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House, RV Maker Fleetwood Posts Lower Quarterly Profit

March 02, 2000|From Reuters

Fleetwood Enterprises Inc., a Riverside-based maker of recreational vehicles and manufactured housing, said Wednesday that its quarterly profit fell because of a weaker manufactured-housing market that may hurt future results as well.

The company, noting the quarter now underway will also be challenging, said net income in its fiscal third quarter ended Jan. 30 was $15.9 million, or 48 cents a diluted share, down from $21.3 million, or 59 cents a share, a year earlier.

The latest earnings per share just missed analysts' consensus estimate of 49 cents, according to First Call/Thomson Financial.

Shares in Fleetwood fell 25 cents to close at $15.19 on the New York Stock Exchange, lowest since the mid-1990s. The stock hit a high of $32.69 last year--before a glut began to develop in the manufactured-housing market nationwide.

"Our recreational-vehicle group achieved record third-quarter sales and improved profitability, but this was offset by lower earnings from manufactured housing," Fleetwood President Nelson Potter said.

The weakness in that market reduced sales volumes and operating efficiencies at Fleetwood's factories, the company said. The retail housing business operated at a loss in the quarter.

But overall revenue reached an all-time high for the company in the third quarter and the nine-month period, primarily because of growth in recreational vehicles sales. Third-quarter sales rose to $852 million, up 6% from last year's $804 million. The RV segment accounted for $434 million, a record for the third quarter and up 18% from $368 million a year ago.

But third-quarter manufactured-housing revenue was off 5% to $407 million.

Amid a glut of supply, higher interest rates aren't helping the manufactured housing business, analysts note.

Higher rates haven't appeared to be denting RV sales much thus far. But while "the near-term outlook for the RV business remains favorable, as reflected in the strength of our RV order backlog position," Potter warned that RV margins are under pressure because of a "shift in sales mix toward more competitively priced products."

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