A better performance in the second half of the year, notably in November and December, combined with contributions from two acquisitions, have helped specialist AV distributor Midwich Group achieve single digit growth in 2020 and exceed profit expectations.
In a trading update for the year ended 31 December 2020, the Midwich Board said it expects to report revenue for 2020 of more than £710 million, up 4% on the year before, with adjusted profit before tax of approximately £14 million.
With lockdowns affecting key markets, such as hospitality and events, underlying sales, before the effect of the in-year acquisitions of Starin Marketing (February) and NMK (December), were 7% lower in the second half of the year than in the same period in 2019 and 22% lower in the first half, giving an overall decline of 14% for the year.
Stephen Fenby, Group Managing Director of Midwich, said: “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 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 added: “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, represent 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. 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.”
Strong cash generation enabled Midwich Group to reduce net debt to approximately £20 million at 31 December 2020, down from £53 million in 2019.