Midwich MD on H1 results, responding to product shortages and acquiring Intro 2020 business

Group managing director Stephen Fenby offers positive outlook for future but says the business is still facing several challenges

Midwich saw a resurgence in its revenue and profits compared with a "challenging" first half of last year, but group managing director Stephen Fenby warned there is still a "long way to go" when it comes to the recovery of some of its key markets.

The audiovisual distributor posted revenues of £390.1m for H1 of 2021, up 29 per cent year-on-year from £302m, and reported an operating profit of £7.6m having made a loss of £0.7m during the same period last year.

Gross profit meanwhile increased by 35 per cent from £43.8m to £59.1m.

It comes after the business started to show signs of recovery during the second half of last year, though still posted a 71.6 per cent decline in operating profit for FY2020.

"Despite the restrictions on our business, we've still carried on growing, and we've been very pleased with the achievements we've made," group managing director Stephen Fenby told CRN.

"We've seen general improvements in different segments of the market. I think for us, mostly, we've tried to keep our service levels as high as possible, and therefore pick up more market share from the competition and I think we've done a good job at that.

"There's still some parts of our business and our markets that are causing headwinds. We're seeing product shortages continue and logistics issues for both getting product into the UK and into our businesses.

"Some of our end user markets are still struggling. So live events is coming back but it's still slow and there's a long way to go. The entertainment markets are sort of similar. The corporate market, which is offices and meeting rooms and huddle spaces and the like, is improving, but probably a little bit slower than we might have thought six months ago."

Midwich's UK and Ireland business benefitted from the easing of strict lockdowns, recording an increase of 25 per cent in revenue for H1 2021 which was "helped particularly by the contribution from new vendors launched in late 2020 and H1 2021".

EMEA showed the greatest improvement across the business with a 65 per cent increase in revenue thanks to a particularly strong performance in Germany and France. Revenue in North America, however, was 41.8 per cent lower than the same period in 2020 due to the group "exiting a low margin fulfilment arrangement".

The distributor's growth was driven largely by its displays and projection sales, which increased 33 per cent and "exceeded 2019 levels", while revenue in specialist product areas such as technical video, audio, broadcast and lighting grew by 26 per cent.

Fenby also said the company was helped by "a bigger effort to acquire new brands" which has expanded its product portfolio, following Midwich's August announcement that it had agreed a deal to acquire the operations and specific assets of imaging distributor Intro 2020.

"It's a good complementary fit with our Holdan business. The company (Intro 2020) had got into financial difficulties, we bought it out of administration as part of a process there so we've taken over the team and they are now sitting in one of our offices that is now a division of Holdan," Fenby explained.

"Some of the businesses in our sector have done very well, but there will undoubtedly be one or two that are still struggling and if they've got something where we think we can help them, they can help us, then we're very much open to conversations."

In its results, Midwich said that the board believes the group is "very well positioned to take advantage" of the forecasted growth in the AV sector, and Fenby offered a positive outlook for the rest of the year and beyond despite some of the difficulties the business is still facing.

"We're positive about the rest of the year but the growth rate for the first half was very strong against clearly a fairly horrible first half of last year, so I wouldn't expect it necessarily to be quite the same growth rate in the second half that it was in the first, but we're still focused on growing the business," he added.

"Product shortages are having an impact on our business, but we think mostly that's deferred business rather than lost business. But, in time, we should get the products coming back through again and logistics issues should sort themselves out so we don't see those big long-term impacts."