Goodwin

The statue's alright

Goodwin GDWN

This is just some thoughts, it isn’t investment advice or incitement to buy in any way, just my views - please do your own thorough research. I’m not an analyst, I’m just a private investor looking after my own money. Nothing I do or say is meant as advice or should be taken as such. My views of a stock may change quickly, dependent on my research or news. Here I publish my ideas and research that I have done and discuss the way I invest. Anything written here needs to be verified for its accuracy. Assume any stock I write about I likely own, so my views are biased. Inevitably I will get things wrong, everyone is responsible for their own decision making and what they buy and sell. Subscribing and reading this article means you accept the above and you take full responsibility for your own actions and decisions. Small Cap stocks can be illiquid and very hard to sell at times when demand is weak so caution is required.

Expect some spelling mistakes – I’m dyslexic and in a rush to get this out on a Friday so a bit of a task at times.

Okay, so Goodwin, GDWN put out a trading update today. To say I am livid is an understatement. I have had the greatest respect for this company but the events today and on Friday I find extremely disappointing. My worst trading day ever.

Goodwin PLC

“Trading Update March 2026” Today.

It is encouraging that the Group’s trading performance remains in line with expectations, as outlined in the October 2025 trading update. Activity within the Mechanical Engineering Division continues to track broadly in line with the first six months of the financial year.

The Group’s firm fixed orderbook stood at £288 million at the end of February, reflecting the procurement cycles typical of the capital goods markets we serve. The Mechanical Engineering Division has been disappointed by the outcome of two significant tenders during the period. Easat lost a tender for 20 off 7.5 metre Coastal Radar Antenna and Transceivers, with a contract value of approximately €18 million, relating to installations off the coast of Estonia. In addition, Goodwin International unexpectedly lost a tender with Sellafield in the last quarter, with a bid value in excess of £45 million, despite the strength of the Group’s technical proposal and its ongoing delivery of compliant Self Shielded Boxes and 63 Element Racks in line with production schedules.

Within the Refractory Engineering Division, trading conditions remain broadly unchanged. Persistently elevated gold and silver prices continue to weigh on confidence in the jewellery casting markets, and there have been no other material developments influencing trading activity during the period other than the lack of confidence by the general public starting to colour their spending habits.

We feel it appropriate to advise that as of the time of writing, none of the many valves we currently have on order for LNG facilities in the Middle East or the USA have been cancelled or placed on manufacturing hold. However, on certain large Middle East contracts, the Group has been requested to delay the dispatch of valves, reflecting the current geopolitical environment in the Gulf . While these requests have not resulted in cancellations, they may affect the timing of revenues.

The Group has proceeded with the construction of an extension to the foundry facility; the development is intended to support an automated moulding line. The company has undertaken the work to date at its own risk, however we are expecting final planning approval for the project imminently and any significant progression or purchase of capital equipment is subject to the securing a purchase order by Goodwin Steel Castings Ltd.

For Duvelco high technology products, still no commercial sales have been made to date, the business has progressed to a stage where market engagement is expected to lead to initial contributions to Group sales in the financial year ending 2027. Any such contribution is not expected to be substantial in the early years, as the rate of increase in sales is anticipated to be progressive as with any new product launch and dependent on technical approval timelines specific to individual end‑markets, which can vary in length and, in some cases, extend over multiple years.

Considering the payment of a special interim dividend in November 2025, together with highly increased global geopolitical uncertainty, the Board continues to take a prudent approach to capital allocation and financial resilience. Accordingly, the Board is considering whether to revert to its previous dividend policy, under which distributions were limited to 38% of post‑tax profit plus depreciation and amortisation, or to a lower level should this be considered appropriate given the escalating Gulf situation and the broader economic environment.

Finally, we are proud to announce the return of the Steelman statue to the front of Goodwin House, our head office. Originally manufactured by Goodwin Steel Castings in 1974 to honour the workers of the Shelton Bar Steelworks prior to its closure, the Steelman has been kindly loaned by the Potteries Museum on a long-term basis. To see an image of the Steelman in its new location, please visit our homepage at www.goodwin.co.uk.

T.J.W. Goodwin

Chairman

Let’s start with Friday. You never see volume trades in Goodwin with the directors holding 50%+ no large institutions holding oveer 3% other than Rulegate Nominees with 5% and JH Ridley who has 7%, there are no major holders. So it was quite a surprise to see a 1% trade go through late on Friday at near the lows of the day. I had Goodwin down as a company that didn’t leak news hence the big rallies on big surprises but to see a trade of that size, 2 trading hours before a warning says to me somebody knew this was coming. Did they have insider info? I don’t know – some coincidence though.

The trading update came out today and I thought perhaps it might be staid, the usual not saying an awful lot at worst but with a trading update just back in October, absolutely all singing and all dancing what could have gone significantly wrong I thought.

“October 2025 Trading Update” Not todays update:

Further to the Trading Update on 24^th September, and in light of the strong trading performance across the businesses, the Board considers it appropriate to update shareholders to expect a material increase in the Group’s profitability, supported across all divisions.

The Board is pleased to report that it expects, with a high degree of confidence, the trading profit before tax for the financial year ending 30^th April 2026 will be in excess of £71 million, representing a 100% increase compared with the prior year (April 2025 £35.5 million).

