What RS Group (RS1) Said on Its H1 Earnings Call

Key Points

• RS Group returned to growth in the first half: revenue rose 10% (7% like-for-like), adjusted profit before tax increased 17%, and adjusted operating margin improved 70 basis points to 9.2%. Management said momentum strengthened from Q1 to Q2, while warning that second-half comparisons will be tougher.
• Growth broadened across regions, with like-for-like revenue up 5% in EMEA, 12% in the U.S. and Canada, and 15% in Asia-Pacific. Americas and Asia-Pacific profitability also improved significantly.
• Adjusted free cash flow increased to £93 million, and RS raised its interim dividend 2% while continuing share buybacks and investing in digital and operating systems. Organic investment is expected to accelerate in the second half; larger efficiency benefits are expected over the next two to three years.

RS Group LON: RS1 reported a return to revenue growth in the first half of its 2026/2027 financial year, as improving markets, pricing actions and stronger commercial execution helped lift profitability across its regions.

Revenue rose 10% in the six months ended Sept. 30, 2026, including 7% growth on a like-for-like basis. Adjusted profit before tax increased 17%, while adjusted operating margin reached 9.2%, up 70 basis points on a like-for-like basis, CEO Simon Pryce said.

Pryce said the results were ahead of expectations and that momentum improved from the first quarter to the second. He cautioned, however, that comparisons with the prior year would become more challenging in the second half.

Recovery Broadens Across Regions

Chief Financial Officer Kate Ringrose said group like-for-like growth reflected approximately four percentage points from volume and three from pricing. The company also benefited from recovery after disruption associated with a U.S. digital platform rollout and a distribution center closure in EMEA. Inorganic investments contributed £33 million of revenue.

EMEA like-for-like revenue rose 5%, with growth across customer segments and improving demand as manufacturing sentiment strengthened. Operating margin increased to 10.4%. Revenue from high-potential corporate customers in the region grew 9% on a like-for-like basis.

In the Americas, revenue rose 9%, while operating profit increased 25% to £44 million. Operating margin improved by 120 basis points to 9.4%, supported by pricing, discount optimization, favorable inventory provisions and cost control. U.S. and Canadian like-for-like revenue grew 12%, and web revenue increased 13%.

Mexico grew 9% as some larger capital projects delayed by trade-related uncertainty began moving forward. Pryce said order trends in Mexico and the wider Americas looked positive heading into the third and fourth quarters.

Asia-Pacific revenue grew 15%, driven primarily by 12% volume growth. Ringrose said investment in artificial intelligence infrastructure and data centers supported demand, particularly in Greater China and Southeast Asia. Regional operating profit more than doubled, and operating margin rose to 6.2%.

Cash Generation and Investment Plans

Adjusted free cash flow increased to £93 million from £86 million a year earlier, while adjusted operating cash flow conversion was 96%. Net debt rose by £40 million, principally because of lease additions, and leverage stood at 1.1 times net debt to adjusted EBITDA.

RS increased its interim dividend by 2% and executed £35 million of share buybacks during the period under its ongoing £100 million program. Ringrose said the balance sheet provided capacity for organic investment and potential acquisitions, adding that the company would remain disciplined on valuation.

Adjusted operating costs rose 9% to £528 million, or 34.2% of revenue. The company spent £18 million on organic operating expenditure investments in the half, including digital replatforming and process improvements. It also realized £8 million in restructuring and integration benefits during the period.

For the second half, Ringrose said RS expects gross margin to be stable and variable or semi-variable costs to remain at approximately 14% of revenue. Fixed costs are expected to rise 7% from the prior-year period, net of savings. She said organic investment would accelerate in the second half.

Digital Projects and Longer-Term Margins

RS continues to invest in customer data, digital commerce and warehouse systems. Pryce said the company had launched 12 automated sales campaigns using connected customer platforms and was incorporating AI into product search and marketing. An upgraded digital commerce platform is in live testing ahead of a planned launch in Switzerland in the first quarter of the next financial year.

Digital revenue increased 5% in the half, while Services and Solutions grew 6% and own-brand RS PRO grew 5% on a like-for-like basis. Those rates were below the group average. Pryce said increased minimum order charges and freight costs had reduced some transactional web activity, but he expected growth in the three areas to pick up in the second half.

Ringrose said a substantial improvement in operating leverage depended on the rollout of enterprise, digital commerce and warehouse systems over the next three years. Pryce said benefits from the next phase of process and efficiency work would not be visible for two or three years.

Asked to separate market recovery from company-specific gains, Pryce estimated that about one percentage point of the group’s 7% underlying growth came from catching up after prior operational disruption. Of the remaining growth, he estimated roughly three points came from pricing and three from volume, with the volume contribution split approximately evenly between market growth and share gains. He cautioned that the figures were difficult to determine precisely.

About RS Group (LON:RS1)

RS Group plc is a high-service global product and service solutions provider for industrial customers, enabling them to operate efficiently and sustainably. We operate in 33 markets, stock over 875,000 industrial 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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