REG - Midwich Group PLC - Trading Update

MidwichAnnouncement

21/10/2024 07:00

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RNS Number : 8593I  Midwich Group PLC  21 October 2024

 

This announcement contains inside information for the purposes of the market
abuse regulation (EU No. 596/2014) as it forms part of United Kingdom domestic
law by virtue of the European Union (Withdrawal) Act 2018, as amended.

21 October 2024

Midwich Group plc

("Midwich" or the "Group")

 

Trading Update

 

Midwich Group (AIM: MIDW), a global specialist audio visual distributor to the
trade market, is today providing a trading update and revised guidance for the
year ending 31 December 2024.

At our Interim Results, issued on 3 September 2024, we highlighted the
challenging market conditions experienced in the first half of the year, with
market survey data indicating a return to growth in mainstream products during
the second half.

In recent weeks, whilst the UK market has stabilised, and performance in the
North American region, as well as demand in the live events and entertainment
sectors remains strong, broader market conditions have not improved as
anticipated. In particular, Germany has seen a further deterioration and there
remains subdued demand for mainstream products, primarily in the education and
corporate markets.

We now expect current market conditions to persist for at least the rest of
the year. Given the challenging AV market backdrop, the Board now expects full
year Group revenue to be marginally ahead of the prior year.

In line with the Group's stated strategy, the continued progress in product
mix in favour of technical video, audio and lighting products, is expected to
result in full year Group gross margins in line with the record levels
achieved in the first half.

The previously announced overhead reduction programme is also well progressed.
However, whilst these overhead reductions will support increased operating
profit margins in the second half of the year onwards, the Board expects
adjusted operating profit for 2024 to be significantly below the prior year,
reflecting the operational gearing of the business.

In recent weeks, the Group has completed three small specialist acquisitions
in the UK for a total combined cash consideration of £12m. These higher
margin technical businesses operate primarily in the live events and fire
security markets. The total consideration paid, when combined with the usual
second half operating cash inflow, is expected to result in year-end leverage
of around 2.2 times adjusted EBITDA. The Group remains well within its debt
covenant levels.

Despite the continuing challenging market conditions, the Group remains well
positioned, has continued to grow market share in its key markets since the
half year and will seek to drive further revenue mix towards technical product
sales. The Board remains confident in the future prospects of the Group.

Midwich expects to release a scheduled year-end trading update on 20 January
2025.

For further information:

 Midwich Group plc                                       +44 (0) 1379 649200

Stephen Fenby, Managing Director

Stephen Lamb, Finance Director
 Investec Bank plc (NOMAD and Joint Broker to Midwich)   +44 (0) 20 7597 5970

 Carlton Nelson / Ben Griffiths
 Berenberg (Joint Broker to Midwich)                     +44 (0) 20 3207 7800

Ben Wright / Richard Andrews
 FTI Consulting                                          +44 (0) 20 3727 1000

Alex Beagley / Tom Hufton / Matthew Young

About Midwich Group

Specialisation at scale.

Midwich Group is a network of businesses which partner with the world's
leading technology companies to accelerate their growth. Selling into over 50
countries from 23 global locations, the Group specialises in audiovisual
technology - whether in state-of-the-art meeting rooms or on a festival main
stage, our solutions help the world connect, communicate, or experience wow
moments.

Taking technology further.

With services ranging from product distribution to complex system design,
focused marketing campaigns to flexible financing solutions, and showcase
events to seed funding for startups, the Group's ever-expanding offering is
designed to add value and solve its partners' biggest challenges.

This has enabled the Group to maintain strong relationships with global
manufacturers and a diverse customer base of over 21,000, including
professional integrators, event production companies and IT resellers in
sectors such as education, corporate, retail and live events.

Enabling tomorrow.

With over 1,900 employees across the UK and Ireland, EMEA, Asia Pacific and
North America, the company is committed to being a responsible employer.

The Group wants to do the right thing and actively works to limit its impact
on the environment and communities, and recognises the importance of giving
back - find out more about our sustainability activities here
(https://midwichgroupplc.com/sustainability/) .

Help us go further, together.

Visit https://midwichgroupplc.com (https://midwichgroupplc.com)

 

 

 

 

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