Shares in engineering group Goodwin (GDWN) tumbled 39% to £140 after the firm said it had lost two significant tenders. It also warned it had delayed the delivery of parts for certain large Middle East contracts, potentially affecting revenue timing.
Shrinking order book
The company said trading since October 2025 was generally as expectated and ‘broadly in line’ with H1. The firm fixed order book was £288 million in February, against £330 million in December and £365 million in October.
However, the Mechanical Engineering business lost two significant tenders worth a combined £60 million in revenue. The first, relating to coastal radar equipment for Estonia, was worth €18 million, while a contract with Sellafield was worth over £45 million.
Trading in the Refractory Engineering division was ‘broadly unchanged’, although high precious metal prices have weighed on the jewellery sector. The firm also said the lack of confidence among the general public was ‘starting to colour their spending habits’.
Dividend policy under review
None of the group’s orders for valves for the LNG industry have been cancelled yet, or manufacturing been put on hold. On some large MIddle East contracts, however, customers have delayed delivery which may affect the timing of revenues.
After paying a special dividend last November, the board is now reviewing its capital allocation policy. In future, distributions may be limited to 38% of profits after tax, depreciation and amortisation, or lower if appropriate.
We, and presumably the rest of the market, didn’t see today’s warning coming, hence the share price reaction. While losing out on tenders is disappointing, it is a normal part of doing business.
What’s happening in the Middle East certainly isn’t normal though, and it’s hard to see how Goodwin could insulate itself. While orders haven’t been cancelled yet, there is still that possibility if customers’ plans suddenly change.
The bigger question is how many other firms might be in the same situation and have yet to ‘fess up. The Middle East has been a good source of revenue and earnings for quite a few companies in recent years.
Read the press release here: https://www.goodwin.co.uk/investors/
You might also like these stories:
