Navigating the Strait, Goodwin and annuities: The Companies and Markets Show

The episode opens with a discussion of the ongoing US-Israeli war with Iran and its effects on the Strait of Hormuz, a critical global shipping route that has been effectively closed by the conflict. Alex Hamer explains that beyond oil and gas, the disruption is affecting fertiliser supply (a third of global urea transits the strait), helium (impacting semiconductor manufacturing), and broader food supply chains as planting season approaches. The OECD has flagged rising inflation globally, with the UK expected to take the biggest growth hit and the US the biggest inflation rise. Damage to key infrastructure — particularly Qatar's Ras Laffan LNG complex, which adjoins Iran's South Pars field — could take years or even decades to repair, with new gas turbines facing multi-year backlogs. BP and Shell, despite some production losses in the region, are expected to see earnings rise significantly due to their leverage to higher oil prices, with EPS estimates up roughly 25% over the past month. The discussion also touches on UK North Sea policy, with debate ongoing over whether to revoke or reinstate permits for fields like Rosebank and Jackdaw, and whether the crisis strengthens the case for domestic production or accelerated decarbonisation.

The second segment focuses on Goodwin PLC (GDWN), a family-run specialist engineer based in Stoke-on-Trent, whose shares fell roughly 50% following a trading update released on Monday morning during a broader market sell-off. Alex Newman explains that Goodwin makes highly specialised products — including metal castings, nuclear waste containers, submarine components, and refractory engineering — for niche global markets. The stock had surged from around £65 to £270 over the prior year following strong earnings growth and margin expansion. The trading update flagged delays in dispatching orders to Middle Eastern LNG clients (though no cancellations), a reassessment of dividend policy potentially reverting to lower historic payout levels, two lost tenders for business not previously in the order book, and a general tone of uncertainty that raised more questions than it answered. Analysts noted the update felt like a 'Jim Bowen moment' — highlighting what could have been. The communications failures were compounded by the lack of a PR agency, minimal institutional ownership (only ~5% held by funds, ~60% by insiders), and the announcement being made at 9:20am into a falling market with no institutional buyers to stabilise the price. Despite the fall, the underlying business appears to be tracking in line with profit guidance of ~£70m for the year to April 2026, leaving the stock on a P/E of around 14x — which Newman suggests may represent an opportunity for long-term investors.

The final segment features Holly McKechnie discussing annuities as a retirement income product. She explains that annuities provide a guaranteed income for life in exchange for a pension lump sum, contrasting with drawdown which keeps the pot invested with flexible withdrawals. While rising bond yields typically improve annuity rates, current rates have remained broadly stable — a 65-year-old with £100,000 would receive roughly £7,644/year this week versus £7,793 in September. McKechnie highlights several overlooked features: enhanced annuities available to those with health conditions (potentially two-thirds of buyers could qualify but don't disclose); joint annuities that provide a survivor's income without inheritance tax implications for unmarried couples ahead of the 2027 pension IHT changes; and value protection annuities, which return unused capital to beneficiaries but are only used in about 7% of purchases. She also discusses inflation-linked annuities (more expensive) and the growing popularity of hybrid strategies combining a base annuity for essential expenses with a remaining invested drawdown pot, which may offer better inflation protection over the long term.