Shares of RS Group PLC (LSE:RS1) jumped around 9% to 655p after the industrial products distributor announced a new £100 million share buyback and increased its full-year dividend, signaling confidence despite softer profits.
"2025/26 was another year of strong execution of our multi-year plan to improve the business and deliver on the significant value creation opportunity at RS," Chief Executive Simon Pryce said. "Better execution, cost discipline and cash focus also supported operating profit and cash conversion ahead of expectations."
For the year ended March 31, RS Group reported revenue of £2.88 billion, slightly ahead of the £2.87 billion analyst consensus. Adjusted operating profit came in at £265 million, beating expectations, while net debt fell to £329 million from £364 million a year earlier. The board declared a final dividend of 14.2 pence, bringing the full-year payout to 22.9 pence, a 2% increase.
The market's positive reaction suggests investors are prioritizing the company's robust cash flow and shareholder returns over a slight dip in profits in what it termed "challenging industrial markets." Analysts at Stifel reiterated their "Buy" rating, viewing the current valuation as "relatively undemanding" and expecting internal initiatives to drive operating leverage as volumes improve.
By region, the Americas posted an adjusted operating margin of 9%, flat year-on-year, while Asia Pacific's margin improved to 3% from 2.8%. The company’s own-brand range, RS PRO, saw like-for-like growth of 5% to £415 million.
The new £100 million buyback program will run over the next 12 months. The company's focus on shareholder returns and debt reduction appears to be supporting investor sentiment as it navigates a complex global market. Investors will now watch for the "improving momentum" management expects in fiscal 2027.
This article is for informational purposes only and does not constitute investment advice.
