Austal Limited

For the first half of FY26, Austal reported group revenue up 34.4% and EBIT up 41% to $60 million; management also said NPAT increased double digits. U.S.A. shipbuilding revenue rose 29%, U.S.A. support revenue rose 11%, Australasia shipbuilding revenue increased 83%, and Australasia support revenue improved 27%. Group EBIT margin was 17.9% for Support, cash balance was $371.6 million at the close of 2025, trade receivables were $211 million, and operating cash flow was negative $63 million. Forward-looking commentary focused on the $17.7 billion order book, the expected ramp of the Landing Craft Medium and Heavy programs over about 18 months, MMF3 Phase 1 targeted for Q4 FY26, and no cash flow guidance was provided.

Paddy Gregg described the half as a very strong strategic period, highlighting the transformation of the order book and the move toward a more balanced U.S./Australasia footprint. He emphasized that the new Australian shipbuilding contracts and broader defense demand are creating long-term revenue visibility, with about 76 ships in build or scheduled and certainty of work for roughly a decade. His tone was upbeat and confident, while acknowledging the recent guidance revision was caused by a forecasting error and that U.S. shipbuilding margins were below ideal levels for now.

Christian Johnstone said the company delivered double-digit growth across revenue, earnings, and NPAT, with EBIT of $60 million and all segments growing. He noted the balance sheet remains stable, cash was $371.6 million, and capex is elevated because of more than $1 billion of combined investment in MMF3 and FA2; $131 million of the cash decline was tied to those projects. He also flagged trade receivables of $211 million, negative operating cash flow of $63 million due to onerous contracts and late customer payments, and said the tax REA cash is already being earned across the program. He said MMF3 and FA2 are on schedule and within budget, with MMF3 Phase 1 now targeted for the fourth quarter of FY26 and ahead of prior expectations.

Analysts focused on margins, cash, the milestone payment timing, and the earlier earnings guidance error. Management said U.S. shipbuilding margins should improve as programs stabilize, and Paddy reiterated a longer-term U.S. and Australia shipbuilding EBIT range of 7% to 10%. On cash, Christian said the delayed $105 million of milestone payments have now come through, cash flow guidance is not provided, and MMF3/FA2 remain on budget. On the guidance error, Christian said it was an inadvertent double count tied to an onerous U.S. program and that additional internal controls are being added.