REVENUE GROWTH Differentiated proposition driving market share gains 2X MARKET 3. Investing to improve efficiency and operating leverag
Slide 26: Questions?
Questions? 26 RS Group plc – 2024/25 Half Year Results
Slide 27: Disclaimer
Disclaimer This presentation contains certain statements, There are a number of factors, which may be statistics and projections that are or may be beyond the control of RS Group plc, which could forward looking. The accuracy and completeness of cause actual results and developments to differ all su
Slide 28: Appendix
Appendix 28 RS Group plc – 2024/25 Half Year Results
Slide 29: Guidance points
Guidance points – Additional trading days in 2024/25 are expected to increase revenue Trading days by around £27 million (of which £23m included in H1 24/25) – Key exposure: net buyer of US dollars, net seller of euros and other currencies FY 24/25 USD EUR impact FY 24/25 average exchange rate assum
Slide 30: Guidance points (continued)
Guidance points (continued) – Cost actions on track to deliver >£30m annualised savings in 2024/25 Total £m FY24 H1 24/25 H2 24/25 FY25 2yrs Restructuring costs (8) (1) (4) (5) (13) Integration costs (5) (8) (4) (12) (17) Total costs (13) (9) (8) (17) (30) Cost actions Restructuring benefits 8 10 8
Slide 31: Income statement
Income statement Like-for-like H1 2024/25 H1 2023/24 Change change Revenue £1,441m £1,447m (0)% (3)% Gross profit £616m £633m (3)% (4)% Gross margin 42.7% 43.7% (1.0) pts (1.1) pts Operating profit £120m £139m (13)% (12)% Adjusted operating profit £134m £156m (14)% (13)% Adjusted operating profit ma
Slide 32: Operating profit summary
Operating profit summary £m H1 2024/25 H1 2023/24 (restated1) EMEA 95 114 Americas 42 47 Asia Pacific 3 2 Region operating profit 140 162 Central costs (7) (6) Adjusted operating profit 134 156 Amortisation of acquired intangibles (14) (13) Acquisition-related items - (4) Operating profit 120 139 1.
Slide 33: Cash flow
Cash flow £m H1 2024/25 H1 2023/24 Operating profit 120 139 Add back depreciation and amortisation 42 41 EBITDA 162 179 Add back impairments and loss on disposal of non-current assets 1 - Movement in working capital 4 (79) Defined benefit retirement contributions in excess of charge (6) (5) Movement
Slide 34: Net debt position
Net debt position – Lease liabilities of £57 million (H1 2023/24: £76 million) Net debt – Net debt to adjusted EBITDA of 1.3x, EBITA to interest 9.3x (H1 2023/24: 18.8x) £m H1 2024/25 H1 2023/24 – Headroom to Group’s banking covenants of net debt to adjusted EBITDA less than 3.25 times and EBITA to
Slide 35: Financial key performance indicators
Financial key performance indicators Like-for-like H1 2024/25 H1 2023/24 Change change Like-for-like revenue change (3)% (8)% Adjusted operating profit conversion 21.7% 24.6% (2.9) pts (2.3) pts Adjusted operating profit margin 9.3% 10.8% (1.5) pts (1.3) pts Adjusted earnings per share 18.7p 22.3p (
Slide 36: Non-financial key performance indicators
Non-financial key performance indicators Customer People Health and safety 49.9 72 36% 0.46 Net Promoter Score Employee engagement Percentage of management that All Accidents (Group, R12) are women (per 200,000 hours) Environment 1.9 2,800 1.55 85% Carbon intensity Carbon emissions Packaging intensi
Slide 37: Central cost allocation change
Central cost allocation change RS Group plc announced at the final results in May 2024 that the definition of central costs would be limited to costs solely related to support Group head office activities. Costs incurred to directly support the Group’s operating segments will be allocated accordingl
Slide 38: Product category reclassification
Product category reclassification – We have reclassified our product categories to better align with customer procurement needs and supplier classifications – Majority of our electronics products are aligned to specific industrial applications – Of our historic Electronics category (previously c. 18
Slide 39: Basis of preparation
Basis of preparation Unless otherwise stated – Figures have been prepared using UK-adopted international accounting standards – Adjusted excludes amortisation and impairment of intangible assets arising on acquisition of businesses, acquisition-related items, substantial reorganisation costs, substa