Electronic products distributor RS Group was the FTSE 100’s biggest faller on Wednesday as it announced a widespread slowing in sales.
As 852.6p per share the RS Group share price was last 4.7% lower in midweek trading.
Profit To Beat Forecasts
The business announced that it expects adjusted operating profit for the financial year to March 2023 “to be slightly ahead of consensus expectations.” Forecasts suggest full-year profits just shy of £3 billion.
It commented that “our gross margin improved, benefiting from a one-off price inflation gain and margin optimisation work.” It added that “tight cost control and more targeted operational investment is partially offsetting inflationary pressures.”
New chief executive Simon Pryce said that “we enter 2023/24 with a strong pipeline of potential acquisition opportunities and confident in our ability to outperform even in a more difficult economic environment as we invest further to expand our solutions offer, broaden our product range, improve our digital experience and extend our technical customer service and support.”
Revenues Cool
However, RS Group warned that sales continued to cool towards the end of the year. It noted that “revenue momentum… slowed in the fourth quarter against tough comparatives.”
For the full-year to March like-for-like turnover across the group rose 10%, it said. But sales growth slowed as the year progressed and clocked in at just
just
1% during the fourth quarter.
Across its Europe, Middle East and Africa (EMEA) region, like-for-like revenues growth halved during quarter four from the previous three months, to 6%.
However, RS Group said that the region “continues to outperform against tough comparatives with volume growth in our industrial ranges offsetting weaker electronics products.”
The business generates almost 60% of revenues from its EMEA customers.
In The Americas, like-for-like sales reversed 4% in quarter four from a year earlier. It was also a big swing from the 6% increase RS Group reported in the third quarter.
The firm said that “The Americas slowed in quarter four against very strong comparatives combined with a softer market, customer destocking and some rebranding disruption.”
Struggles In Asia
Meanwhile, like-for-like sales in Asia Pacific tanked 15% year on year in the fourth quarter, widening from the 8% drop reported in quarter three.
For the full year to March, like-for-like revenues in Asia dropped 1%, whilst in EMEA and The Americas comparable sales increased 12% and 11% respectively.
RS Group noted that “Asia Pacific continued to be impacted by a greater exposure to electronics and single-board computing, geopolitical issues in China and the hit from COVID-19 lockdowns.”
It added that “we continue to manage our costs appropriately as we invest and refocus our offer towards the industrial market and solutions.”
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