Midwich revises expectations amid challenging market

21st Oct 2024 15:22

(Sharecast News) - Audio-visual distribution specialist Midwich Group revised its expectations for the year on Monday, amid persistently challenging market conditions.

The AIM-traded firm said that while the UK market had stabilised, and demand in the North American region and live events sector remained robust, broader market conditions, particularly in Germany, had deteriorated.

Subdued demand in the education and corporate sectors led the company to revise its expectations.

Midwich now forecast full-year group revenue to be marginally ahead of the prior year.

However, adjusted operating profit was expected to be significantly below 2023 levels, reflecting the operational gearing of the business.

The board said that came despite the group's strategic focus on higher-margin technical products, such as video, audio, and lighting, which supported gross margins in line with record levels from the first half.

Its overhead reduction programme was said to be progressing well, aimed at improving operating profit margins from the second half of the year onwards.

Additionally, Midwich said it had completed three small specialist acquisitions in the UK for a total consideration of £12m.

The acquisitions, focussed on the live events and fire security markets, were expected to enhance margins, with year-end leverage forecasted at around 2.2 times adjusted EBITDA.

Despite the ongoing challenges, Midwich said it was still growing its market share, adding that it remained confident in its future prospects.

It said a year-end trading update was scheduled for 20 January.

At 1311 BST, shares in Midwich Group were down 17.81% at 263p.

Reporting by Josh White for Sharecast.com.