Midwich Group Reports Return to Growth in Second Half, Profits In Line for 2025

Midwich’s 2025 Trading Update: H2 growth returns, profits on target

Midwich Group’s year-end update does exactly what it says on the tin: results in line and a welcome return to growth in the second half. Revenue for 2025 is expected to be circa £1.3 billion (2024: £1.3 billion), gross margins “broadly similar” year on year, and adjusted profit before tax is expected to land around £30 million, in line with the Board’s previous expectations.

Under the bonnet, it’s a mixed picture: organic revenue for the full year was down around 1.5% versus 2024, but that includes a -3% first half and a return to growth of about 0.5% in the second half. In a subdued global AV market, that H2 inflection – coupled with strong cash generation – is the key takeaway.

Key numbers at a glance

Metric	2025 (guidance/estimate)	2024 comparator	Notes
Revenue	c.£1.3bn	£1.3bn	Flat year on year; H2 returned to growth
Adjusted profit before tax	c.£30m	Not disclosed	In line with Board expectations
Gross margin	Broadly similar YoY	Not disclosed	Margins “held up well”
Organic revenue change	-1.5% vs 2024	-	H1 -3%; H2 +0.5%
UK & Ireland revenue	+c.7% vs 2024	-	Represents c.40% of Group revenue
EMEA revenue (constant currency)	-c.5.5% vs 2024	-	H1 -7%; H2 -4%; outside Germany +c.9%
North America revenue (constant currency)	-c.5%	-	Tariff uncertainty and vendor transitions
Operating cash conversion	>100% of adjusted EBITDA	-	Above long-term 70-80% target
Adjusted net debt (31 Dec 2025)	c.£130m	Slightly below Dec 2024	c.2.3x adjusted EBITDA

H2 momentum and UK&I lead the way

The standout positive is the return to growth in the second half, after a tougher first six months. That is exactly what investors wanted to see: momentum stabilising and then turning up into year-end. Management credits new vendor launches, sharper focus on customer needs, and targeted growth initiatives.

UK & Ireland delivered approximately 7% revenue growth versus 2024 and now accounts for about 40% of Group revenue. In plain English: the core home market is doing the heavy lifting again. That’s encouraging given UK&I’s importance to the P&L and suggests the Group’s vendor additions and share gains are landing where it matters most.

Regional picture: EMEA weighed by Germany, elsewhere looks stronger

EMEA: Germany drags, higher-margin specialisms grow

EMEA revenue fell by around 5.5% versus 2024 on a constant currency basis. The culprit is Germany, which faced significant softness in corporate demand and, crucially, delayed education purchases ahead of new federal funding. The funding is now fully approved, with projects expected to pick up from 2026 – helpful for patience, but not a 2025 fix.

Strip Germany out, and EMEA grew approximately 9% for the year, driven by stronger demand in more technical, higher-margin categories. That’s a quality signal: winning in specialist segments typically supports margin resilience and pricing power.

North America: one-off headwinds, medium-term confidence

North American revenues declined roughly 5% on a constant currency basis. Two factors were cited: tariff uncertainty and the planned transition to new technical vendors. Both are transitional issues rather than structural weaknesses; management expects the region to return to growth and deliver strong profitability over the medium term as trade negotiations conclude and new vendors come on stream.

Margins steady, cash excellent, leverage manageable

Gross margins “held up well” and are expected to be broadly similar to last year – no small achievement in a subdued market. The cash performance is even better: operating cash conversion was over 100% of adjusted EBITDA, beating the long-term 70-80% expectation. That suggests solid working capital discipline and supports balance sheet flexibility.

Adjusted net debt at year-end was circa £130 million, slightly lower than December 2024, and equates to roughly 2.3 times adjusted EBITDA. That leverage level is reasonable for a distributor with a history of acquisition-led and organic growth, though it still needs watching if macro conditions stay soft. An ongoing ERP deployment review is due to complete by the full-year results in March 2026 – worth keeping an eye on, as ERP programmes can create execution risk alongside long-term benefits.

Management’s stance: cost discipline, AI productivity, and specialisms

Midwich is doubling down on specialist, higher-margin product areas and keeping a tight grip on overheads. Management also flagged initiatives to implement AI solutions aimed at improving productivity and supporting future growth. In practical terms, that should mean smarter processes, faster customer service, and improved inventory and pricing decisions over time.

The company continues to target growth both organically and through acquisitions. With cash generation running hot and leverage within a sensible corridor, the Group has room to stay on the front foot when opportunities arise.

What I think it means for investors

The good

• Second-half growth and UK&I strength (+c.7%) show the commercial engine is working again.
• Margins held steady despite weak market conditions – a good sign for pricing and mix.
• Cash conversion above 100% of adjusted EBITDA boosts financial flexibility.
• EMEA ex-Germany up c.9% with a tilt to higher-margin technical categories – supportive for profitability.

The watch-outs

• Full-year organic revenue still down around 1.5% – H2 improved, but the base remains flat overall.
• Germany’s education rebound is a 2026 story, not an immediate catalyst.
• North America faces tariff and vendor transition noise – management is confident, but timing depends on trade outcomes and ramping new lines.
• ERP review ongoing into March 2026 – execution risk to monitor, even if the long-term benefits are attractive.

Jargon buster: quick definitions

• Adjusted PBT: profit before tax excluding items like acquisition costs, share-based payments, exceptional items and amortisation of acquired intangibles – used to show underlying performance.
• Adjusted EBITDA: operating profit before non-cash charges and certain adjusting items – a proxy for cash earnings.
• Constant currency: strips out foreign exchange movements to show like-for-like trends.
• Continuing revenue: excludes the small Swiss business (less than 2% of revenue) being closed.
• Adjusted net debt: borrowings minus cash, excluding lease liabilities.

Outlook and next milestones

Midwich says it “remains well positioned for the year ahead” and continues to focus on higher-margin specialist areas, operating efficiency, and new growth opportunities. The second-half uplift, strong UK&I performance, and cash discipline all support that view. Regional headwinds are easing, but Germany’s education recovery is more of a 2026 swing factor.

Mark your diary: final results are due on 17 March 2026. That should bring more colour on margins, vendor wins, cash flow detail, and the ERP review outcome. For now, this is a steady, confidence-building update with the right trend into year-end.