RS Group H1 2026 Earnings Call Transcript

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Provided by Quartr
November 6, 2025

Key Takeaways

  • Neutral Sentiment: For the six months to 30 September 2025, group revenue fell 3% reported (‑1% like‑for‑like excluding FX and trading days) with Q2 returning to marginal growth; adjusted profit and earnings were down single digits and the interim dividend was increased 2% to £0.087.
  • Positive Sentiment: Cash and balance sheet strengthened — adjusted free cash flow was broadly flat with cash conversion of 107%, net debt reduced to £333m (around 1x EBITDA), providing headroom for continued investment and selective M&A.
  • Positive Sentiment: Strategic operational investments are delivering early traction — the new customer data platform and CRM generated >340,000 interactions and identified >50,000 sales opportunities, while site findability and checkout improvements raised add‑to‑cart and basket conversion rates and new product introductions tripled to >30,000/month.
  • Positive Sentiment: Cost and efficiency programs are material — RS has delivered over £47m of restructuring/integration savings to date, is on track for >£15m this year, and targets at least 150bp of margin upside over time.
  • Neutral Sentiment: Regional performance was mixed — Americas and APAC showed growth (US book‑to‑bill stable), while EMEA was slightly down with Germany and Mexico still weak due to manufacturing softness, tariffs and project deferrals.
AI Generated. May Contain Errors.
Earnings Conference Call
RS Group H1 2026
00:00 / 00:00

Transcript Sections

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Operator

Hello everyone, and thank you for joining us today for the RS Group 2025/2026 half-year results call. My name is Sammy, and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad to remove yourself from a question queue. I'd now like to hand over to your host, Simon Pryce, CEO of RS Group, to begin. Please go ahead, Simon.

Simon Pryce
Simon Pryce
CEO at RS Group

Thanks very much, and good morning everyone. Welcome to the RS Group interim results call for the six-month period ending 30th September 2025, and thank you all for joining us this morning. The presentation should take around 30 minutes, and then we'll have some time at the end for questions, but we'll try and make sure that we finish the call by no later than 10:00 A.M. I'm going to start by summarizing our pleasing first-half performance. Kate will then run through our inline financials and what's driving them, both at a group and a regional level, and then I'll conclude by sharing with you the good underlying progress that we're making as we make the business better at RS and position ourselves to accelerate growth, improve efficiency, and drive better operating leverage over time.

Simon Pryce
Simon Pryce
CEO at RS Group

Before we get into the details of this morning's presentation, we would like to start our meetings, virtual or physical, at RS with a health and safety moment and a values highlight. Although we're virtual, please make sure you do take a safety moment to identify your nearest exit and safest evacuation route in the event of an emergency. For our values highlight, I'd just like to call out and celebrate our new multi-year global partnership with SolarAid to support their mission to light up lives across rural Africa.

Simon Pryce
Simon Pryce
CEO at RS Group

As our new global charity partner, their and our purposes and values are completely aligned, and as one team delivering brilliantly, doing the right thing, and making every day better, we will bring our people, our innovation, our technical expertise, and our suppliers and partners together to help raise over GBP 1 million to partner with SolarAid to deliver clean, safe solar light and power to over 150,000 people living in rural communities without electricity. This is very much RS demonstrating our values in action and continuing to make amazing happen for a better world. As you know, we're on a journey to create a better business here at RS, and I'm really pleased with the progress that we've made in the first half. Against the background of a challenging geopolitical environment and uncertain markets, our data tells us that we're continuing to outperform.

Simon Pryce
Simon Pryce
CEO at RS Group

We're delivering financial outcomes that are in line with expectations. We're actively managing our business to reflect the trading environment we find ourselves in, but we're continuing to invest in the strategic and operational initiatives that are already beginning to deliver, which underpins our confidence, our continued confidence in returning RS Group to growth and through focused investment and effective execution, delivering on those medium-term financial targets and much-improved value creation that we first talked about at our Capital Markets Day last September. Before Kate takes you through the financials, I think it's worth looking at what's going on in our markets, which remain uncertain, although I have to say a bit more stable. As we shared with you at our Capital Markets Day, high-service industrial MRO distribution markets are large, complex, and multifaceted, and they're also generally fragmented, as are the competitors who play in them.

