Midwich FY23 results: Distie revenues grow despite market challenges

Revenue up 6.8 per cent to £1.3bn, while gross margins improve to 16.8 per cent

Midwich has reported revenue increased by 6.8 per cent to £1.3bn in its FY23 results, with gross margins reaching 16.8 per cent, up from 15.3 per cent in 2022.

The distributor also further consolidated its position in the market by completing seven acquisitions and entering the Canadian market with the buyout of SF Marketing.

Adjusted operating profit of £59.6m was a group record, a statement read, and up by 16.8 per cent at constant currency. Statutory operating profit (before adjustments) was £41.6m.

There was strong operating cash generation, with operating cash conversion at 114 per cent (2022: 54 per cent).

"Our adjusted net debt to adjusted EBITDA ratio at c.1.1x (2022: 1.6x) positions us well for future acquisitions and our revolving credit facility gives us funding capacity to support our growth strategy," read the statement.

Stephen Fenby, MD of Midwich said: "The group had another strong year, both operationally and financially, improving all key metrics in a highly challenging market.

"Our performance reflects the fundamental strength of the business, our customer and vendor relationships, our geographic and technical solution diversity and, most of all, the skills and dedication of our team.

"Despite lower demand for mainstream products, stronger technical product sales led to our highest ever gross margin percentage.

"A strong increase in adjusted operating profit of 17 per cent helped us to achieve adjusted profit before tax in excess of £50m for the first time.

"Although still early into the new financial year, and being mindful of the continued challenging general economic conditions, we remain confident that 2024 will see yet another year of growth in excess of the overall market."

Regional split

In the UK and Ireland, after two years of growth, the segment revenue shrank by 3.6 per cent to £474.7m, from £492.2m in 2022.

Technical product categories remained strong whilst demand for mainstream products was subdued due to challenging market conditions.

The gross profit margin increased significantly to 18.1 per cent, reflecting a focus on higher margin products. This resulted in an adjusted operating profit of £27.1m, an increase of 2.3 per cent.

The EMEA segment revenue, on the other hand, grew 10.2 per cent to £589.3m.

Gross profit increased to £92.3m at a gross profit margin of 15.7 per cent, with the increase in margin attributable to a favourable change in product mix. The region produced an adjusted operating profit of £28.1m, an increase of 23.8 per cent.