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(Alliance News) - RS Group PLC shares slipped on Tuesday, though its annual results received decent reviews and Shore Capital Markets believes the firm's outlook is stronger than the market expects.
"RS Group has reported solid results for the [year ended March 31]," UBS analysts Rory McKenzie, Nicole Manion and Abi Bell said, with revenue "in-line with consensus expectations".
The London-based industrial and electronics products distributor said revenue for the year ended March 31 grew by 17% to GBP2.98 billion from GBP2.55 billion a year prior, citing strong growth across its industrial product ranges in the Americas, Europe, Middle East & Africa and Asia Pacific regions.
It reported pretax profit of GBP383.0 million, up 24% from GBP308.8 million in financial 2022.
RS Group proposed a final dividend of 13.7 pence per share, up 18% from 11.6p a year prior, bringing the total proposed dividend to 20.9p per share, a 16% increase from 18.0p per share a year before.
Looking ahead, RS Group said trading for the first seven weeks of financial 2024 have been impacted by a slowing in industrial growth.
However, the company said it remains comfortable with financial 2024's market consensus profit expectations.
"RS Group has outperformed the industrial market, especially in EMEA, according to management, in the first seven weeks of [financial 2024]," said Tom Fraine, research analyst at Shore Capital.
Company-compiled consensus for adjusted operating profit stands at GBP390 million, while for adjusted pretax profit, it stands at GBP379 million, Fraine noted. However, the outcomes would be below the GBP402 million and GBP391 million achieved in financial 2023.
Shore's Fraine added: "These forecasts appear conservative, in our view, given the recently announced acquisition of Distrelec, which would contribute more than GBP20 million adjusted operating profit to the group if it performs in line with [calendar year 2022] and is complete by mid-July, as anticipated."
Shares in RS Group were down 6.5% at 797.00 pence each in London on Tuesday afternoon.
Shore Capital rates RS at 'hold', while UBS rates the company at 'buy'.
By Harvey Dorset, Alliance News reporter
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