01/07/2022 - 11:00

US windfall, Pacific fix for Austal

01/07/2022 - 11:00

Bookmark

Save articles for future reference.

Austal’s share price has hit a 10-month high with the Henderson-based shipbuilder announcing it could be in line for $4.35 billion of work with the US government.

US windfall, Pacific fix for Austal
Paddy Gregg has led Austal since 2020. Photo: Gabriel Oliveira

Austal’s share price has hit a 10-month high with the Henderson-based shipbuilder announcing it could be in line for $4.35 billion of work with the US government.

The company today announced it had secured a contract to design and construct up to 11 offshore patrol cutters for the US Coast Guard.

Only one vessel has been contracted thus far with construction expected to begin next year.

While the contract is effective FY2023, earnings before interest and tax are expected to be $107 million greater for FY2022 due to the project having a positive impact on some cost assumptions.

Austal chief executive Paddy Gregg celebrated the contract as an outstanding opportunity for the company’s US division.

“The offshore patrol cutters are a critical capability in the US's homeland security and the Coast Guard’s most important acquisition program, and the Austal … is very excited and proud to be delivering this major shipbuilding program for the US,” Mr Gregg said.

That news came at the same time as the Department of Defence announced a potential fault in the exhaust system of Austal-constructed, Guardian-class patrol boats delivered to Pacific Island nations through the federal government’s $2.1 billion Pacific maritime security program.

In a statement, the department claimed other issues had emerged with the boats over the past 16 months, including cracking in the coupling between the engine and the gearbox and ventilation in the sick bays.

A spokesperson for Austal confirmed the company would work with the department on temporary rectification measures and a long-term solution to the exhaust systems issue.

“The supplier of the vessels’ exhaust systems is also providing technical advice to both parties,” they said.

“In addition, Austal is working with its supplier to prevent the issue from occurring on Guardian-class vessels under construction.”

Affected nations will be free to decide whether to continue operating or pause use of the boats.

Shares in Austal were trading at $2.21 as at 11:30am AEST.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options