5th Apr 2023 14:45
(Alliance News) - RS Group PLC shares dropped on Wednesday, making the company the worst FTSE 100 performer, as it reported a slowdown in revenue growth in the fourth quarter, despite analysts expecting figures to beat consensus.
RS shares fell 6.6% to 836.20 pence each in London on Wednesday afternoon.
Liberum analyst Sanjay Vidyarthi described the reduction in growth as "expected" following double digit growth in the first half of the financial year and 8% growth in the third quarter.
For the year ended March 31, the London-based industrial and electronics products distributor said it saw 10% like-for-like revenue growth. It delivered growth of 12% in the Europe, Middle East & Africa and 11% growth in the Americas. Like-for-like revenue in the Asia Pacific region fell 1%, however.
For the fourth quarter alone, group like-for-like revenue improved 1% on-year, slowing from 8% growth in the third quarter and 15% and 18% in the second and first quarters, respectively.
Noting that the fourth quarter figures come up against strong performance in the earlier periods, Peel Hunt's Henry Carver commented: "Acknowledging a slower end to the year and some uncertainty in the macro outlook, we believe that the company is in good shape and that tough markets can help it to gain further share."
Echoing this, Shore Capital analyst Tom Fraine expects "a slight margin beat" for the full-year, given RS's "good record of managing consensus expectations, which has helped it deliver upgrades consistently".
However, Fraine noted that the improvement is anticipated to be offset by lower volume expectations for financial 2024.
RS said adjusted operating profit consensus stands at GBP382.0 million, which, if achieved, would represent growth of 19% from GBP320.4 million the prior year.
Consensus for revenue is GBP2.99 billion, up 17% from the GBP2.55 billion achieved the last financial year. Adjusted pretax profit consensus stands at GBP373.0 million, up 19% from GBP313.8 million.
Peel Hunt's Carver, meanwhile, expects adjusted pretax profit to come in slightly ahead of consensus, representing a 2% upgrade to Peel Hunt's top of the range GBP367.7 million figure.
Vidyarthi also expects adjusted pretax profit to beat the consensus, forecasting a figure of GBP374.7 million.
RS Chief Financial Officer David Egan said: "Effective execution and the ongoing hard work, enthusiasm and passion of our people has led to a very strong performance in 2022/23 and we anticipate full year adjusted operating profit to be slightly ahead of consensus expectations."
Peel Hunt and Liberum both maintained their 'Buy' recommendations for RS, while Shore Capital rated the company as 'Hold'.
By Harvey Dorset, Alliance News reporter
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