Austal Limited

Austal reported revenue of over $2 billion for FY 2026, up 11.3% year over year (management also described it as 11.2%). Group EBIT was finalized at a loss of $125 million, mainly reflecting year-end closing adjustments at Austal USA tied to contracts such as T-ATS, AFDM and LCU. By contrast, Australasia delivered record EBIT of $85 million, up 49% year over year and 137% above the prior year’s $36 million record; Australasia shipbuilding EBIT margin improved 288 basis points to 12.4% and support margin improved 818 basis points to 14.7%. The company ended the year with cash of $312 million and positive operating cash flow of $62 million, while property, plant and equipment increased by approximately $270 million and more than $320 million was deployed into U.S. infrastructure. Looking ahead, management did not give formal numerical guidance, but said 2027 is focused on returning the business to profitability, that Australian revenue should more than double over the next 5 years, and that the $16.5 billion order book supports years of growth.

Paddy Gregg framed FY 2026 as a strategic turning point, emphasizing record Australian backlog, the strategic shipbuilding agreement, and the growth runway from Landing Craft Medium, Landing Craft Heavy and the future General Purpose Frigate opportunity. His tone was upbeat on Australasia and constructive on the U.S., but candid that group results were distorted by U.S. contract accounting issues. He said Austal is actively pursuing recovery on those contracts, is prioritizing transparency with Hanwha’s due diligence, and sees the potential U.S. sale as a shareholder-value decision rather than a foregone conclusion.

Christian Johnstone said the group delivered double-digit revenue growth of 11.3% and that underlying operational performance, especially in Australasia, was exceptionally strong. He highlighted the cash position of $312 million, positive operating cash flow of $62 million, and more than $320 million of investment in U.S. infrastructure to build future capacity. He also pointed to U.S. shipbuilding revenue growth of 3.9%, U.S. support EBIT of $22.2 million with a 9.2% margin, and a sharp improvement in Australasia shipbuilding and support margins to 12.4% and 14.7%, respectively.

Analysts focused heavily on the U.S. onerous contracts, asking when Hanwha learned about them and whether they were disclosed before the bid; management said Hanwha was already aware of all contractual positions and had been discussing them for some time. Questions also probed the OPC program, where management said talks with the Coast Guard are about contract certainty and accelerating delivery rather than an REA process. On Australasia, analysts pressed on execution risk and margins as backlog expands; management said the Landing Craft Heavy program is lower risk because it is based on an existing Damen design, and that staffing will ramp steadily, not all at once.