Advice from new activist investor

Fleetwood again urged to
quit caravan production

By Dennis Amor
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CARAVAN and portable accommodation builder Fleetwood Corp has clinched a lucrative five-year deal to supply manufactured houses to National Lifestyle Villages.

The news comes after a call from one of its investors, Sandon Capital, to dump the production of Coromal and Windsor caravans.

Under the initial five-year agreement, Fleetwood will build the houses at its High Wycombe facility in Perth and install them in National Lifestyle Village across WA.

The agreement includes an option for NLV to extend it for a further five years.

Fleetwood managing director Brad Denison said it would provide NLV "with surety" in sourcing more homes and increase Fleetwood production volumes.

Fleetwood has been under pressure from activist investor Sandon, which recently became a shareholder with a 5.4 percent stake, to abandon its poorly performing caravan manufacturing interests and focus more on manufactured accommodation.

Activist investors are described as shareholders who seek to influence a company's decision making by voicing concerns and taking a proactive and hands-on approach to improve things.

Fleetwood was asked by Caravanning News for its reaction and while not commenting directly on Sandon's call, Mr Denison said his company had recently introduced new caravan designs to the market which were generating "significant interest" amongst consumers.

In particular, the Element and Appeal caravans had been refreshed with modern interiors and slide-out units in some models. In addition, the new Princeton and Pioneer caravans were setting a new industry standard for luxury and off-road performance in packages that provided "very good value for money", he added.

It's not the first time Fleetwood has been urged to quit building RVs.

Last year, analyst Simon Andrew of financial services company Hartleys said the division should be closed or sold to help reduce debt.

He said caravan builders were now in a more competitive market, both from local and foreign-built RVs.

But then Fleetwood RV chief executive Brad van Hemert told Caravanning News: "This is the view of only one analyst out of probably 10 or 12 at a briefing ... there is no question of us getting out of the caravan industry.

"We are producing the Coromal and Windsor brand of caravans and will continue to do so."

In its last half-yearly report, Fleetwood admitted it had been a "challenging" six months for sales, but the introduction of new caravan models and a focus on developing the dealer network had resulted in a "modest increase" in orders and production levels.

"The impact on end consumer demand will be clearer at the conclusion of major caravan shows in the next three months," it added.

Revenue from its Recreational Vehicles division for the six months reached $51.3 million compared to $56.7 million for the corresponding period last year.

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