Midwich Group’s revenue for the first half of 2021 is expected to be 29% higher than for the first half of 2020, when the pandemic first made its impact, the company said in a business update for the ended six months June 30. Organic growth represents 25% of this 29% increase.
The overall gross margin of the company was around 15.2%, which is 0.7% more than in the first half of 2020 and 0.9% more than for the whole of 2020. The increase is due to improving the product line and discounts received, although further gross margin improvements are expected to be made once the live events, entertainment and hospitality markets pick up after the lockdown.
The company’s adjusted pre-tax profit in the first half of the year is expected to be around Â£ 13million, up from Â£ 3.2million in the first half of 2020.
Trade in EMEA showed the greatest improvement, with revenues up 65% year-over-year and significantly higher net profit. The recent eLink and NMK acquisitions made a strong contribution to results, but organic sales and profit improved in almost all businesses, particularly those in Germany and France.
Performance in the UK and Ireland improved significantly following the easing of severe lockdowns earlier in the period. Turnover increased by 25%, helped in particular by the contribution of new publishers launched in late 2020 and H1 2021, such as Barco Clickshare and BirdDog. The gross margin percentage is stable compared to H1 2020, although this represents a continuous improvement compared to the post-Covid period. The live events, entertainment and hospitality markets remained sluggish, but it is expected that further easing of restrictions should allow these markets to return to normal, thereby improving sales and margins for the UK&I business. .
Trading in North America improved steadily in the first half of the year, with good margins being supported in particular by the reversal of provisions on aging stocks sold over the period. As expected, trade in the APAC region has been relatively stable compared to the previous year.
Cash generation was in line with the expectations of the Board of Directors, with the increase in net debt of around Â£ 40million being a combination of M&A expenses and increases in working capital due to normal seasonality and significant growth in business. The leverage effect remains comfortably in the group’s commitments.
If foreclosure restrictions in the group’s key markets continue to ease, Midwich’s board expects full-year revenue and earnings to be well above analysts’ expectations, who range between Â£ 742.5million and Â£ 791.6million and Â£ 21.3million. to Â£ 23.2million.