Midwich revenue rises as profit growth, dividend increase and unchanged outlook offset regional pressures

Midwich Group has delivered a respectable first half of 2026, with revenue returning to growth, adjusted profit before tax rising at a double-digit rate and the business moving back into statutory profit.

The specialist audio visual distributor also increased its interim dividend by 8.6% and said full-year profit remains on track. That is encouraging given disruption in the Middle East, continued weakness in Germany and generally challenging market conditions.

However, this was not a completely clean performance. Group-level organic growth remained modest, the gross margin slipped and working capital movements resulted in an operating cash outflow.

Investors can read the original company announcement for the complete accounts and notes.

Midwich's key first-half figures

Metric	H1 2026	H1 2025	Change
Revenue	£640.3 million	£620.3 million	3.2%
Gross profit	£111.1 million	£109.6 million	1.4%
Gross margin	17.4%	17.7%	Down 0.3 percentage points
Adjusted operating profit	£17.0 million	£16.6 million	2.4%
Adjusted profit before tax	£10.6 million	£9.6 million	10.3%
Statutory profit before tax	£4.3 million	£3.0 million loss	Return to profit
Adjusted basic EPS	7.86p	6.91p	13.7%
Interim dividend	1.9p	1.75p	8.6%

Revenue increased by 3.2%, or 2.4% at constant currency. Constant currency strips out exchange-rate movements to give a clearer view of underlying trading.

Adjusted profit before tax grew faster than revenue, rising 10.3% to £10.6 million. Midwich said growth was around 20% when the Middle East and exited businesses were excluded, showing that the healthier parts of the group performed more strongly than the headline figure suggests.

Adjusted basic earnings per share increased by 13.7% to 7.86p.

UK and US growth did the heavy lifting

The best performance came from Midwich's UKIANZ division, covering the UK, Ireland, Australia and New Zealand. Revenue increased by 9.9% at constant currency to £294.7 million, helped by double-digit UK growth and market-share gains.

North American revenue rose by 8.4% at constant currency to £108.4 million. The US delivered double-digit growth, although Canada declined while transitioning to new technical vendors. Management expects those vendors to support revenue during the second half.

Unified communications was a major contributor. This category, which includes technology used for workplace communication and collaboration, grew revenue by more than 30%. Professional audio, drones and networking products also recorded strong double-digit growth.

The mainstream displays and projection categories were weaker, with revenue down by around 3%. Improved margins nevertheless produced a small increase in gross profit from these categories.

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Middle East disruption and Germany remain the main drags

The EMESEA division, covering Continental Europe, the Middle East and South East Asia, reported a 7.9% constant-currency revenue decline to £237.2 million.

Double-digit growth in Spain was outweighed by weakness in Germany and disruption caused by the conflict involving Iran. Middle East volumes were significantly lower, although the local operation remained profitable.

That resilience matters, but the region remains a source of uncertainty. Midwich noted that its Middle East contribution was more heavily weighted towards the second half in 2025. The duration of the conflict therefore creates a range of possible outcomes for the remainder of 2026.

Germany is another area to watch. The company is carrying out growth and efficiency initiatives and reported some signs of progress, but trading conditions remain difficult.

These pressures explain why Midwich's revenue growth was fairly modest despite stronger performances elsewhere.

Margins were mixed, but cost control helped

Group gross margin declined from 17.7% to 17.4%. Midwich attributed this mainly to reduced activity in the higher-margin Middle East business and changes in the UKIANZ sales mix as it gained market share.

North America's gross margin dropped more sharply, from 18.4% to 16.4%, because lower-margin US growth made up a larger part of regional revenue while higher-margin Canadian sales declined.

Midwich offset some of this pressure through overhead savings, keeping its adjusted operating margin unchanged at 2.7%.

The statutory numbers improved substantially. Operating profit increased by 119% to £10.3 million, while the group moved from a £3.0 million pre-tax loss to a £4.3 million profit.

Investors should note that statutory profit included a £0.6 million net exceptional credit. Midwich received a £2.1 million insurance recovery connected with the 2024 Dubai warehouse fire, partly offset by around £1.5 million of restructuring costs.

Debt improved year on year, but cash flow was weak

Adjusted net debt stood at £138.1 million, down from £148.2 million a year earlier but up £12.1 million since the end of 2025.

Leverage, measured as adjusted net debt divided by adjusted EBITDA, was 2.4 times. Management expects this to fall to approximately 2.0 times by the year end, comfortably within its banking covenant of three times.

Cash flow deserves attention. The first half is normally more working-capital intensive, but the £23.9 million working-capital outflow was significantly higher than the £8.7 million outflow recorded a year earlier. Net cash outflow from operating activities was £0.5 million, compared with a £6.3 million inflow in H1 2025.

The company said seasonality, particularly within education, was the main cause and maintained that its long-term cash conversion range of 70% to 80% remains sustainable. Investors will want to see the expected second-half cash recovery arrive.

Dividend rises and a buyback remains possible

Midwich declared an interim dividend of 1.9p per share, an increase of 8.6%. It will be paid on 6 November 2026 to shareholders on the register on 2 October, with an ex-dividend date of 1 October.

The board is also considering a share buyback under the authority granted at its May 2026 annual meeting. No programme has been confirmed, and the potential size and timing were not disclosed. Management indicated that any buyback would probably be additional to the ordinary dividend policy.

Acquisitions remain part of the strategy. No deals were completed during the half, but management has become more active in pursuing relatively small opportunities and described the pipeline as healthy.

What investors should watch next

The key reassurance is that Midwich continues to trade in line with the board's full-year profit expectations. The second half has started solidly, while growth in the UK, US and Iberia shows the benefits of the group's geographic and product diversification.

The main concerns are the Middle East, Germany, margin pressure and weak first-half cash conversion. These are meaningful issues rather than minor footnotes.

Overall, the results show a business making progress in difficult conditions. Profit growth, lower year-on-year debt and a higher dividend are positives, but delivery in the second half will depend on maintaining momentum in stronger markets while controlling the regional and cash-flow pressures discussed above.