The storm clouds hovering over mining services dumped a load on Fleetwood Corporation (FWD) this morning.
If the sector was looking shaky, Fleetwood provided ample justification for the fears with a bad result that was even worse than expected (and which Eureka Report had warned subscribers about back in May).
A 77% drop in net earnings to $12.5 million was well below the $15.5 million anticipated. And there is little comfort on offer in regard to the future.
Fleetwood was in hot demand until late last year. But its main business – providing accommodation for resource projects – has been left reeling from project cancellations and staff layoffs as the resource investment has sharply reversed.
Another of the company's businesses, which manufactures recreational vehicles including caravans, has experienced difficulties recently that have forced the company to shut its Victorian plant and consolidate production in Western Australia.
The stock took a hammering this morning, down 17% to $3.44, which is around one third its value in March.
Unlike city-based hotels, owning and operating purpose built accommodation facilities in the middle of nowhere doesn’t allow for a great deal of strategic latitude during a downturn, especially one that is shaping up to be a long-term event.