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Northamber looks to build on H1 2020
Distributor issues an update detailing how it fared in the last six months of 2020, with coronavirus and Brexit both having an impact on the business
Northamber is navigating through challenging times, with the distributor hoping that as lockdowns ease, an increasing number of customer projects will come back on line.
The channel player issued an interim trading statement for the six months ended 31 December 2020 that showed it had delivered a revenue increase of 13% in its first half to £29.6m. A combination of gross margin improvements and a shift to higher-margin products helped it deliver a 65% increase in gross profit, from £2.8m to £3.8m.
Northamber picked up Audio Visual Materials (AVM) in February last year and that also supported its strategy to move to higher-margin products.
Northamber chairman Colin Thompson used his comments accompanying the figures to update investors on how the firm had managed to deal with the coronavirus pandemic and Brexit.
“We are very pleased to be able to report an operating profit driven by year-on-year gross margin growth and year-on-year revenue growth for the last six months despite challenging market conditions,” he said.
Thompson expressed hope that as the national lockdown is reviewed and potentially eased, it will unlock more customer spending. “Previously discussed lockdown challenges have impacted performance in some of our strategic business units and our subsidiary AVM, as site restrictions limited access for higher-end projects, but we are hopeful of improved performance as these restrictions ease later in 2021 and beyond,” he said.
Thompson added that the distributor was also holding more stock than at this time last year as it tried to make life easier for resellers.
“Stock levels are higher than last year at £8.4m against £4.5m, in part due to the AVM acquisition, and also as we continued to seek to profitably support our partners by maintaining sufficient stock in-country during the uncertainty of logistics derived from Brexit and Covid impacts on supply chains,” he said.
“We see our flexibility on local stock levels as a key driver of our future with our partners, who have recognised the benefits of Northamber’s financial strength in underpinning this.”
When it came to looking ahead, Thompson was clear that there were several factors that could still have an impact on the company’s second half.
“We necessarily remain cautious due to the economic uncertainty, Brexit and the potential further impact of Covid on demand and the supply chain, but feel strongly that our continued focus on strategic higher-margin value categories provides a solid roadmap for the future with profitable growth opportunities,” he said.
He also hinted that the firm could look at acquisitions: “The strength of our balance sheet allows us to continue to do what is best for the business strategically and we continue to review organic and non-organic opportunities for growth which meet our strict criteria and add value.”