Shipbuilder Austal delivered improved financial results for the full year, despite paying a sizeable settlement that was offset through a major US land transaction.
Shipbuilder Austal delivered improved financial results for the full year, despite paying a sizeable settlement that was offset through a major US land transaction.
The Henderson-headquartered shipbuilder reported earnings before interest and tax of $56.5 million for financial year 2024, up from its $4.8 million loss booked the year prior.
It recorded net profit after tax of $14.9 million, a gain from its $13.8 million loss reported in FY23. Alike FY23, Austal did not declare a dividend, pointing to forecast expansion capex and its $35 million penalty.
Revenue was $1.46 billion for FY24, down from $1.58 billion, which Austal attributed to its Australasia division underperforming financially due to fewer commercial contacts.
Austal, through its stronger US division, broke ground on $440 million ($US300 million) expansion of its shipyard in Mobile, Alabama, where its American arm is based.
When asked about funding arrangements for the expansion and whether Austal would tap investors, chief executive Paddy Gregg said debt was favoured over equity.
“[The] share price is trading below net tangible assets, so that's not preferable, and we have had a lot of interest in debt based on the fact we have very big order book and long-term government backed contracts,” he said.
“There is a lot of appetite for debt in the US, and a lot of support on that.
“The resolution of DoJ [US Department of Justice] matter turns a question mark into a number in spreadsheet, and we're now … very focused on finalising what the right answer is for that capex cash.”
Austal’s shares last changed hands at $2.34.
Penalty payment
Earlier this week, Austal told the market it had agreed to pay a $35 million penalty to settle an investigation over former US employees allegedly manipulating its financial reports between 2013 and 2016.
The shipbuilder reached the deal with US Department of Justice (DoJ) and the US Securities Exchange Commission to resolve the long-running investigation.
In its financial report tabled today, Austal detailed that the costs related to the DoJ settlement totalled $56.8 million, being the fine itself and legal costs.
Austal said a negative impact on earnings was offset by a $54.4 million gain from a major land transition at its shipyard in Mobile.
It said its American branch had negotiated the sale of land, totalling 2.7 hectares (6.75 acres) , and in consideration received cash of $48 million and land adjacent to its existing facilities.
Austal broke ground on an infrastructure expansion at that US shipyard in FY24, which includes a new assembly building, waterfront improvements and a new ship-lift system.
“The impact of the provision for the DoJ resolution related costs was offset by the gain we made on a land sale at our shipyard in Mobile, resulting in a $2.4 million difference between our underlying performance and our statutory result,” Austal wrote.
Outlook
Handing down the group’s financials, Mr Gregg touted the shipbuilders $12.7 billion order book across more than a dozen programs.
He also said the group anticipated hiring more than 2,000 workers in the coming years.
Austal has a global headcount if 4,300, which its boss said was growing daily.
“We are transitioning to our new order book and new programs, which will bring great growth to the business, both in terms of revenue and profitability, and that will also bring a lot of jobs,” Mr Gregg said.
“I anticipate, between US and Australia, we will be recruiting in excess of 2,000 people over the next two to three years, and there are more opportunities on top of what we've talked about today.”
Mr Gregg pointed to opportunities in Australia, like Aukus and its strategic shipbuilder anointment, which he said would catch the division up to its stronger US arm.
Late last year, Austal announced it had notched a strategic shipbuilder agreement - expected to be finalised later this year - with the Australian government.
Under that deal, Austal would secure a consistent platform of work, including the delivery of medium and potentially heavy landing craft for the Australian Army.
“The strategic shipbuilding agreement here in Australia, which we hope to finalise later this year, will place the Australian business in the in the same position we’ve forged in the US,” Mr Gregg told analysts.
