Videndum keeps on top of inflation

Few can resist a Latin motto, and Videndum (VID) – formerly Vitec Group – is no exception. ‘Videndum’ means ‘that which must be seen’, or ‘a must see’, and is an appropriate name for a company that makes camera supports, video transmission systems, live streaming solutions and smartphone accessories, among other things. 

Videndum says it is “right at the heart of the growing content creation market” and its results bear this out. Revenue has risen by almost a quarter to £224mn –  22 per cent higher than pre-pandemic levels. Our appetite for ever more content is expected to keep demand high, coupled with the fact that tech products are being replaced more frequently. 

The group raised its prices in 2021 and the first quarter of 2022 to offset the higher cost of raw materials, freight, duty, utilities and labour. This was sensible: adjusted operating expenses were £10.1mn – or 17 per cent – higher this year than last. Videndum has done a good job of protecting its profits, however. Its adjusted operating margin of 13.4 per cent is 1.3 percentage points ahead of last year. Statutory figures are less impressive as a result of acquisition costs. 

‘Production solutions’, which makes and distributes technically advanced products for broadcasters and production companies, has the roomiest margins. Growth here is particularly strong, with revenue up 28 per cent year on year.

‘Creative solutions’, focused on independent content creators, has narrower margins. Operating margins of 11 per cent are not to be sniffed at, however, and demand is still healthy: revenue is up 21 per cent year on year. 

Videndum’s shares have risen by 11 per cent over the past six months and, with a forward price/earnings ratio of 14.3, they are not cheap. However, it has reported a record order book going into the second half and its long-term growth prospects are appealing. Buy.

Last IC View: Buy, 1,250p, 2 Mar 2022