Midwich eyes AV market growth despite tough macro-trading backdrop

The Norfolk company has achieved such metronomic beats of success that the slightest hint of a bum note appears to spook the market. Yet a pre-close first-half trading statement reveals a story of robust revenue, gross margin & market share performance driven by a continued focus on value-added technical solutions, despite challenging market conditions.

The Board's expectations of adjusted operating profit for the full year remain in line with previous expectations.

Revenue for H1 2024 (to June 30) is expected to be around £645 million, representing an increase of over 5.7 per cent year-on-year.

Organic revenue on a constant currency basis reduced by 1.1 per cent versus H1 2023. This reflected the continued challenging market conditions, particularly in the UK & Ireland, as detailed in the group's AGM statement on May 14.

Midwich said that mainstream product categories had been particularly impacted, it believes due to some over-supply of products resulting in short-term price erosion this year. The group still delivered a record gross margin of approximately 17.3 per cent, which was significantly higher than the 16.3 per cent achieved in H1 2023.

It says the main factor for this strong growth was the mix of sales, which was weighted towards higher margin technical products, in line with the group's strategy.

Overheads increased as expected during the period, due to acquisitions completed in H2 2023, and labour cost inflation, which Midwich says is now showing signs of easing.

Trading remained strong in North America with sales up by some 69 per cent on a constant currency basis, including the impact of acquisitions completed in the last 12 months.

Managing director Stephen Fenby says: “The group has continued to navigate challenging trading conditions in the first half of 2024, particularly in the UK & Ireland, and has delivered a solid result despite this backdrop.

“Midwich remains well positioned as the leading global specialist Pro AV distributor, with the group's £1.3 billion revenue in 2023 representing less than one per cent of the global market and just 3-4 per cent of our target addressable market.

“Over the coming years, we anticipate there being significant opportunities to continue growing faster than the overall market, both organically and through acquisition and the board remains excited by the long-term prospects for the group.”