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US operations drive growth for Austal


Austal’s first-half results for 2017-18 have shown increases in net profit and across the order book, but the company cautioned that any contract signings relating to the Offshore Patrol Vessel project could be “several months” away.

Austal’s first-half results for 2017-18 have shown increases in net profit and across the order book, but the company cautioned that any contract signings relating to the Offshore Patrol Vessel project could be “several months” away.

In its results announcement, Austal reported a revenue of $653 million, up on the FY2017 H1 revenue of $649.2 million, and a 174 per cent increase in net profit after tax of $25.6 million, compared with the $9.3 million it reported in FY2017 H1.


Austal chief executive David Singleton pointed to the Littoral Combat Ship (LCS) program in the US as a success for the company, noting the project has "entered a reliable and consistent period of production with our sixth vessel now delivered and a further nine vessels in the pipeline".

"Austal won its 15th LCS trimaran (LCS 30) in October 2017 following LCS 28, which was awarded in June 2017 adding over $1.5 billion to the order book. Both vessels were priced at a level that reflects our now well understood cost base and will therefore be delivered at a reasonable margin for a vessel of this complexity," Singleton said.

The FY2018 H1 results also showed Austal currently has its largest commercial ferry order book in a decade, which the company said will "underpin significant growth" at its Philippines shipyard.

On the Australian side of the business, Austal was impressed with its 20 per cent productivity gain in production hours over the last two years, but touched on the contentious OPV program, telling investors that its role in the project is still in negotiation and may take several months. This is despite Deputy Secretary of the Capability Acquisition and Sustainment Group Kim Gillis telling December's Senate estimates hearing a contract would be signed by February due to time constraints.

"Austal was disappointed that it did not win the Royal Australian Navy’s Offshore Patrol Vessel program outright, but the government’s indication that it wishes Austal to be involved in the program has the potential to provide a backbone of work for the Henderson shipyard over the next 15-20 years," the FY2018 H1 report said.


"This outcome would ensure that the export of commercial ships from Henderson can continue, thereby providing that hundreds of jobs in Western Australia are maintained in addition to those employed directly on the OPV program. When awarding the contract in November 2017, the federal government indicated that the prime contractor Lürssen would include Austal in building the 10 OPV in Henderson, subject to satisfactory commercial negotiations."

Austal was initially in partnership with designer Fassmer for the contract but the government selected Lürssen. Austal was introduced to the project under a new arrangement that will see ASC build two of the 12 vessels in Adeladie before the project moves to WA. Negotiations are underway to determine Austal and Civmec's role in building the remaining 10 in the Henderson precinct.

The Department of Defence has maintained there has been no change to Lürssen's tendered offer when the German company was only partnered with ASC and Civmec.

"The final agreed contract value with Lürssen Australia matches Lürssen’s tendered offer," a spokesperson for the department told Defence Connect.

Questions around the project continue to arise, with industry experts questioning how the government was able to recently sign a contract with Lürssen when the final costings of the 12 vessels and arrangements remain undecided between Austal and Lürssen.

The OPVs will have an important role protecting Australia’s borders and will provide greater range and endurance for the Navy than the existing patrol boat fleet.

US operations drive growth for Austal
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