Goodwin's cast iron returns

Companies still being run by the descendents of the original founder are pretty rare in today's stock market, but engineer Goodwin remains substantially owned and managed by the Goodwin family. Indeed, Goodwin represents a success story that illustrates the value of continuity.

The numbers speak for themselves. A punt on FTSE 100 index would have doubled your money over the past 20 years, while an investment in Goodwin over that period would have risen over 1,900 per cent. Goodwin's success is based on its niche of casting specialist materials at high temperatures into parts that are heat and corrosion resistant - something which, perhaps, only 20 firms globally can do. Customers include General Electric, the Royal Navy and China's power stations, as well as civil engineering companies that need high-grade materials for projects such as suspension bridges.

The recent full-year results demonstrated the best of Goodwin's qualities. The dividend, for instance, was bulked-up by a chunky special pay-out, meaning a very attractive yield. While the family's big shareholding, at about 60 per cent, should allay fears about the long-term security of that pay-out. The operation's cash generative nature adds comfort there, too, and has also helped wipe out the group's borrowings. Moreover, management has finished reorganising the main engineering business, after several acquisitions - that should leave Goodwin well placed if, as forecast, demand for car parts and jewellery casting recovers by 2011.

There are risks - Goodwin sells to late-cycle industries and the credit crunch has hit capital spending recently. But any slowdown should be countered by the company's strong balance sheet, which will improve further as part of a drive to improve cash flow - that reached £14.3m at the full-year stage, up from £11.2m in 2008.