Goodwin shares drop as MidEast war may trigger dividend policy change
Goodwin PLC shares plunged on Monday, as the company disclosed it lost two contract tenders in the period from October and said it is considering reducing its dividend payout rate in response to the uncertainty caused by the war on Iran.
Goodwin shares were down 38% to 14,150.00 pence on Monday morning in London. The stock remains well up from 6,580.00p a year ago, however.
The Stoke-on-Trent, Staffordshire-based engineering and manufacturing company said it is considering reverting to its previous dividend policy of distributing up to 38% of post-tax profit plus depreciation and amortisation.
The company proposed moving to a 58% payout ratio as it released its most-recent full-year results in July last year from the 38% it had maintained since 2018.
The dividend policy change, Goodwin said, is due to taking a ‘prudent approach to capital allocation and financial resilience’ in light of the special dividend of 532 pence per share that it paid in November and the volatile situation in the Middle East. The company said it could revert to a payout of 38%, or lower ‘should this be considered appropriate given the escalating Gulf situation and the broader economic environment’.
Goodwin said its firm fixed order book stood at £288 million at the end of last month, despite the Mechanical Engineering division losing two tenders worth about £60.6 million combined.
The division is otherwise trading ‘broadly in line with the first six months of the financial year’, which ends April 30, the company said. Overall group trading also remains in line with expectations, Goodwin said on Monday. It will release its full-year results in August.
The tenders included a €18 million contract for 20 coastal radar antenna and transceivers off the coast of Estonia, and a £45 million tender with Sellafield, a nuclear site being decommissioned in Cumbria, England. Goodwin described the loss of the Sellafield tender as unexpected, since it already delivers equipment to the project.
Goodwin noted that none of its valves on order for liquefied natural gas facilities in the Middle East or the US have been cancelled or put on manufacturing hold.
Valves connected to some large Middle East contracts have seen delayed dispatches upon customer request, Goodwin said, noting that this may affect the timing of that revenue.
Goodwin added that it has proceeded with the construction of an extension to the foundry facility to support an automated moulding line, and that trading conditions within the Refractory Engineering division remain unchanged, as high gold and silver prices give the company confidence in the jewellery casting markets.
The Duvelco high technology business is yet to make sales, with market engagement expected in the financial year ending in 2027, the company said. Early years contributions to revenue are not expected to be substantial.
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