RS Group LON: RS1 said it delivered “good progress and building momentum” in the year ended March 31, 2026, as the industrial and electronics distributor reported resilient results despite challenging markets and continued investment in its multi-year growth plan.
Chief Executive Simon Pryce said the company’s financial performance was “in line with or marginally ahead of expectations,” with volumes slightly lower but revenue supported by pricing discipline. He said the company maintained operating margins through improved gross margins and controlled costs.
“We enter the next financial year with attractive and building momentum, notwithstanding the quite challenging macro environment that remains out there,” Pryce said.
Revenue Flat on Like-for-Like Basis, Cash Conversion Strong
Chief Financial Officer Kate Ringrose said reported revenue decreased 1% year over year. On a like-for-like basis, excluding the impact of a weaker U.S. dollar, fewer trading days and one month of revenue from the recently acquired BPX business, revenue was flat.
Ringrose said like-for-like daily average price rose around 2%, while volumes fell about 2.5%. Average order value increased to $276 from $263, improving across customer segments and outpacing price movements, while order numbers declined, particularly among smaller and less frequent customers and through the web channel.
Adjusted profit before tax declined by low single digits, reflecting lower volumes and increased organic investment, partly offset by lower interest charges. Reported operating profit included two exceptional items: an £11 million positive settlement of a legal dispute related to RS Group’s purchase of Synovos and a £15 million write-off of old and unused capitalized code.
Cash flow conversion was 109%, ahead of the company’s target of more than 80%. Net debt fell to £329 million, equivalent to 1.0 times net debt to EBITDA. Ringrose said the balance sheet is now at the bottom of the company’s target leverage range of 1.0 to 2.0 times EBITDA.
The company said it would raise its final dividend by 2% to 14.2 pence per share, taking the full-year dividend to 22.9 pence per share. RS Group also began a £100 million share buyback program over 12 months, citing its cash generation, balance sheet capacity and capital allocation framework.
Regional Trends Improve, Though Mexico and Germany Remain Challenging
RS Group reported improving revenue momentum in the second half, with EMEA returning to growth and APAC and North America continuing to grow. Pryce said PMI data had become “surprisingly stable” during the year and moved into expansion territory in the final quarter of fiscal 2026, though he cautioned that RS Group’s revenue typically lags PMI indicators by three to six months.
In EMEA, Ringrose said revenue momentum improved in the second half across markets. The U.K. shifted to growth and France continued to outperform, while the DACH region was affected by a challenging German market. In response to an analyst question, Pryce said Germany remained difficult, particularly due to the automotive sector, but added that easier comparisons and some improvement in sentiment offered grounds for “soft” optimism.
In the Americas, Ringrose said U.S. growth accelerated through the second half, while Mexico remained pressured by delays in customers committing to large capital projects and by currency translation effects related to a stronger peso versus the dollar. She said roughly half of Mexico’s 21% second-half revenue decline was caused by this currency mechanism, which had an offsetting effect in cost of sales and was flat from a gross profit margin perspective.
APAC showed growth across subregions in both price and volume, with positive sales momentum, stable gross margins and operating profit improvement from cost management.
Digital Revenue Dips, RS PRO and Solutions Outperform
Digital revenue, which accounts for about 60% of group revenue, declined 1% on a like-for-like basis. Ringrose attributed the decline largely to softer web demand and short-term impacts in the first half. Pryce said some of the weakness reflected temporary disruption from technology upgrades designed to improve the customer experience, adding that digital is “already back in growth.”
By product category, facilities and maintenance grew 2%, while mechanical and fluid power grew 8%. Automation and control and electrification, the company’s largest product category, declined 2%. Demand for semiconductors and passives remained weak in RS Group’s end markets.
RS PRO continued to outperform, growing 5% year over year and increasing its share of revenue by almost 100 basis points to 14.4%. During the Q&A, Pryce said RS PRO has more room to grow, especially in Asia Pacific and the Americas, where penetration remains lower than in Europe. Ringrose added that RS PRO’s share grew in all regions.
Solutions also outperformed, growing 6% like-for-like and representing more than 25% of group revenue. E-procurement grew 9% like-for-like. Pryce said the solutions offering helps deepen relationships with higher-potential customers, while RS Integrated Supply benefited from improvements to its RS SYNC technology platform.
Investment Plan Moves From Foundation to Activation
Pryce said RS Group is two years into a multi-year “value acceleration” plan focused on customers, customer experience, products and suppliers, solutions and operational excellence. He said much of the initial work has been foundational, particularly in customer systems, product management and supply chain, but the company is now moving into an activation phase.
Key initiatives cited by management included:
- A global customer data platform and common CRM rollout across digital and EMEA high-touch channels.
- AI-enabled web search and an upgraded digital commerce platform launched in the Americas and now in testing in EMEA.
- A product management system capable of listing more than 50,000 new products a month.
- A non-stocked product capability with more than 185,000 products available for customer-only order.
- Technology estate simplification, including the removal of more than 100 applications.
Pryce said early benefits include stronger conversion rates, improved sales pipeline conversion and a 6% like-for-like revenue increase among high-touch corporate customers. He also said the company’s delivery-to-promise solution contributed to second-half improvements and a 4% uplift in average order value.
RS Group completed the exit from its Distrelec warehouse in the Netherlands and made progress on upgraded facilities in Italy and Ireland. Pryce said the new Italy facility will include robotic automation that is expected to become the standard for regional distribution centers.
Capital Allocation Includes M&A, Dividends and Buybacks
RS Group acquired BPX in March for consideration of up to about £30 million. Management said the company continues to have a strong M&A pipeline but emphasized disciplined capital allocation. Pryce said there is no immediate deal the company “must do,” but said RS Group has sufficient capacity for organic investment and bolt-on acquisitions.
Ringrose said organic operating expenditure investment is expected to rise toward the top of the company’s stated £35 million to £45 million range as RS Group increases spending on process harmonization and technology. She also guided to operating cost inflation of around 3% and capital expenditure of about £50 million.
Pryce said management remains focused on execution amid macroeconomic and geopolitical uncertainty. He reiterated medium-term targets of growing revenue at twice the market, achieving mid-teens operating margins, maintaining strong cash conversion and delivering returns on invested capital.
“There is a lot going on here, but the significant strategic investments that we’ve made to accelerate growth, improve efficiency, and drive better operating leverage are all on track,” Pryce said. “More importantly, they are beginning to deliver.”
About RS Group LON: RS1
RS Group plc is a global product and service solutions provider for industrial customers, enabling them to operate efficiently and sustainably.
We operate in 36 markets, stock over 800,000 technical and specialist products and list an additional five million relevant for our industrial customers, sourced from over 2,500 suppliers. This extensive range supports our customers across the industrial lifecycle of designing, building, and maintaining equipment and operations. We enhance their experience through a tailored service model, leveraging our efficient physical, digital and process infrastructure sustainably.
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