Fleetwood slumps on earnings update

Shares in Perth-based Fleetwood Corporation fell nearly 20 per cent today after the RV and accommodation company flagged subdued market conditions for its caravan manufacturing business.

Fleetwood said it was now forecasting underlying earnings of $5.5 million, following original estimates of about $15 million.

“The expected result is driven primarily by ongoing losses in caravan manufacturing (RV) and smaller secondary effect in modular accommodation related to timing of capital spend in the education sector and lower volume from the affordable retirement sector,” the company said in an earnings update to the ASX.

Fleetwood shares were off 16 per cent at $1.89 each at 2pm AEDT.

In February, Fleetwood advised that demand for caravans had reduced, and said today the subdued trading conditions would continue in the second half of the 2018 financial year.

Fleetwood is now estimating this will result in a loss of about $13 million within its caravan manufacturing division.

The company also said that demand for its modular accommodation in Victoria had changed.

“While education demand ran at a strong rate in the first half of FY18, over the last three months, order flow in Victoria shifted from units manufactured for immediate sale to units manufactured for rental ahead of the Victorian state budget announcement, which was delivered on May 1,” Fleetwood said.

“While these have had a negative impact on the second half, a series of modest project wins in the Western Australian resource sector has made up for part of this reduction.”

Fleetwood said its village operations had benefited from more demand in Karratha.

“Demand for FIFO accommodation from operational workers is expected to remain relatively consistent into the first half of FY19, and the company has reached agreement with major resources companies for periodic shutdowns expected during FY19,” the company said.