Midwich mounts comeback in H2 despite Covid disruption

AV distie sees revenue grow four per cent to £710m for its full FY20

Midwich has reported its business rebounded in the second half of 2020 in what group MD Stephen Fenby describes as a "very challenging year" for the industry.

Revenues grew by four per cent to £710m in Midwich's full year 2020.

The figure represents a H2 recovery for the AV distributor, which it attributed to a strong end to the year in November and December in a trading update this morning.

However sales before the positive effects of in-year acquisitions were down seven per cent in H2, compared to a 22 per cent drop in the first half of the year, resulting in an overall decline of 14 per cent for the year.

Midwich now anticipates that adjusted profit before tax will be £14m for the year ending 31 December 2020, significantly ahead of its expectations.

The distie also anticipates that ongoing lockdowns in many of its key geographical markets will hamper demand for its products and services for the first half of 2021 and so considers it "too early" to revise its expectations for this financial year.

The company's share price jumped eight per cent since the trading update was released earlier today.

"I am pleased with the group's significant achievements in what was a very challenging year for both the world economy and our industry," stated Stephen Fenby, group MD of Midwich.

"Despite significant challenges, we managed to continue our long-term year-on-year revenue growth. Although markets for many of our higher margin product areas were significantly depressed (and continue to be so), I am pleased that the group was able to grow its share of the business available. This demonstrates that our service levels have remained high and that we are well placed to capitalise on future market demand when it returns fully."

The acquisitions of US-based Starin Marketing and NMK in the Middle East last year is expected to develop the distie's ability to serve international customers and their projects, Fenby added.

"The group has made substantial progress in acquiring new brands while also exiting from lower margin or unprofitable relationships. In particular, we have enhanced our offering in the unified communications, collaboration and audio segments through the year," he continued.

"Our acquisition of Starin Marketing in the US in February 2020, followed by the announcement in December of the acquisition of NMK in the Middle East, represents the group's entry into two strategically important markets. These acquisitions should substantially enhance our ability to serve international integrators and their global end-user project rollouts.

"As a result of these acquisitions, the group now has a foothold in all strategically important global regions and will look to build on that presence in the years to come. Our enhanced team represents by far the strongest in the industry and our acquisition pipeline remains healthy."