Austal Limited

Austal said group revenue increased 34.4% year on year, EBIT increased 41% to $60 million, and NPAT grew on a double-digit basis. U.S.A. shipbuilding revenue increased 29%, U.S.A. support revenue increased 11%, Australasia shipbuilding revenue increased 83%, and Australasia support revenue increased 27%. The company ended the half with net assets above $1.3 billion, cash of $371.6 million, and trade receivables of $211 million; cash flow from operations was negative $63 million, and overall cash declined by $212 million, including $131 million of capex on MMF3 and FA2. Management did not provide cash flow guidance, but said MMF3 and FA2 are on schedule/in line with budget, with MMF3 Phase 1 targeted for Q4 of this financial year and heavy/medium landing craft programs expected to cut metal in the back end of the calendar year and ramp to steady-state production over about 18 months.

Paddy Gregg emphasized that the quarter showed the strategy is working: the strategic shipbuilding agreement helped unlock the Landing Craft Medium and Heavy contracts, while the order book now provides decade-long visibility. He described the outlook as “fantastic” in both the U.S. and Australasia, and highlighted defense demand, AUKUS, submarine modules, and commercial low-emission opportunities as future growth drivers. His tone was upbeat, but he also acknowledged the recent guidance revision was caused by a forecasting error and called it disappointing.

Christian Johnstone said the half delivered double-digit growth across revenue, earnings, and NPAT, with EBIT of $60 million and an EBIT margin of 17.9% at the support segment level. He noted the balance sheet remains stable, with cash of $371.6 million and net assets over $1.3 billion, but cash was reduced by growth capex, including $131 million on MMF3 and FA2. He also called out $211 million of receivables, negative operating cash flow of $63 million, and the impact of two onerous U.S. contracts plus late customer payments; he said collection of receivables will be a key second-half focus. He added that the $105 million of missed milestone payments have now come through, and that MMF3 and FA2 are both tracking to budget.

Analysts focused on margins, cash, and the guidance miss. On margins, management said U.S. shipbuilding was below expectations due to the wind-down of legacy programs and onerous contracts, but expects margins to recover as new programs ramp and sees the U.S. business returning to the 7% to 10% EBIT range often discussed for defense shipbuilding. On cash, Christian said the missing $105 million of milestone payments have now been received, MMF3 Phase 1 is ahead of schedule, and the company has substantial debt capacity if needed. On the guidance error, Christian said it was an inadvertent double-counting issue tied to the half-year close and that additional internal controls are being added.