Midwich beats chest after 'tough' year for audio visual market

AV market's customary four per cent growth stalled last year, distributor says as it unveils 20 per cent annual growth hike

Midwich's shares rose sharply this morning as it claimed it took share in a "tough" audio visual market last year.

The acquisitive, AIM-listed distributor grew revenues by a fifth to £686.2m in its year to 31 December 2019, despite admitting that macro factors stalled the AV market's customary four per cent growth.

Organic growth stood at six per cent, with CEO Stephen Fenby claiming the Diss-based firm took "significant" share with many of its vendors.

Midwich's shares were up by seven per cent in early morning trading as it also unveiled an 11 per cent rise in adjusted operating profit to £33.5m.

Fenby stressed that Midwich "grew strongly" in a market that "was at best flat".

"Internally, one of our key measures is of the share of our vendors' business that we represent. In this respect we believe that many of our market shares grew significantly in the year, illustrating the strength of our performance relative to the market as a whole," he said.

Seeking to put the results in further context, chairman Andrew Herbert stressed that the AV industry has experienced a long-term average annual growth rate of around four per cent, "with stronger years being interrupted by occasionally tougher years".

"The market in 2019 was one of those tougher years, with global macro factors such as the US/China trade dispute impacting the world economy, with a knock-on impact on our industry," he said.

At a group level, Midwich drew 40 per cent of revenues from displays, 17 per cent from projection and 43 per cent from technical products, including audio, broadcast and lighting.

Having made acquisitions in Switzerland, Norway, Italy and Spain last year, since year end Midwich has leapt into the US with the acquisition of Starin and has pledged further M&A.

It now employs about 1,000 staff across Europe, North America and Asia Pacific.

The UK and Ireland lost its status as its largest geography during the year as revenues from its home turf came in flat at £314.6m.

Its domestic performance was impacted by the exit of a small range of consumer products and the managed reduction of its Document Solutions business, which represented less than seven per cent of the segment's revenue in 2019.

During the year it opened a 50,000 square foot showroom and office in Bracknell (pictured).

Although revenues from mainland Europe hiked 42 per cent to £222m and Asia Pacific sales pogoed 41 per cent to £50.6m, Herbert admitted that market conditions worsened across all geographies during the year.

"Having been relatively resilient to the uncertainty of Brexit, the UK AV market slowed significantly in the latter half of the year," he said.

"In continental Europe, political uncertainty in countries such as Spain and Italy, and a slowdown in the German manufacturing sector contributed to more challenging conditions. In Asia Pacific, after many years of strong capital investment, the Australian economy took a pause for breath," he added.