Simon Pryce
Simon Pryce
CEO at RS Group

It is for this reason that we have highlighted that the best way of thinking about our future direction of travel is to look at PMI data, and that our revenue growth is very closely correlated with trends in PMI data, typically lagged by between three and six months. During the first half of the year, this remained true. As you can see from the chart on the left and in the red circles, PMI data, which is the gray bars, have been improving since a low point in our fiscal Q3 last year, but it still does remain below 50, suggesting modest contraction, and markets in the first half were probably a bit slower than we anticipated.

Simon Pryce
Simon Pryce
CEO at RS Group

Against this backdrop, our revenue, shown by the red line, has stabilized and indeed started to move in the right direction over the last couple of quarters, and we actually returned to marginal growth in Q2. As the chart of the regional PMI data on the right indicates, and as you'll hear from Kate in a minute, this was reflected in good growth in Americas and APAC, broadly offsetting a small decline in EMEA. Now, whilst PMI data is a good indicator of the likely future direction of travel, we use other data sources to assess our relative performance, and probably the most relevant of these are web searches and supplier-reported channel shares. We monitor Google traffic for relevant search terms, and these were down 6% in the first half versus our own group and indeed digital performance, which was only down 2%.

Simon Pryce
Simon Pryce
CEO at RS Group

In the chart on the left, you can see that we've broken it down by product category across EMEA, where we have the most detailed data, and in all four of our major product categories, you can see that we are performing significantly better than the market. On the right-hand side of the chart on channel shares, supplier data continues to indicate that we're gaining share from other distributors, across virtually all of our industrial product categories in Europe, and if anything, this has probably picked up a bit in the first half of this year, which is all indicative of our continued outperformance, which is enabled by our differentiated proposition. With that market background, let me pass you over to Kate, who'll take you through the numbers and the drivers behind them.

Kate Ringrose
Kate Ringrose
CFO at RS Group

Thank you, Simon, and good morning, everyone. I'd like to echo what Simon has said. We've made considerable progress over the last couple of years, and although the market environment remains uncertain, RS Group is in a much better place today. There's plenty of evidence to support this in the first half. In Q2, we moved into growth for the group. We're actively demonstrating strong cost management, managing pricing, and cash flow alongside discipline in investment. Revenue decreased by 3% compared with last year on a reported basis, on a like-for-like, the decline is 1% after excluding impact of the weaker dollar and reduced trading days. EMEA performed relatively well in a weak industrial environment, and performance in the Americas and Asia-Pacific was positive. I'll go through the revenue bridge on the next slide.

Kate Ringrose
Kate Ringrose
CFO at RS Group

Lower revenue and increased investment drove single-digit reductions in our adjusted profit and earnings measures, despite the benefit of a slightly higher gross margin, and cash flow conversion was very strong at 107%, with continued good working capital management and growth stable at 15%. In our unadjusted free cash flow, we also saw a GBP 10 million cash contribution following a successful legal challenge. We're increasing the interim dividend by 2% to GBP 0.087 per share, in line with our progressive dividend policy and our expectation of low single-digit growth until cover grows back to historical levels. There are a few things to highlight on the progress we're making in our growth accelerators at the bottom right corner of this page.

Kate Ringrose
Kate Ringrose
CFO at RS Group

As Simon has illustrated, in current market conditions, the digital revenue decrease of 2% is indeed a resilient performance, supported by the investment in web converter and a 9% growth in our e-procurement solution for higher-value customers. That has largely offset reduced revenue from typically lower-value web-only customers, including the temporary impact of our U.S. digital platform upgrade. This growth in e-procurement was also reflected in a 7% increase in like-for-like service solutions revenue, alongside improved revenue and profit from RS Integrated Supply, following the strategic refocusing of that business under new leadership last year. RS PRO grew sales by 4% with growth in all of our regions. We continue to develop our product offering and improve the marketing of our range, and RS PRO now accounts for 14% of group revenues. Let's turn to look at revenue in a bit more detail.

