Market mix supports further Midwich growth

Midwich has shared interim half-year numbers that underline the benefits of selling into a broad number of markets.

The audiovisual specialist has seen slowness in some markets, notably education and corporate, but elsewhere, the health of the live event and entertainment sectors has helped the bottom line.

Other distributors have reported similar mixed fortunes as they find challenging economic conditions impacting product categories and verticals differently.

For the six months to 30 June, Midwich’s revenue increased by 7.4% to £610.4m, with organic growth of 2.3%. Adjusted operating profit growth improved by 30.9% to £26.4m, compared with £20.2m in 2022.

Revenue across EMEA was described as strong. But in the UK specifically, there was a 2.2% year-on-year decline, which the firm pointed out was less than the market average.

The update also reminded investors that during the period, the firm also made an equity placing in June 2023, raising over £50m to support its mergers and acquisitions strategy.

The channel player has already been active on that front, acquiring SFM, a specialist value-add AV distributor in Canada, in June, before continuing into the second half of the year with a flurry of deals to pick up Toolfarm.com and Digital Media Promos, trading as 76 Media, in the US, HHB Communications Holdings and Pulse Cinemas Holdings in the UK, and Video Digital Soluciones in Spain.

The interim results stated that the firm continued to see a strong acquisition pipeline across all regions as it continued to look for growth opportunities in product segments and geographies.

Stephen Fenby, managing director of Midwich Group, said it had been able to navigate the current conditions.

“Slower than expected corporate and education markets were more than compensated for by strength in the live event and entertainment sectors. The change in mix attributable to the significant growth of technical video and audio products resulted in a favourable product margin mix,” he said.

Midwich has reported in the past the gathering strength in demand from the live events market, which was one of the hardest hit during the pandemic but has since returned to growth as life went back to normal.

“The EMEA region performed particularly well, with strong improvements in organic revenue, gross margin and adjusted operating profit. Although general macroeconomic conditions are widely expected to remain challenging over the coming months, the group continues to be well placed to identify and benefit from organic and inorganic business development opportunities,” he added.

He added that the firm remained upbeat about the prospects for the second half and would be able to weather the economic storm.

Midwich also reminded vendors that during challenging times there are clear benefits from working with an established channel player that can support the sale of high-quality products.

“Our order books remain strong and as a result the board’s expectations for the full year remain unchanged,” he stated.