Goodwin (LON: GDWN) shares were down around 3.8% at the open on Wednesday after a trading update showed its new Duvelco plant held back by a production bottleneck. The update covers the four months to the end of August and focuses on the businesses that will remain after a large disposal.
Duvelco, which makes polyimide (a high-performance plastic) in Stoke-on-Trent, found a mechanical issue while commissioning its full-scale production plant. The final drying stage, under 12% of the manufacturing process, limits output to about 20% of designed capacity.
The indicated lead time for the proposed dryer is around ten months. Goodwin said the team is trying to shorten that, that trials with alternative dryers are under way, and that it will update the market once the timetable is certain.
Duvelco’s loss was £1.7m, against £592,000 a year earlier, which the company said was primarily driven by depreciation on manufacturing assets. Goodwin maintains the product is technically competitive with the world market leader, and exceeds it in certain respects.
Elsewhere the picture was better. Profits from overseas refractory businesses, which make heat-resistant materials, rose 19% year on year to £3.1m. AVD Fire, which sells lithium-ion battery fire protection, and Dupré Minerals, a vermiculite and specialist minerals business, together grew profits 30% to £1.0m.
There were drags. A planned maintenance shutdown at Hoben International took a calciner offline for about 11 weeks, hitting UK powder operations, and elevated gold and silver prices weighed on demand in certain end markets, hurting Goodwin Refractory Services.
The disposal is the larger backdrop. On the 9th of September Goodwin agreed to sell a substantial part of its Mechanical Engineering Division to an affiliate of Cerberus for headline cash of up to about £1.1bn, with completion expected in the first quarter of 2027, subject to regulatory approvals. The company expects no UK corporation tax on the gain.
The board is still weighing how to return a significant proportion of net cash proceeds to shareholders, and has made no final decision on amount, timing or form.
Goodwin is also recruiting a Chief Executive Officer and a Finance Director, while the board reviews roles, responsibilities and remuneration. The board said it remains confident, with refractories providing the earnings foundation and AVD Fire and Duvelco offering growth.