Kate Ringrose
Kate Ringrose
CFO at RS Group

As I said, like-for-like revenue fell 1% compared with last year after excluding the impact of FX and working days, and in this chart, we also show the temporary impact on revenue of the U.S. digital platform upgrade. Most of that impact was in the first quarter, with steady recovery through Q2, and adding this back, like-for-like revenue would have been flat in the first half. We also saw a reduced average order frequency and a lower number of customers as demand fell in markets that were in contraction through the period, including some expected customer attrition in Distrelec as customers migrated to the RS proposition. However, this was offset by the benefit of active pricing management, including supplier pricing pass-through, and importantly, the increased revenue from our higher-value corporate and managed key customer accounts.

Kate Ringrose
Kate Ringrose
CFO at RS Group

These factors resulted in a 3% increase in the average order value in the first half. At a product level, the more resilient categories of Facilities and Maintenance, Mechanical and Fluid Power, PPE and Site and Safety grew 3%. Automation and Control and Electrification was down 2%, producer signs of recovery. Demand for semiconductors continues to be weak, with end markets remaining challenging. Turning to costs and cost management in the half, it has been good, and I'm really pleased with the discipline evidenced across the group. We've held costs flat half on half despite inflation and increased organic OpEx investment, and the net impacts of inflation, a favorable FX impact on the weaker dollar, and a GBP 5 million increase in organic OpEx investment was largely offset by restructuring and integration benefits, including those in Distrelec, which was an additional GBP 9 million in the first half.

Kate Ringrose
Kate Ringrose
CFO at RS Group

We're on track to comfortably achieve our target of over GBP 15 million of benefits for the full year. Within an ongoing cost base, our efficiencies and savings, which have also enabled us to absorb investments in people, capability, and the migration of technology spend to the software-as-a-service model for solutions partners. This results in an ongoing cost base of GBP 482 million for the half, effectively flat on last year. One of the benefits relates to a GBP 3 million profit on the disposal of part of the Distrelec Nordic business to our existing export partners, and the cost to deliver the restructuring and integration savings in the half was GBP 4 million. Underlying operating margin, excluding the elevated organic investment OpEx, was flat through the effective management of pricing and costs. The net impact of lowering revenue and cost inflation reduced margin by 100 basis points.

Kate Ringrose
Kate Ringrose
CFO at RS Group

However, this was offset by restructuring and integration benefits alongside a reduced cost to deliver these. In addition, we have been delivering an increasing OpEx investment spend through the transition period, with the year-on-year increase reducing margin by 40 basis points, shown to the right of the chart. These investments will drive improved margins over time from our strengthened differentiated proposition and improved operating leverage. Moving on to the regions now and starting with EMEA, which delivered a resilient revenue and operating profit performance in weak economic conditions. PMIs were below 50 in our main markets for the period, indicating market contraction, and like-for-like revenue was down 2%, which includes the anticipated Distrelec customer attrition post the closure of the Distrelec DC, which in and of itself saved us over EUR 10 million per year. Now let's build out by markets.

Kate Ringrose
Kate Ringrose
CFO at RS Group

Business confidence remained weak in the U.K., but we relatively outperformed. Our performance in France continued to be strong, and our targeted products and sales offering to more resilient industry verticals were successful. For example, those connected to process manufacturing, such as food and beverage. The DACH market remains challenging, with volumes remaining weak in the manufacturing and automotive industry. Gross margin was slightly up, with early benefits of pricing coming through, and operating costs increased by less than inflation through active cost management and strong synergy delivery. It largely reflected the reduction in revenue on a like-for-like operating profit, was down 11% to GBP 86 million, and much of the increased organic OpEx investment resides in EMEA, which was a main factor in the operating margin decline to 10%. Moving to Americas, which on a like-for-like basis grew by 1%.

Kate Ringrose
Kate Ringrose
CFO at RS Group

On a reported dollar basis, it was down 5%, which is largely a function of a weaker US dollar. You can see the recovery in digital sales since May, which were impacted following the upgrade of our digital platform in Q1, and if we adjust Americas like-for-like revenue for the temporary impact, H1 revenue would have been up around 5%. Growth rates accelerated through Q2 in the U.S. and Canada against a backdrop of resilient economic sentiment. Markets in Mexico remain more volatile, with persistent concerns over tariffs and their impact on the wider Mexican economy, and this has led to a number of larger customers deferring capital expenditure, which was the significant factor in a decrease in like-for-like revenue in Mexico.

Kate Ringrose
Kate Ringrose
CFO at RS Group

Gross margin for the region was slightly up, with a strong performance in the U.S. against the tariff backdrop, more than offsetting increased cost of sales in Mexico due to unfavorable dollar-to-peso movements. Inflation and strategic investment in digital and pricing optimization were reflected in operating costs. Like-for-like operating profit was down 9%. Profit was down in Mexico, which reflected reduced revenue and gross margin. However, profit was slightly up in the U.S. and Canada from improved revenue and gross margin. Let's move on to Asia Pacific. We have been seeing positive momentum here since the final quarter of last year, and revenue was up 4% on a like-for-like basis. We delivered growth in Australia and New Zealand, with last year's Trident acquisition performing ahead of expectations. We also delivered growth in Southeast Asia and Japan and Korea.

Kate Ringrose
Kate Ringrose
CFO at RS Group

Greater China was impacted by very weak performance in Hong Kong, reflecting significantly lower spend from a few large state-owned customers linked to government budgetary constraints. Gross margin benefited from favorable pricing and lower inventory provisions, and with cost broadly stable, we saw a strong increase in operating profit, reflecting improved operational leverage. Right, let's move on to cash. Since where our continued focus has delivered strong cash conversion, our adjusted free cash flow was broadly flat, with our working capital metrics stable. This resulted in cash flow conversion of 107%, well in excess of our target of over 18%, and this was largely a function of disciplined inventory management in response to revenue demands. Stable capital of GBP 25 million translated to 1.1x depreciation as we continue to invest in our physical and system infrastructure.

Kate Ringrose
Kate Ringrose
CFO at RS Group

Our well-funded pension obligations mean we do not anticipate any further additional company contributions for these schemes. Net debt decreased to GBP 333 million, continuing a downward trend over the last 12 months, and is now equivalent to one-time net debt to EBITDA at the low end of our 1x-2x range. Our cash-generative business model's strong balance sheet and facility headroom provide us with plenty of capacity for continued investment and selective M&A. There is no change to our capital allocation policy. Firstly, we prioritize organic investments in order to significantly improve our efficiency and our market position. Secondly, financially disciplined acquisitions in this global fragmented market can accelerate our strategy, especially small bolt-ons. Third, we believe in sharing cash generated with our shareholders through a progressive dividend policy.

Kate Ringrose
Kate Ringrose
CFO at RS Group

If we cannot productively invest excess capital over a reasonable period of time, we will seek to return this to shareholders. Finally, from me, our full year outlook, which is pretty consistent with what we indicated at the start of the year. There are a few points of emphasis for the second half. We now expect our gross margin to be a bit above 43%, so higher than last year. Our organic investment to deliver our strategic initiatives in OpEx is still likely to be at the lower half of the guided range of GBP 35 million-GBP 45 million per annum, and depreciation and accruing centers are expected to be weighted to the second half. We have demonstrated our active cost management in relation to the market environment, and we will continue to do so.

Kate Ringrose
Kate Ringrose
CFO at RS Group

There are further guidance points, including trading days and forex, and a summary of our restructuring benefits to date, which are included in slide 29 of the presentation. I'll now hand you back to Simon.

Simon Pryce
Simon Pryce
CEO at RS Group

Thanks, Kate. As I think you can tell, excuse me, there is a huge amount going on at RS, but I do recognize that in challenging markets, it's difficult to see this in our financial performance. Over the next few slides, I'm going to highlight a number of the areas where I see the changes and the strategic improvement investments that we're making already beginning to deliver. Because it's this that I'm pleased about, as it's real evidence of the progress we're making in repositioning RS to drive better growth, improve efficiency, deliver better operating leverage, and much improved sustainable shareholder value over time.

