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Midwich signals AV market strength with strong H1

Live events are returning and helping to drive revenues at the distributor, which has continued to use M&A to expand the business

Midwich has shared a pre-close trading statement that will bring cheer to investors, with the audio-visual specialist indicating its first half has been a decent one.

The distributor will share full details of H1 in early September, but has issued an update that includes the words “record first-half revenues and adjusted profit before tax”.

The statement revealed that Midwich’s revenue is expected to be in excess of £610m, an increase of over 7.5% versus H1 2022. Organic revenue growth on a constant currency basis was 2.2% versus H1 2022.

The distie indicated a continued recovery in the live events market, but elsewhere, there was slower activity in the corporate and education markets, particularly in the UK and Ireland.

Adjusted profit before tax for H1 2023 is expected to be more than £21.5m, compared with £19.2m a year earlier, which represents a 14% improvement.

When it came to drilling down into geographies, EMEA produced a revenue increase of 14%, up year-on-year with the audio business performing well across the region. When it came to the UK and Ireland, the performance was slightly down compared with H1 22, but strong gross margins and overheads management led to a significant increase in operating profits in the region.

One of the strategies to bolster growth has been through acquisitions, and the period saw the firm seal a couple of deals to add geographical and market coverage.

Distributor acquisition

Last month saw the business acquire SF Marketing, a specialist value-add AV distributor in Canada. The move added a business that came with a network of 1,500 new customers, and had the benefit of strengthening relationships with key suppliers in the audio and visual markets.

The deals have kept coming, and even after the first half completed, the business has used funds from its recent equity issue to pick up and Digital Media Promos, which trades as 76 Media in the US and HHB Communications Holdings in the UK. The outlay for those acquisitions was in the region of £16m.

Given the challenging economic conditions, all eyes have been on any financial update across the channel, and the Midwich H1 performance adds to a growing body of evidence that has underlined the resilience of both resellers and distributors.

In terms of comments about the future, the statement remained upbeat, and talked of further growth in the second half, a period many market watchers are hoping will improve with falling inflation and an easing of some cost pressures.

“With order books remaining healthy, unless general economic conditions deteriorate significantly, the board expects the momentum seen in H1 2023 to continue throughout the remainder of the year,” the firm stated. “As a result, the board continues to expect trading performance for the full year to be in line with its previous expectations before the positive contribution from the three acquisitions completed in July.”

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