Rs Group Plc · LSE:RS1
Rs — Electrocomponents — H1 2020 Earnings Presentation
36 slides from Rs's earnings presentation, Nov 12, 2019
Slide 1: 2020 Half-year Financial Results
ELECTROCOMPONENTS 2020 half-year financial results MAKE MORE 12 November 2019 2020 Half-year Results POSSIBLE
Slide 2: Safe Harbour
SAFE HARBOUR This presentation contains certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans and obj
Slide 3: Overview
OVERVIEW Delivering on our 4.5% like-for-like(1) Revenue growth in Like-for-like(1) strategy to drive revenue growth, all three regions. adjusted(2) PBT driven by market Strong broadly flat due to long-term growth share gains in outperformance at lower gross margin uncertain markets RS PRO with 9.7%
Slide 4: Agenda
AGENDA 1 FINANCIAL RESULTS – HIGHLIGHTS – REGIONAL RESULTS – CURRENT TRADING AND OUTLOOK 2 HOW WE CAN CONTINUE TO DISRUPT AND ACCELERATE – WHAT ARE WE DOING – OFFERING OUR CUSTOMERS MORE – BUILDING A SCALABLE AND EFFICIENT SUPPLY CHAIN 3 SUMMARY AND Q&A 2020 Half-year Results 4
Slide 5: Financial Results
1 FINANCIAL RESULTS Continued progress 2020 Half-year Results
Slide 6: Financial Highlights
FINANCIAL HIGHLIGHTS Strong market outperformance > Profitability impacted by investment > EPS and dividend growth > Like-for-like(1) revenue growth (%) Adjusted(2) operating profit (£m) Adjusted(2) EPS (p) 104.0 105.6 17.2 17.8 9.7 4.1 4.5 (2.1)% (0.6)% (1) RS PRO Digital Group H1 2019 H1 2020 Like
Slide 7: Driving Operational Excellence – Gross Margin
DRIVING OPERATIONAL EXCELLENCE – GROSS MARGIN H1 and FY 2020 > Going forward > Key areas of focus for us on gross margin include: Gross margin down 0.7 percentage points on both a reported and like-for-like basis Continuing to grow RS PRO as a percentage of Group – 0.2 percentage points positive
Slide 8: Driving Operational Excellence – Operating Efficiency
DRIVING OPERATIONAL EXCELLENCE – OPERATING EFFICIENCY We have accelerated investment in strategic initiatives while continuing to drive underlying operating efficiency Our strategic investments will enable us to scale our business and lower our cost to serve over the medium term. Adjusted operat
Slide 9: Summary Income Statement
SUMMARY INCOME STATEMENT Highlights £m H1 2020 H1 2019 Revenue saw a positive impact from currency (£17.6 million) and a positive Reported Adjustments Adjusted(1) Reported Adjustments Adjusted(1) impact from extra trading days (£1.0 million) Revenue 978.7 978.7 911.8 - 911.8 Net finance costs de
Slide 10: Cash Flow
CASH FLOW Highlights £m H1 2020 H1 2019 H1 cash flow has been impacted by an EBITDA 115.7 111.8 acceleration in strategic investment Movement in working capital (38.2) (49.1) We have invested inventory to: – Reposition electronics business and launch of OKdo Movement in provisions (3.1) 2.2 – Pr
Slide 11: Regional Performance – EMEA
REGIONAL PERFORMANCE – EMEA Highlights Like-for-like(1) £m H1 2020 H1 2019 5.4% like-for-like revenue growth change – Primarily driven by market share gains Northern Europe revenue 273.9 254.2 5.2% – All sub-regions grew despite uncertain backdrop Selling more to existing customers Southern Euro
Slide 12: Regional Performance – Americas
REGIONAL PERFORMANCE – Americas Highlights Like-for-like(1) £m H1 2020 H1 2019 3.4% like-for-like revenue growth change – Q1 0.4%, Q2 6.5%, Revenue 263.7 240.2 3.4% – Sales initiatives drive market share gains in Q2 Selling more to existing customers Operating profit 31.3 31.4 (7.1)% – Improved
Slide 13: Regional Performance – Asia Pacific
REGIONAL PERFORMANCE – Asia Pacific Highlights Like-for-like(1) £m H1 2020 H1 2019 1.7% like-for-like revenue growth change – Continued market share gains in Australia / New Zealand and South East Asia Revenue 100.0 95.9 1.7% – Web issues and high board level exposure in Japan impacting performanc
Slide 14: Current Trading
CURRENT TRADING We will continue to drive share Over the first six weeks of H2 we have continued to outperform, and actively manage our delivering modest growth despite weakness in some of our key operating costs while increasing underlying markets. investment in strategic initiatives to position
Slide 15: How We Can Continue to Disrupt and Accelerate: What We Are Doing
2 HOW WE CAN CONTINUE TO DISRUPT AND ACCELERATE WHAT WE ARE DOING 2020 Half-year Results
Slide 16: What We Are Doing
WHAT WE ARE DOING Differentiating to disrupt Actions and investment in H1 Delivering in the medium term 1 Digital leadership Progress towards best-in-class mobile first Ease of use experience ‘Faster than real-time’ Sustainable market share Improved franchise position in electronics Perso
Slide 17: Offering Our Customers More
2 HOW WE CAN CONTINUE TO DISRUPT AND ACCELERATE OFFERING OUR CUSTOMERS MORE 2020 Half-year Results
Slide 18: A Significant Market Opportunity
