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Fleetwood (ASX:FWD) shares climb 13pc following upgraded earnings guidance

Industrial
ASX:FWD      MCAP $130.5M
03 February 2021 18:00 (AEST)
Fleetwood (ASX:FWD) - Interim CEO & CFO, Andrew Wackett

Source: Fleetwood

Shares in Fleetwood (FWD) have climbed more than 13 per cent after it reported an increase in its anticipated earnings for the first half of 2021.

According to previous estimates, earnings before interest, taxes, depreciation, amortisation (EBITDA) had been forecast in line with previous figures at around $12.8 million, but with “satisfactory to solid performances” across the company’s three operating divisions — accommodation, building and RV solutions — this has been increased to between $15 million and $16 million.

In its accommodation segment, Fleetwood noted that its Osprey Village is fully occupied with a waiting list of potential tenants, thereby reflecting the strength of the Port Hedland market. One of its major clients, Rio Tinto (RIO), also renewed a contract for an additional 13 months at the Searipple Village in Karratha.

While results for the second half of the 2021 financial year are unlikely to match those in the first half, Fleetwood said the outlook remains positive, with significant investments in the oil and gas and resources sectors likely to drive an increase in demand for fly-in-fly-out rooms.

The company’s building division finished the first half with a strong order book of $140 million, including a $41.5 million contract with the Victorian Government’s Prison Infill Expansion Program and a $30 million expansion contract with Rio Tinto.

Fleetwood said the market is expected to improve, thanks in part to anticipated government stimulus spending.

Its RV solutions segment also finished well, with a pandemic-driven boom in domestic travel leading to three very strong months of sales — a trend the company said is expected to continue in the second half of the year.

“All businesses have continued to face significant challenges during the global pandemic, and we are pleased at the way our company and people have responded,” said Andrew Wackett, Interim CEO and CFO of Fleetwood.

“Having three business units and three diverse revenue streams has certainly helped us as a company to weather the impact,” he added.

Notably, the company’s board of directors has approved an increase in the annual dividend payout ratio to 100 per cent of net profit after tax, which Fleetwood said reflects management’s confidence in the future of the business.

At the end of the first half, the company had $64 million in net cash after accounting for a first-half dividend payment of $11.4 million.

Fleetwood is up 13.18 per cent to $2.49 per share at 4:25 pm AEDT.

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