Simon Pryce
Simon Pryce
CEO at RS Group

Just a quick reminder that we set out our ambitious strategy to improve RS at our capital market stage just over a year ago, and we continue to execute to that multi-year plan. Our aim is to deliver sustainable outcomes and to be first choice for all of our stakeholders, particularly our customers and suppliers. We have detailed actions in each of the areas of our strategic wheel set out on this slide. Whilst it is still relatively early in our change journey, in the first half, we executed effectively, and we have set that out in a fair bit of detail in the R&S.

Simon Pryce
Simon Pryce
CEO at RS Group

What I'd like to do here is just highlight a few areas where we're making real tangible progress, delivering increased resilience today, improving some of our key underlying operational metrics, and supporting accelerated growth that are all early indicators of us beginning to realize some of the exciting RS opportunity. Core to delivering our strategy is, of course, our people, and we've significantly strengthened our leadership over the past two years, and we continue to do so while investing in training and upskilling across the group. Our people buy into this strategic journey that we're on with our engagement score well into the mid-70s, despite the challenging markets and the level of change going on within the group today. Our people are doing a fantastic job, and they remain the lifeblood of this business as they embrace and drive change to create greater agility and efficiency.

Simon Pryce
Simon Pryce
CEO at RS Group

It is probably in customers where our biggest opportunity lies and where I am most excited about the progress that we have made over the last six months. There is huge potential here through the more effective use of our unique data to target the right type of high-potential value customers and to increase our share of wallet through delivering a tailored value proposition and a personalized experience, but with an optimized cost to serve. This requires consistent and ultimately connected customer data engagement and management platforms coordinated across all channels globally. We have now reconfigured, cleansed, and uploaded and matched over 90% of our customer data across EMEA and APAC with Americas to follow.

Simon Pryce
Simon Pryce
CEO at RS Group

We're already starting to use this data to develop highly targeted and potential-based segmentation models, which will allow us to prioritize customer targeting with both human and digital marketing and to more effectively deploy our sales efforts next year, particularly in EMEA. We've also completed in the first half the development of our customer data platform, which we are now using to develop opportunity-based personalized experiences, both online and offline, to better attract, nurture, and gain a larger share of customers' wallet. Our CRM system, which we completed the rollout of last year, has now recorded over 340,000 customer interactions, and to date, this has enabled our sales team to identify more than 50,000 new sales opportunities.

Simon Pryce
Simon Pryce
CEO at RS Group

Leveraging this richer data insight, we've seen materially higher win rates and bigger deal sizes, which is part of how we've achieved that 4% growth in revenue from our corporate customer segment in half one that Kate referred to earlier. This is all before we ultimately knitted it all together and connected to our enhanced digital commerce engine as we rolled that out across the group, all of which will accelerate customer and wallet capture through enhanced connected data platforms. I'm also pleased with the progress we're making to further strengthen our technical product offer. Our product management solution, launched at the end of last year, now has allowed us to more than triple our average new product introductions to over 30,000 a month in the first half of this year.

Simon Pryce
Simon Pryce
CEO at RS Group

That has resulted in a nearly 30% increase in new product sales and great expansion of our curated product range. Initial investment in more dynamic pricing has allowed us to process over three times the normal number of pricing changes that we make in America, which is part of how we have dealt so effectively with the impact of tariffs. The real opportunity of dynamic pricing and the database margin optimization capability that comes with it is already supporting gross margin expansion in Americas and will be rolling this out across the group more widely over the next couple of years. These investments are just examples of how we are better supporting both suppliers and customers and enhancing the value that we create for them.

