LONDON (ShareCast) - (Sharecast News) - Specialist audio visual distributor Midwich Group said on Wednesday that, despite the ongoing challenges of the coronavirus pandemic, its trading recovery had continued in the second half and, as a result of a "strong close" in November and December, it now expected to report revenue for 2020 of more than £710m.
The AIM-traded firm said that represented growth of about 4% over the prior year, and 4% at constant currency.

Underlying sales before the effect of in-year acquisitions were 7% lower in the second half, compared with 22% lower in the first half, giving an overall decline of 14% for the year.

As a result of that performance, the Midwich board said it was now expecting adjusted profit before tax for 2020 to come in at £14m, "significantly ahead" of its prior expectations.

A number of its end user markets, such as hospitality and events, continued to be depressed as a result of lockdown restrictions in various territories.

As those were often more profitable areas, the board said, gross margins were continuing to be held back in the second half of the year.

The group's focus on working capital management had led to "strong" cash generation, with net debt reducing to about £20m as at 31 December, from £53m a year earlier.

Midwich said the current lockdowns in place in many of its key geographical markets meant that market conditions for its products and services were likely to be impacted for at least the first half of 2021.

In view of that uncertainty, although trading strengthened as the company closed 2020, it was still too early to revise expectations for 2021.

"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," said group managing director Stephen Fenby.

"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."

Fenby said that in particular, the company had enhanced its offering in the unified communications, collaboration and audio segments through the year.

"Our acquisition of Starin Marketing in the US in February, 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."

As a result of the acquisitions, Fenby said the group now had a foothold in all strategically important global regions, and would look to build on that presence in the coming years.

"Our enhanced team represents by far the strongest in the industry and our acquisition pipeline remains healthy."

Midwich said it would announce its final results for the year ended 31 December on 9 March.

At 0911 GMT, shares in Midwich Group were up 5.38% at 490p.

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