A SIGNIFICANT MARKET OPPORTUNITY c.£300bn Our market today Global Our market is large $155bn Electronic Global A&C (4) Large & highly fragmented component and highly market market fragmented. We Source: Business Our customers are looking for Source: Wire DiscoverIE have significant fewer partner
Slide 19: Offering Our Customers More – Solutions
OFFERING OUR CUSTOMERS MORE – SOLUTIONS Outsourced Business Process Outsourcing (BPO) Corporate International or nationwide company, 1. Value-added solutions multiple locations, central purchasing, Integrating • Procurement solutions high spend potential • Inventory solutions Human touch & value • M
Slide 20: Offering Our Customers More – By Going Broader & Deeper
OFFERING OUR CUSTOMERS MORE – BY GOING BROADER & DEEPER Limited range Part range Full range Competitors Becoming first choice Using Europe as an example BLE Industrial Our customers are short of time and are 1 2 3 4 5 6 7 looking to consolidate their supplier base Semiconductors BLE Passives Our
Slide 21: Offering Our Customers More – Value
OFFERING OUR CUSTOMERS MORE – VALUE 2020 Half-year Results 21
Slide 22: Building a Scalable and Efficient Supply Chain
2 HOW WE CAN CONTINUE TO DISRUPT AND ACCELERATE BUILDING A SCALABLE AND EFFICIENT SUPPLY CHAIN 2020 Half-year Results
Slide 23: A Scalable and Efficient Supply Chain – Ambition
A SCALABLE AND EFFICIENT SUPPLY CHAIN – AMBITION 2020 Half-year Results
Slide 24: A Scalable and Efficient Supply Chain – Action
A SCALABLE AND EFFICIENT SUPPLY CHAIN – ACTION Infrastructure Transport Shared services & automation We are building a global network strategy We are advancing a project to We have initiated a global shared services which will: optimise our transport strategy with regional centres of expertise
Slide 25: A Scalable and Efficient Supply Chain – Progress
A SCALABLE AND EFFICIENT SUPPLY CHAIN – PROGRESS Significant step forwards in H1 Americas DC German DC Americas DC expansion – DC building now complete – Automation and conveyor installation nearly completed – Stocking plan in development – On track to open summer 2020 – on time and within budget
Slide 26: Summary
3 SUMMARY 2020 Half-year Results
Slide 27: Summary – We Are Making Good Progress
SUMMARY – WE ARE MAKING GOOD PROGRESS 1 2 3 4 UNIQUELY POSITIONED IN DRIVING MARKET BUILDING A LEAN AND STRONG CASH AND ATTRACTIVE MARKET SHARE GAINS SCALABLE MODEL ATTRACTIVE RETURNS Global player in large fragmented marketplace We aim to grow at two times the market, driving We have made good
Slide 28: Q&A
4 Q&A THANK-YOU FOR YOUR CONTINUED INTEREST IN ELECTROCOMPONENTS 2020 Half-year Results
Slide 29: Appendix
5 APPENDIX 2020 Half-year Results
Slide 30: Basis of Preparation
BASIS OF PREPARATION Unless otherwise stated: Figures have been prepared using International Financial Reporting Standards as adopted by the European Union Adjusted measures of profitability and cash flow exclude amortisation of intangible assets arising on acquisition of businesses, substantial
Slide 31: Impact of Adoption of IFRS 16
IMPACT OF ADOPTION OF IFRS 16 The Group adopted IFRS 16 ‘Leases’ on 1 April 2019 with no restatement of Income statement > Cash flow > comparatives Definition of net debt has been updated £0.1 million net decrease to PBT £7.0 million increase in free cash flow to include lease liabilities an
Slide 32: Guidance Points
GUIDANCE POINTS Trading days Foreign exchange Expect around £10 million positive impact on revenue from additional Currency movements increased H1 2020 adjusted profit before tax by trading days in the year to March 2020 £2.5 million Other guidance points If November rates persist we would exp
Slide 33: Group Financial Highlights
GROUP FINANCIAL HIGHLIGHTS (£m) H1 2018 H1Like-for- 2017 H1 2020 H1 2019 Change like Adjusted cash generated from operations 45.5 82.1 change Revenue (£m) 978.7 911.8 7.3% 4.5% Net interest paid (2.5) (2.6) Gross profit (£m) 427.7 404.8 5.7% 2.8% Income tax Adjusted paid profit (£m) operating 105.6
Slide 34: Net Debt Movements
NET DEBT MOVEMENTS Strong balance sheet £m H1 2020 H1 2019 Net debt rose to £220.7 million Net debt at 1 April (122.4) (65.0) Inclusion of lease liabilities as a result Lease liabilities at 1 April 2019 on adoption of IFRS 16 (53.3) - of the adoption of IFRS 16 increased Adjusted free cash flow(
Slide 35: Key Performance Indicators
KEY PERFORMANCE INDICATORS H1 2020 H1 2019 Change Like-for-like revenue growth (%) 4.5 9.8 Group Net Promoter Score 54.7 52.5 4.2% Adjusted operating profit conversion (%) 24.7 25.7 (1.0) pts Adjusted operating profit margin (%) 10.8 11.4 (0.6) pts Adjusted EPS (p) 17.8 17.2 3.5% Return on capital e
Slide 36: Impact of Foreign Exchange
IMPACT OF FOREIGN EXCHANGE Translation Exposure Euro and USD movements to Sterling € to £ $ to £ Reported profit sensitivity to a one 1.50 cent movement in: 1.40 – Euro: £1.4 million 1.30 1.20 – USD: £0.5 million 1.10 1.00 Transaction Exposure Group treasury maintains 3-7 month hedging to smooth