Simon Pryce
Simon Pryce
CEO at RS Group

Kate shared with you a bit earlier the growth that upgrading our e-procurement solution is already delivering, and we continue to invest in our other digital procurement solutions for upgrade next year. Our investment in process and technology, as Kate alluded to, is also repositioning our integrated supply business, RSIS, which delivered strong growth in revenue and much improved profitability in the first half, which is all evidence that our solutions and services focus is driving much improved strategic engagement and, importantly, product pull-through and enhanced value. I'd also like to call out the investments that we've made in the first half to improve our digital experience, which is also contributing to our performance. Our investment in enhanced findability tools have driven a 2% improvement to more than 18% in our add-to-cart rate when a customer searches for product on our website.

Simon Pryce
Simon Pryce
CEO at RS Group

Our new basket and checkout functionality has resulted in a 5% improvement in basket-to-order conversion, which is now up to 41%. We have launched an upgraded version of our enhanced digital platform in North America in the first half, as you know, and we continue to tune that platform. Just an example of how much more effective it is, our website load times are now a third quicker compared to the old website. We also continue to tune our delivery promise solution that we launched last year. That is already resulting in fewer cancellations and returns, but is importantly now beginning to yield increasingly granular data, which will allow commercialization of artificial intelligence and machine learning optimized decisions, particularly in the areas of stock availability, inventory management, and pricing.

Simon Pryce
Simon Pryce
CEO at RS Group

Kate's already talked about much of what we've achieved to enhance the efficiency of our physical, digital, and process infrastructure across the group, and that is an ongoing initiative. It's important to realize that we've now delivered sustainable restructuring and integration savings, totaling over GBP 47 million over the last two years, and that's more than we anticipated at the outset. We're also now well into the detailed plans that will deliver at least an additional 150 basis points of margin that we referred to as potential upside in our Capital Markets Day over a year ago. It isn't just about cost reduction. As an example, our delivery to promise investment that I mentioned earlier is also allowing us to do things like optimize product flows through our distribution network.

Simon Pryce
Simon Pryce
CEO at RS Group

In the first half, we reduced the number of times we handled a product more than once from 52% to 40%, clearly reducing our cost to serve and, importantly, also reducing our carbon footprint. We see lots of opportunity to further optimize this with more data going forward. All of these efforts around improving our infrastructure are driving significant improvement in our future operating leverage. Notwithstanding a decent inline financial performance, despite the challenging, albeit a bit more stable markets, I hope this presentation has highlighted for you the real reason why I'm pleased with the first half performance. The change in investment we're making is already delivering better revenue resilience and continued outperformance. It's delivering growth in our accelerators and areas of focus, such as our corporate customer segment, RS PRO, and our solutions business.

Simon Pryce
Simon Pryce
CEO at RS Group

It's driving improvements in our gross margin, in part driven by our investments in new pricing technology and capability, and we're also exercising good cost control and improved efficiency. Almost more importantly for me, it confirms that RS is uniquely positioned in fragmented markets with attractive through-cycle growth characteristics. We have an increasingly differentiated technical and digital product and service solutions offer, which positions us to continue to drive market share gains. We're improving the efficiency of our global infrastructure, which will drive operating leverage and significant margin expansion over time. We can deliver value-creative growth through disciplined acquisitions. Although we haven't made any in the first half, this was a result of value discipline, not a lack of opportunity, and we have a good pipeline going into the second half.

Simon Pryce
Simon Pryce
CEO at RS Group

Most importantly, it's further evidence to me that our medium-term financial targets to grow revenues at twice the market with mid-teens adjusted operating margins, over 80% cash conversion, and over 20% return on invested capital are more than achievable. This will all deliver exciting sustainable value creation for all of our stakeholders over time. That's the end of the formal presentation. Thank you for listening. I would now like to open the call up to any questions you might have.

Operator

Thank you very much. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from David Brockton from Deutsche Numis. Your line is open, David. Please go ahead.

David Brockton
Analyst at Deutsche Numis

Thank you. Good morning, all. Can I ask three quick ones, please? Firstly, on the U.S., I guess that's a region where you have a little bit more visibility, or at least historically have done. Can you just touch on what the book-to-bill looks like there? The second question relates to Germany. Clearly, that's still been a tough region for you. Can you maybe give any insight as to whether you're seeing any signs of improvement in that region? And then the final question relates to some of the improvements that you've touched on, the share gains as well, that you clearly set out. The one sort of lagging indicator or indicator that's still off a little bit looks like the net promoter score, which is down year-on-year. Can you maybe just give any insight into what you think is happening there, please? Thanks.

