RS Group
Potentially interesting, but short-term headwinds persist
RS Group ($RS1.L) is a £3 billion UK-based global component distributors of maintenance, repair and operations (MRO) products and service solutions tailored for industrial customers’ needs. The company sources and resells to customers all over the world a vast range of industrial products: cables & connectors; mechanical & fluid power; semiconductors & passive components; test & measurement tools; safety & personal protective equipment, workwear, and janitorial products.
Founded in a London garage in 1937 as Radiospares to supply spare parts to radio repair shops, it expanded into electronic components in the 1950s and was listed on the London Stock Exchange in 1967 as Electrocomponents Plc (it was renamed to RS Group in 2022). Since the 1990s, RS has grown steadily through a mix of organic growth and acquisitions. In 1998 it was the first company to launch a transactional website in the UK, and its network grew rapidly, including acquiring Allied Electronics and Automation in the US in 1999. Today it has operational sites in 36 countries and revenues of roughly £3 billion.
But its ownership is widely dispersed (100% free float) with no controlling shareholders: the biggest are funds run by Columbia Threadneedle (~10%), Fidelity (8%) and Wellington (5%).
Business model
RS is an essential link between suppliers and industrial customers who typically can’t trade directly with each other given the small volumes:
"Our suppliers do not tend to have the distribution capabilities, or desire, to service or deliver directly to these customers in such small volumes. RS plays a very important role connecting over 2,500 suppliers and 1.1 million customers."