The Board remains confident in the Group’s ability to continue to grow its activity and profitability based on the Group’s product quality and strong order book that, as at the time of writing, stands at £365 million, along with enhanced visibility across multiple key defence and nuclear programmes that are not yet reflected in the order book.

The Group does not ordinarily provide forward guidance and does not intend to change this long-standing policy. However, given the high increase in pre-tax profitability for the year ending April 2026, on this occasion, it was thought appropriate to do so, as it is correspondingly being matched with a similar improvement in cash flow.

All divisions contribute to this performance, although it should be noted that profitability levels and growth trajectories vary across the Group’s businesses. Furthermore, this improved performance in profitability does not include contribution from our advanced Polyimide Division which should start contributing in the next financial year.

Special Interim Dividend

The Board wishes to acknowledge and reward shareholders for their long-term commitment and support of the Company’s prior investment programmes that have been integral to achieving these outcomes and in laying the foundations for continued future growth. So, bearing in mind the imminent UK Budget that the Chancellor is announcing on the 26^th November, the Board of Goodwin PLC has declared a special one-off interim dividend of 532 pence per share in addition to the dividend paid earlier this month of 140 pence and the declared dividend to be paid on or around the 10^th April 2026 of 140 pence.

As the Group approaches a zero net debt position, its strong cash generation, limited non-customer-funded capital expenditure and a resilient balance sheet have placed it in a position of financial strength, with surplus funds exceeding those needed for optimal efficiency.

Following payment of the special interim dividend, the Group will continue to have low gearing relative to its peers. The Board remains confident in the Group’s ongoing profitability and cash generation, which will support the growth of its existing businesses while also enabling investment in attractive opportunities as they arise.

The special interim dividend will be paid on or around 21^st November 2025 to shareholders on the register at the close of business on 7^th November 2025 (ex-dividend date 6^th November 2025; ISIN: GB0003781050; TIDM: GDWN).”

Things were going that well they paid a big special divi. Future divis would be at 58% of earnings the company had said, they were doing that well.

Today they said they had lost out on a £45m+ contract with Sellafield. As far as the company had been saying, they were about one of the only companies that could manufacture these things, they were sitting pretty! In the recent trading update they said they didn’t much care if competitors were reading their update because they were so niche and capable. But to me it looks like a customer was reading it and decided Goodwin had got too cosy and charging too much -hubris?

Similarly, they have lost two tenders by Easat for 18m Euros. All this when they sounded so upbeat and sure in October.

There also seemed to be a pre-warning about disappointment in the middle east with LNG facility orders being placed on hold.

This was very disappointing compared to what they had been saying. But there was worse to come.

Duvelco – their new superplastic. This has the potential to be bigger than the entire existing business over time they said, and commercial sales were set to start in the coming financial year and sounds like they still are. This was what attracted me more than anything else. They had put together huge capacity, I think they already have the capacity for 40 tons of the stuff and had purchased the raw materials to manufacture that. Today they said this:

“Any such contribution is not expected to be substantial in the early years, as the rate of increase in sales is anticipated to be progressive as with any new product launch and dependent on technical approval timelines specific to individual end‑markets, which can vary in length and, in some cases, extend over multiple years.”

That just doesn’t jive.

They did say they expected several years of strong growth.

So not only are they not going to make as much in earnings as they suggested, I’m only going to get 38% or less paid to me instead of the 58% on a lot more. You don’t reverse your divi policy without being concerned imo. The rating was quite rich here, a PE of around 30 for the current year but they have had 6 years of 39% compound earnings growth. 50% earnings growth in the coming year as I would have expected at least with Duvelco was good value, perhaps a fwd PE of 20 for the existing year. It doesn’t look like they can meet anything like that now. Why have they bought the materials and built the capacity to produce 40 tons of Ducoya? This stuff should be selling well over £1k a kilo or £1m a ton at least and it’s supposed to be 30% better than anything else in the world?

So, the story changed today. They are not going to grow as fast as they have been in my opinion, the divi will be 38% of a lot less than 58% of a lot more – that almost halves my div expectations. Ducoya doesn’t sound like the killer product recent statements have suggested and demand looks much less, at least for now.

Suitably humbled – I had 35% of these making my portfolio and had been so confident, too confident. A painful big 6 digit hit this morning and a costly lesson in over-confidence. Sh*t happens as they say, at the end of the day it’s only money, I haven’t lost a limb. You’ve never made money till you’ve banked it, it’s all numbers till then.

SAGA and SSIT have gone some way to easing the pain today, but nowhere near enough. I know there are others as long on GDWN as me, in fact a lot longer than me – I empathise. The only way I can look on it is that the bulk of mine were bought under £100 and I’ve had 10% back in divis this year on my sub £80 buys. Giving back hurts though – there was a small holiday home there or several years in a nursing home paid for until 9.20am today. Anyway, I don’t care, I have sold the lot, I have spent the whole day selling. I have other places to make this back up going forward. There will be plenty of bargains thrown up in the fog of war. That’s the way I am with a co that lets me down that heavily, others I know will do differently so you make your decision.

As ever, don’t follow me, do your own research – I could be making a huge mistake, I’m just saying what I have done.

The good news though is they are proud of the Steelman Statue that has gone up at the factory.

I’ve done this note as I will get endless questions and can’t answer them all, sorry. Can likely say more at the weekend.

Cockney Rebel