Simon Pryce
Simon Pryce
CEO at RS Group

Lovely. Thanks, David. Good morning.

Simon Pryce
Simon Pryce
CEO at RS Group

Yeah, U.S. book-to-bill rates are stable to slightly positive. In North America, in Mexico, stable. I think what we are seeing in Mexico is a continued deferral of some quite big capital projects. So although the book-to-bill rate looks okay, we do see pretty consistent deferral. We haven't seen that capital investment spend loosen up yet, but generally, pretty solid. In Germany, yes, it remains difficult. There is the hope that stimulus will eventually feed through both to industrial confidence and to investment. I mean, the one thing about Germany is that lapping means the pace of decline is slowing. We have new leadership in Germany, and I'm very confident that we're positioned to recover or to benefit from recovery in Germany when it happens.

Simon Pryce
Simon Pryce
CEO at RS Group

No major signs of that happening yet, but equally, Germany is a lot more stable than it was even six months ago. Lastly, the NPS score that you refer to, David, the way we report NPS is on a rolling lagging basis, 12-month basis. We did anticipate internally a decline in our NPS score, both in Europe and in North America, firstly with the launch of DTP and secondly with the introduction of our new digital commerce engine. I think, pleasingly, the monthly recovery in NPS has actually followed or slightly exceeded, if I'm honest, our own expectations. Whilst the externally reported number still looks a bit weak, if you look at the movement that we can see internally month on month, we're on a very good trajectory on NPS.

David Brockton
Analyst at Deutsche Numis

Thank you very much.

Operator

As a reminder, to ask a question, please press star followed by one on your telephone keypad. Our next question comes from Michael Donnelly from Investec. Your line is open, Michael. Please go ahead.

Michael Donnelly
Michael Donnelly
Equity Analyst at Investec

Thank you. Just a couple from me, please. And they're both about RS PRO. Now that it's 14% of group, and we've seen great strength in the U.S., albeit from a low base, should we be thinking about a sustained mid-single-digit growth trajectory for that product in the medium term, or is it more likely to moderate to group growth at some point? And related to that, I think you've mentioned the potential in the past for RS to reach about a fifth of group revenues. Could you comment on that potential given the recent performance of the period? Thank you.

Simon Pryce
Simon Pryce
CEO at RS Group

Thanks, Michael. Good morning. So.

Simon Pryce
Simon Pryce
CEO at RS Group

We have seen a good performance for RS PRO in the first half. Given the very low base we're starting from in America, I'm not sure that we're celebrating victory there quite yet. There's a lot of work to do to build both recognition and understanding of the RS PRO brand, to make sure we've got the right products stocked for our U.S. customer base and are actively selling and promoting the brand in the right way. I do think you should expect RS—I mean, it will be a little choppy—but I do expect, or I do think you should expect to continue to see RS PRO growth outperform the broader group growth over time. With reference to sort of medium and long-term targets, I'm not sure we've gone out there with a formal position on where our RS PRO brand should get to.

Simon Pryce
Simon Pryce
CEO at RS Group

If you look at world-class distributors, I think your comments about between 20% and 25% of revenue being about the right level for a private label product. I do not think we are necessarily disagreeing with that. It takes time to get there. We are on a journey with RS PRO that is not yet finished.

Michael Donnelly
Michael Donnelly
Equity Analyst at Investec

That's very clear. Thank you.

Operator

We currently have no further questions. With that, this concludes today's call. We thank everyone for joining, and you may now disconnect your lines.

Executives
    • Kate Ringrose
      Kate Ringrose
      CFO
    • Simon Pryce
      Simon Pryce
      CEO
Analysts
    • Michael Donnelly
      Equity Analyst at Investec
    • David Brockton
      Analyst at Deutsche Numis
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