Shares in Stoke-on-Trent engineer Goodwin (GDWN) slumped about 7 per cent on the day these solid first-half numbers were announced. That reflects the company's exposure to the oil and gas industry, which is struggling with a 40 per cent slump in the oil price since June, compounded by the volatility of a stock with a very limited free float.
The record workload with which Goodwin started the financial year has been steadily shrinking, and management expects the second half to turn out weaker than the first. Although the depressed conditions currently facing Goodwin's oil and gas clients could yet improve, management isn't banking on it. In fact, chairman John Goodwin says the company is "going hell for leather" to replace lost business by focusing on longer-term projects in areas like UK defence. Moreover, Goodwin has invested heavily in new machine tools to cope with projects outside of the oil and gas sector. But progress with these diversification plans could stutter in the near term, given the uncertainties generated by next year's general election.
Meanwhile, the company's refractory engineering operation - which produces a powder used by the jewellery manufacturers - has continued to grow activity and sales. The snag is that this business currently generates only about a third of group sales.
GOODWIN (GDWN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,533p | MARKET VALUE: | £182m | |
| TOUCH: | 2,501-2,599p | 12-MONTH HIGH: | 4,250p | LOW: 2,533p |
| DIVIDEND YIELD: | 1.6%† | PE RATIO: | 9 | |
| NET ASSET VALUE: | 1,072p | NET DEBT: | 19% | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 71.3 | 12.3 | 131 | nil |
| 2014 | 73.0 | 13.5 | 142 | nil |
| % change | +2 | +10 | +8 | - |
Ex-div:- Payment:- †Includes full-year extraordinary dividend of 17.645p | ||||
