Fleetwood returns down on reduced demand from mining firms
Net profit for the first half to December 31 fell 81 per cent to $5.12 million.
Fleetwood's Searipple Village in the Pilbara town of Karratha in Western Australia reported a 50 per cent fall in capacity following Woodside Petroleum's delay in the expansion of the Pluto liquefied natural gas (LNG) project last year.
Rio Tinto also scaled back a major iron ore project in WA.
The chief executive, Stephen Price, said Fleetwood was not tying its fortunes to the resources sector.
"We always keep our eye on commodity prices and the outlook," he said. "We are very mindful of commodity prices and what the impact is on our villages, but we're not wedded to any particular sector."
The company did not provide full year earnings guidance but said the outlook would improve this year as the Osprey and Searipple upgrade projects in WA and the Gladstone project in Queensland underpinned manufacturing activity.
Mr Price said the Gladstone precinct to house Curtis Island LNG plant workers would take business away from competitors because it offered shorter travel times.
Patersons analyst Graeme Carson said the first phase of the 350-room Gladstone precinct was being built without contracts being signed for tenants, which he described as risky.
He said the cancellation of major Pilbara resources projects meant Fleetwood had to renegotiate accommodation contracts.
"The demand for mining accommodation has fallen off because capital expenditure is not there," he said.
Flagging consumer sentiment was expected to affect revenue for the recreational vehicles division, which comprises about a third of the company's business.
Fleetwood declared an interim dividend of 30¢ a share, down from 33¢ a year earlier.
Its shares finished on Tuesday 37¢ lower at $9.60.
Frequently Asked Questions about this Article…
Fleetwood's net profit for the first half to December 31 fell 81% to $5.12 million. The decline was largely driven by reduced demand from mining customers after miners curtailed projects amid falling commodity prices, which hit demand for temporary accommodation.
Miners delayed or scaled back projects — notably Woodside Petroleum's delay to the Pluto LNG expansion and Rio Tinto cutting back an iron ore project in WA — which reduced demand for mining accommodation. Fleetwood had to renegotiate accommodation contracts and saw lower occupancy at some villages.
Searipple Village in the Pilbara town of Karratha reported a 50% fall in capacity after Woodside delayed the Pluto LNG expansion. This is important because reduced capacity at Pilbara villages directly lowers rental and occupancy revenue for Fleetwood.
Fleetwood expects an improved second half. Management said manufacturing activity would be underpinned by upgrade projects such as Osprey and Searipple in Western Australia and the Gladstone project in Queensland, which should support revenue as those projects progress.
Yes. Patersons analyst Graeme Carson noted the first phase of the 350-room Gladstone precinct was being built without signed tenant contracts, which he described as risky because it relies on finding tenants after construction begins.
Flagging consumer sentiment was expected to affect revenue for Fleetwood's recreational vehicles division, which makes up about one-third of the company's business. Lower consumer demand can reduce RV sales and revenues.
Fleetwood declared an interim dividend of 30¢ a share, down from 33¢ a year earlier. Its shares finished the trading day 37¢ lower at $9.60, reflecting the market's reaction to the results and outlook.
No. CEO Stephen Price said Fleetwood does not tie its fortunes to the resources sector. While the company monitors commodity prices and the impact on its villages, it is not wedded to any particular sector and operates across accommodation and recreational vehicle markets.
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