RS Group Half-Year Report 2023
In the half year ended 30 September 2023, we experienced continuing geopolitical uncertainty, ongoing deterioration in manufacturing PMI data globally, industry destocking particularly in electronics, supply chain normalisation, reducing price inflation and ongoing cost inflation. Last year we also benefited from the tailwind of having inventory in a constrained global supply environment experiencing material price inflation, which delivered an estimated c. £35 million of adjusted operating profit of which £26 million was realised in H1 2022/23 and a further £9 million in H2 2022/23.
Revenue
Group revenue decreased by 1% to £1,447 million. Like-for-like revenue declined 8% after adjusting for the £142 million gain from acquisitions, £21 million from adverse exchange rate movements and a negative impact of £13 million from fewer trading days. As anticipated, the transition of our single-board computing range away from Raspberry Pi accounted for 1% of the Group like-for-like revenue decline. Our strong product availability when global supply chains were constrained provided a trading benefit in H1 2022/23. We estimate the reversal of this benefit contributed c. 5% of the revenue decline in this half year, as the global supply chain issues eased and our customers reduced their higher inventory levels.
RS PRO, which is our main own-brand product range and accounts for 13% of Group revenue, grew by 5% on a like-for-like basis, due to extending its product breadth and the end-to-end sales and marketing focus in the regions. Our competitively priced offer continues to gain traction as a quality but non-competing alternative to main branded ranges as we demonstrate quality and value through our quality assurance qualifications and design and test facilities.
Gross margin
Group gross margin decreased 1.8 percentage points to 43.7%, of which 1.4 percentage points was a function of the dilutive impact from our recent acquisitions due to their lower digital participation compared to the rest of the Group. Last year’s gross margin benefit from our cost of sales inflation lagging price inflation, especially within electronics products, due to our low inventory turn has begun to unwind.
