Why it's not all gravy for AV: Midwich's sales 'less than 50 per cent of expectations' at height of pandemic

Audio visual distributor reveals fall out from COVID-19 pandemic in first-half trading update

Midwich has laid bare the impact COVID-19 has had on its numbers in a pre-close trading statement, revealing that its revenues nose-dived to less than 50 per cent of expected levels at the height of the pandemic.

The audio visual distributor - which operates in 18 territories globally including many of those hardest hit by coronavirus - said this morning that it expects first-half underlying sales to fall by 22 per cent on an annual comparison (including acquisitions, revenues fell four per cent).

As detailed in CRN Essential's Meet the Specialists report, the onsite bias of the audio visual market has made it one of the sectors more susceptible to lockdown.

A "significant proportion" of Midwich's audio visual products are installed in buildings, meaning the ability of its system integrator customers to access sites became "significantly curtailed" during lockdown.

This led to a revenue reduction that - at its worst - equated to less than 50 per cent of its expected haul in April.

The statement echoes a similar stock market update from the parent of rival Exertis on Friday, which also admitted B2B revenues had been hit by a lack of onsite work for its reseller customers.

Although Midwich's revenues improved in May and further in June, it warned that market conditions for its products and services are likely to remain "significantly impacted by the development of the pandemic for the remainder of 2020".

"It is likely that the growth in profitability will be slowed as certain government support measures for employment, particularly in the UK, is scaled back later in 2020," Midwich stated.

With sales last year of £686m and over 1,000 staff, AIM-listed Midwich operates in 18 different territories, most of which have been hit hard by the pandemic.

Countries that saw the most comprehensive initial lockdowns (such as France, Italy, Ireland and New Zealand) saw the most dramatic reduction in revenue initially, but the sharpest subsequent recovery as the lockdowns eased, Midwich said.

It added that its German and Australian arms have been the least impacted.

In more positive news, Midwich said actions taken to reduce operating expenditure mean it expects to remain in the black in its first half - albeit at a level "significantly below last year".

Due to reduced customer demand during the period, staff actions including voluntary short time working, reduced remuneration and - in the UK - furloughs were taken, it explained.

Midiwch has been on an M&A blitz in recent years, and in an effort to maintain its long-term momentum the distributor said it is now resuming conversations with key strategic acquisitions, as well as building expertise and reach in the unified comms market.

Having launched new vendor relationships with Sonos, Netgear, Poly and Huddly so far in 2020, Midwich also promised to continue adding new vendors and technologies.