Australian shipbuilding group Austal has revealed that it did not receive a single order for a passenger ferry during the first half of its 2021 financial year.
However, military contracts, especially from the US government, kept it busy and are likely to continue doing so based on the number of defence tenders and requests for proposals it plans to bid this year.
Austal said on Friday that during its fiscal first half, which ended on 31 December 2020, its net profit increased by 29% to AUD 52m ($40.7m), up from the AUD 40.7m recorded during the first half of the previous financial year.
This came despite revenue falling by 19% from AUD 1bn to AUD 840m.
The net profit increase was attributed to the strength of Ebit margins, which climbed from 8.1% to 10.8% in the US and from 3.4% to 5.8% in Australasia.
The company lowered its revenue guidance for full year 2021 from AUD 1.8bn to AUD 1.65bn due to the negative impact of the appreciation of the Australian dollar, lower US support revenues and Covid-19 delays shifting revenues into the 2022 financial year.
Austal said its current orderbook stands at AUD 2.9bn, with 38 ships scheduled or under construction.
Contracts for the US Navy and the Royal Australian Navy form the majority of these orders.
Austal operates six shipyards in Australia, the US, Vietnam, China and the Philippines, and has a total of 5,800 employees.
US investigation
On Monday, the company announced that Austal USA president Craig Perciavalle had resigned and would be replaced in the interim by the company’s chief financial officer, Rusty Murdaugh.
At the same time, Austal said it was under investigation by the US Department of Justice, the US Securities and Exchange Commission and the Australian Securities and Investments Commission over a $115m loss that the wholly-owned US subsidiary posted in 2016 that was tied to its Independence-class littoral combat ship programme.
The company had at the time attributed the loss to underestimating construction costs associated with the littoral combat ship, which it claimed was due to "a significantly higher level of modifications to the ship design and cost than previously estimated".
Austal said it was continuing to cooperate with investigators and said it did not know if any further action would be taken.
Austal and its US subsidiary said they “were engaging with the relevant US regulatory authorities regarding these investigations”, adding that “it is not possible at this stage to predict what action [if any] they may take in relation to these matters”.
Austal said it was confident that the proactive steps already implemented to strengthen its internal reporting and compliance practices “will be taken into account in determining whether there are any potential consequences arising from matters identified by the investigation, as well as ensuring such circumstances do not happen again”.
Revenue from Austal’s US shipyard and maintenance operations, which are derived almost exclusively from defence contracts, accounted for AUD 641m of the revenue generated during first-half 2021.
Austal said its relationship with the US Department of Defense remains strong.
