FLEETWOOD has ordered a review of its recreational vehicles
business.
This follows news that the Perth-based manufacturer of Windsor and Coromal
caravans has seen its rising sales come to a standstill.
Managing
director Brad Denison broke the news to shareholders at the company's
annual general meeting.
"The recovery in volume we saw in the
caravan manufacturing business in 2017 (financial year), where revenue increased by 50
percent, has stalled in the first half of 2018 on the back of very
unstable industry volume," he said.
"So in line with our previous
communications to you about the time frame we had set for the business to
recover, the board has taken the next step which involves an external
review of the business."
Mr Denison said new products had been
introduced to the market, the first being its revamped Princeton caravan
boasting the largest electronic slide out unit on the market today.
At 4.5m, it was attracting much attention at caravan shows.
He
said Fleetwood now had 22 dealerships, with 15 of them exclusively selling
Coromal and Windsor products.
"This couldn't have been achieved
without the major push into developing new products," he explained.
Although the improvement in sales and market share had come at a
cost, with the factory in a very inefficient state while it rapidly
prototyped new units and at the same time ramped production to meet the
increased demand.
This had meant that in 2017 the business
delivered unsatisfactory earnings.
"And there is also another
factor which has come into play at the start of 2018, in that we are
seeing very unstable market conditions in the industry as a whole for the
first time in many years," Mr Denison told shareholders.
"Although
we have been outperforming most of our competitors at recent caravan
shows, sales growth in the early part of the 2018 year stalled.
"And while 2018 earnings in this business look at this stage to be roughly
in line with 2017, there will be a skew to the second half.
"So
from a broader perspective, and given this financial performance, the
board has established a fully independent strategic review of the
business."
He stressed there were no plans to discontinue the
business.
"This review, which is being undertaken by a reputable
external firm, is covering - among other factors - the competitive
environment and the business structure including its manufacturing
locations.
"The result will be the identification of options the
board has with respect to the business."
The results of the review
will be available for discussion along with the company's half-year result
announcement in February.
