-First half revenues up 46%, operating profit up 45%
-Bolt-on acquisitions supplement organic growth
-Trading in line with prior increased full-year guidance
Specialist audiovisual distributer Midwich (MIDW:AIM) continued to exhibit strong growth with first-half revenues jumping 46% year-on-year to £568.6 million and adjusted operating profit climbing 45% to £20.2 million.
Excluding acquisitions organic growth was 27.9%, up from the 18.9% growth clocked-up in 2021 and well ahead of the 10.5% growth forecast for the underlying market by trade body Avixa.
Despite challenging macroeconomic conditions, the company sees no signs of a fall-off in demand.
It said: ‘The board believes that the group’s business and the broader AV market should continue to improve steadily across the remainder of 2022 and into 2023, although there remains a risk of negative impact due to a decline in general economic conditions.’
Trading since the end of June was in-line with the board’s recently upgraded expectations for the full year to 21 December 2022. Despite the positive outlook, the shares were unchanged at 527p.
RISING ESTIMATES
Since the start of 2021 earnings estimates from analysts have been on the rise, with 2022 earnings per share rising 20% to 33.1p and 2023 EPS up 15% to 36.8p.
Investment bank Berenberg left its forecasts untouched after only raising them two months ago, saying: ‘We keep our forecasts unchanged, yet remain confident that the company may have further positive news to share if current trend rates continue in H2 2022.’
The strong results reflect a continuing recovery of in-person events across hospitality and leisure as well as market share gains. The standout regions in the first half were the UK and Ireland and North America where organic revenues grew 86.3% and 81.5% respectively.
Berenberg believes Midwich is well positioned to benefit from manufacturers’ needs for high-quality distributers. The company operates as the sole or the largest distributor for several vendors.
GROWTH-ENHANCING ACQUISITIONS
The company supplemented organic growth with targeted acquisitions aimed at expanding its audiovisual footprint and broadening its unified communications offering.
In January the group purchased 65% of Cooper Projects which distributes video security products. In February the company acquired Nimans, a specialist distributor of unified communications, telecoms, and audiovisual technologies.
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