Resources demand fuels Fleetwood’s profit

Fleetwood Corporation Limited (ASX: FWD) has today announced a 4% increase in net profit to $53.2m compared to last year, despite revenues falling 13%. The company declared a 43 cent fully franked dividend, taking the year’s total to 76 cents, its 15th consecutive increase in full year dividend.

Investors don’t appear too happy with the result, with shares down 7.8% to $11.98 at the close. Fleetwood has two divisions, the first focused on manufactured accommodation and the second division focused on recreational vehicles, producing caravans, trailers and vehicle accessories such as canopies for 4WDs.

Strong demand from resources companies such as Woodside Petroleum (ASX: WPL) and Rio Tinto Limited (ASX: RIO), for accommodation at the company’s Searipple village in Karratha, Western Australia remains a valuable source of recurring revenue each year. It’s worth keeping in mind that accommodation agreements could be terminated at fairly short notice, leaving Fleetwood with an empty village.

During the 2012 financial year, Fleetwood was selected by the Gladstone regional council to build and operate an accommodation village for up to 1,000 people. Gladstone is the major processing and export hub for a large number of sizeable and diverse resource projects in the region. More than $50 billion is being spent by major resource companies on LNG, coal and aluminium related projects, including Santos Limited’s (ASX: STO) Curtis Island LNG.

The company has also been contracted to build and operate 293 service workers’ dwellings at Osprey, in South Hedland, Western Australia for 15 years, through an agreement with the WA state government.

With two major accommodation villages in two different states, plus the Osprey project, the company is exposed to major LNG and resources projects, and will no longer be solely reliant on Searipple village for recurring revenues.

That is important as the other part of Fleetwood’s business is really struggling. Sale of caravans and trailers have been affected by weak consumer sentiment, and earnings before interest and tax fell from $18m last year to just $4m this year.

Foolish takeaway

Fleetwood’s newest project, Osprey village, will start contributing revenues from the 3rd quarter of 2013, with Gladstone village shortly after that. Currently trading on a trailing P/E ratio of 13.3 and a fully franked dividend yield of over 6%, it could be a worthy addition to your watchlist.

If you’re in the market for some high yielding ASX shares, look no further than our ”Secure Your Future with 3 Rock-Solid Dividend Stocks” report. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

Motley Fool writer/analyst Mike King owns shares in Woodside Petroleum.  The Motley Fool ‘s purpose is to help the world invest, better.  Take Stock  is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  Click here now  to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked…

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of The Motley Fool’s Top 3 Blue Chip Stocks for 2019.

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in a specially prepared FREE report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

See the 3 blue chip stocks

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.