Australian shipbuilder and defense contractor Austal Limited announced it has exceeded AU$2 billion of revenue for the first time and delivered record earnings for fiscal year 2020.
The company attributes this success to a greater focus on the defense sector, which now constitutes 88 percent of the company’s revenue.
“The strong performance shows good operational momentum across all of our USA and Australasia operations as we constructed and delivered naval vessels and large ferries, and provided ongoing support services to the US Navy, Royal Australian Navy and the Australian Border Force,” Austal CEO David Singleton said.
Austal’s USA segment reported revenue of $1,603.8 million (FY2019: $1,472.7 million) and EBIT of $123.0 million (FY2019: $106.4 million). The company said this performance reflected the increasingly efficient and stable production of the Littoral Combat Ship (LCS) and Expeditionary Fast Transport (EPF) programs for the US Navy. Support work also continued to increase with the growing number of Austal designed and built vessels being commissioned and deployed by the US Navy.
“The financial results highlight the success of our ongoing strategy to grow our defense business, which now makes up approximately 88 per cent of the group’s revenue across construction and support. The value of this is clear as we see that the broader defense market is strengthening and has largely been shielded from the economic impacts of COVID-19,” Austal COO and CEO-designate Patrick Gregg said.
“There are also defense opportunities closer to home. The recent Defence White Paper and Force Structure Plan identified more heavy steel ships to be built in Australia. In Asia, our shipbuilding facility in the Philippines also has the potential to open up defense opportunities, building on our investments in the region.”
The company added that its $4.3 billion order book was largely comprised of defense vessel programs for the US Navy and Commonwealth of Australia, which helps shield the business from the emerging broader global economic challenges. Austal USA’s defense ship building activities have been identified as essential industries, which supports the Company’s facilities to continue to operate during the COVID-19 pandemic. In Australia the Department of Defence has also been particularly supportive towards keeping the industry running, Austal added.
New steel shipbuilding facility in the US
Austal has revealed earlier that it intends to invest US$100 million in building a modern steel shipbuilding capability in Mobile, Alabama. Development of the facility is expected to take approximately two years and will position Austal USA to bid for work in a series of significant new steel shipbuilding programs for the US Navy. The investment is being partly funded through a Defense Production Act (DPA) agreement between Austal USA and the US Department of Defense, which will fund up to US$50 million of the total investment.