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Austal has been awarded a AUD 4 billion (USD 2.82 billion) government contract to build eight landing craft heavy vessels, marking its second major defence contract under Australia's Strategic Shipbuilding Agreement. The contract, which complements its previous AUD 1.03 billion Landing Craft Medium project, strengthens the company's long-term order book and supply chain. Shares surged over 5% following the announcement. Austal Defence Shipbuilding Australia will lead construction, scheduled to begin this year, with final delivery expected in 2038. The company's U.S. unit is simultaneously producing landing craft for the U.S. Navy.
Australian shipbuilder Austal has secured a AUD 4 billion (USD 2.82 billion) government contract, reinforcing its position as a key partner in the federal government's naval modernisation efforts. This marks Austal's second significant defence award under Australia's Strategic Shipbuilding Agreement, following the AUD 1.03 billion Landing Craft Medium deal announced in December last year. Advertisement
Austal's CEO, Paddy Gregg, highlighted that the contract not only creates a record order book for the company but also signals long-term demand for its supply chain and encourages investment to strengthen its capabilities.
The company's shares responded positively to the announcement, closing 5.5% higher, after reaching gains of up to 7.5% during the trading session. Analysts noted the strategic advantage for both the government and Austal. Richard Ivers, portfolio manager at Prime Value Asset Management, said Austal is unmatched in the Australian listed defence sector and considered the highest quality among its peers. He added that the government's move provides certainty for the defence manufacturing base and supports Austal's long-term growth, which benefits shareholders.
Under the terms of the contract, Austal Defence Shipbuilding Australia, the company's private defence arm, will construct eight 100-metre landing craft heavy (LCH) vessels. These will be built using Austal's own facilities as well as common-user infrastructure at Henderson. Construction is set to begin this year, with the final vessel scheduled for delivery in 2038.
In addition to its Australian projects, Austal's U.S. unit is progressing with the construction of up to 12 smaller landing craft utility vessels for the U.S. Navy at its Mobile, Alabama shipyard. This ongoing work underscores the company's international defence capabilities and diversified order book.
Source Reuters
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