Turbulent oil, gas and mining markets wreaked havoc at mechanical and refractory engineer Goodwin (GDWN) in the first half of its 2016 financial year. The only positive takeaway was a 16 per cent rise in sales order input, and that was achieved by cutting prices. A 22 per cent drop in workload helped cut profits by more than half. Those grim numbers and an uninspiring 'time will tell' outlook statement didn't exactly incite confidence, sending the shares down sharply on results day.
News that Opec has refrained from cutting production led investment banks such as Goldman Sachs to predict further oil price weakness in the year ahead. Goodwin's management team reckons this "quieter" period could last longer, hence why it has been busy investing in other areas.
It invested £5.8m, mainly on new machinery for Goodwin's international business, which produces nuclear components such as pump casings for defence and civil nuclear applications. Management is confident that investments to grow its large five axis machining capabilities will yield an £8m increase in order output.
Other measures taken to help mitigate the downturn faced in Goodwin's core markets included splashing out £4.8m on new assets to boost the refractory engineering unit's tyre and horticultural operations. A research development grant, meanwhile, is expected to lift the antenna business.
| GOODWIN (GDWN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,840p | MARKET VALUE: | £133m | |
| TOUCH: | 1,810-1,900p | 12-MONTH HIGH: | 3,040p | LOW: 1.840p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 1,149p | NET DEBT: | 27% | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 73.0 | 13.5 | 141.5 | nil |
| 2015 | 61.2 | 6.0 | 68.0 | nil |
| % change | -16 | -55 | -52 | - |
Ex-div: Payment: | ||||
