Midwich warns on profits as market struggles continue

(Sharecast News) - Trade audio visual distributor Midwich updated the market on its trading for the year ending 31 December on Wednesday, reiterating the negative global economic sentiment it highlighted in its interim trading update in September.
The AIM-traded firm said that sentiment was impacted by a number of matters, including the US-China trade war, ongoing Brexit uncertainty, and political changes in certain territories.

It said market conditions had continued to be challenging throughout the year, with many of its audio visual manufacturers reporting a fall in overall volumes.

Despite these challenges, the group said it had made "good progress", adding that it expected to report mid-single digit full-year organic revenue growth before the effect of acquisitions, and significant market share gains.

"The group has made four acquisitions during the year, enhancing the product portfolio and expanding geographic coverage," the board said in its statement.

"We have also invested in key areas, strengthening the core business and enhancing our capability to acquire and integrate new businesses."

Following strong trading through the first three quarters of the year, Midwich said it had seen a slowdown in demand in recent weeks in both the UK and across key territories in continental Europe.

In particular, it said it was looking at fewer larger projects, which in turn held back progress in gross margins.

As a result, while the board anticipated delivering total revenues for the year in line with expectations, the product mix effect on gross margins meant adjusted profit before tax in 2019 was now expected to be in the range of £30m to £31m.

"Despite current challenging market conditions, the group is well-positioned and the board remains confident in its future prospects," it added.

At 1224 GMT, shares in Midwich were down 7.22% at 565p.