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(Sharecast News) - Midwich Group reported a decline in full-year earnings for 2025 on Tuesday, amid challenging market conditions, although the audio-visual distributor returned to revenue growth in the second half and maintained record gross margins.
The AIM-traded group posted adjusted revenue of 1.27bn for the year ended 31 December, down 1.5% from 1.29bn in 2024, while gross profit fell 1.6% to 225.2m.
Gross margins held steady at 17.7%, reflecting pricing discipline and product mix, excluding exited businesses.
Adjusted operating profit declined 10.7% to 43.6m, with the operating margin narrowing to 3.4% from 3.8%, and adjusted profit before tax fell 22.1% to 30.5m.
The company's adjusted earnings per share dropped 17.0% to 22.37p.
Statutory results reflected a significant swing to losses, with the group reporting an operating loss of 14.9m compared with a 24.1m profit in 2024, and a pre-tax loss of 30.5m versus a 22.3m profit a year earlier.
Basic earnings per share fell to a loss of 21.92p from earnings of 15.69p.
Despite the decline in profitability, Midwich highlighted strong cash generation, with adjusted cash flow conversion improving to 123% from 97%, supported by working capital efficiencies.
Net debt to EBITDA stood at 2.17 times at the period end, down from 2.5 times at the half year and in line with expectations.
The group said revenue trends improved in the second half, with a return to growth supported by market share gains and new vendor relationships, particularly in the UK and Ireland.
Performance in EMEA was mixed, with growth across most regions offset by continued weakness in Germany, which management expects to improve from 2026.
Midwich also reported progress in digital investments, including artificial intelligence-driven automation and platform development, which it expected to support productivity and growth from 2026.
Reflecting the more cautious earnings backdrop and a revised dividend policy, the group proposed a final dividend of 3.5p per share, bringing the total dividend for 2025 to 5.25p, down from 13.0p in the prior year.
"Against a backdrop of challenging macroeconomic and industry conditions, we determined that 2025 was a year focused on driving efficiencies and continuing to strengthen our market positioning," said chief executive Stephen Fenby.
"Although the business environment has remained challenging, we have focused on our fundamental strengths which has allowed us to capitalise on emerging opportunities.
"Our geographic coverage, technical specialisation, and the skills and dedication of our team mean the group is well placed to pursue new prospects and benefit from improvements in market conditions."
Fenby said the company had strengthened its position through cost control and operational improvements.
"New business lines and vendor relationships combined with reshaping the business and tight cost control have put us in a strong position for 2026 and beyond."
He said the group remained focused on "developing new revenue streams, driving operational efficiencies, ensuring we are ready to develop prospects as market conditions improve and momentum builds."
At 1215 GMT, shares in Midwich Group were up 3.8% at 164p.
Reporting by Josh White for Sharecast.com.
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