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Austal manoeuvres as sovereign defence prime, says annual report

USS Canberra. Photo: Austal.

Australian-based global shipbuilding company Austal has released some significant management changes and insight into its Australian strategy during an official conference call and via the Austal Annual Report 2023.

Australian-based global shipbuilding company Austal has released some significant management changes and insight into its Australian strategy during an official conference call and via the Austal Annual Report 2023.

Austral detailed that its total revenue for the year increased by 10.9 per cent in financial year 2023 – although earnings were negatively impacted with a further writedown on the recently commenced Towing, Salvage, and Rescue Ships program and an expected annual loss of $13.8 million – during a conference call on 31 August.

“Austal delivered nine ships in FY2023 and maintained a strong balance sheet, while allocating considerable enhancing capital as we strengthened our strategic position in the US defence shipbuilding sector,” said Austal chief executive officer Paddy Gregg.

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“This year has been exceptional in terms of contract wins in the US business and puts significant future stability back into the business. Clearly the investment, in partnership with our major customer, in adding a steel production line to our aluminium capability has been money well spent.

“We made significant investments in the USA with both completion of the San Diego service centre investment and the arrival of the floating dock, enabling future revenue growth in line with our business case.

“In Australia, we delivered four defence vessels of the Evolved Cape Class patrol boats to the Royal Australian Navy. If we look back over the last five years, we have delivered 25 ships from the Australian business which is very impressive considering the challenges of COVID-19.

“We await the outcomes of the independent analysis into the Navy’s surface combatant fleet review due in October 2023. The Defence Strategic Review was well received and encouraging on several items, including clarity around the build of Tier 2 ships in Western Australia, an immediate need for medium and heavy landing craft, and a recognition of the importance of continuous naval shipbuilding. These are all indicators of a positive outlook for shipbuilding opportunities in Henderson.

“The next opportunity is the Army’s independent littoral manoeuvre vessel (Army Landing Craft). Austal is seeking to establish its position as the ultimate sovereign Defence prime contractor in Australia, and we continue to assess inorganic and acquisition opportunities in the sector and what the defence precinct post the review’s outcomes will yield.

“As the Defence Strategic Review increases the size of the Navy fleet over coming years, there will be more vessel sustainment activities being undertaken in Perth, Darwin and Cairns, where we are already established.

“The Defence Strategic Review indicated a commitment to Western Australia and consolidation to create a defence precinct, with a desire for continuous naval shipbuilding.”

Gregg also detailed an upcoming company development focus on autonomy, outlined as a pillar of AUKUS, with progress achieved on EPF 13, Overload Unmanned Service Vessel 3 and Saildrone as a future revenue stream in the US and Australia.

“Austal research and development is focusing on technologies for emissions reduction, autonomous operations and reduced crewing,” he said.

“On the back of delivering EPF 13 and its autonomous capability to the US Navy, in Australia, Austal began a patrol boat autonomy trial, sponsored by the Commonwealth’s Warfare Innovation Navy Branch.

“This program is converting a decommissioned Armidale Patrol Boat (the PBAT Sentinel) to autonomous operations in order to better understand the use and capabilities of future autonomous platforms.

“The autonomous functionality is being delivered through the integration of the proven L3Harris autonomous navigation capability and extensions to the Austal MARINELINK Control and Monitoring solution.

“This program is progressing well, with sea trials anticipated in the second half of 2023 calendar year.”

In management change, the resignation of Austral USA president Rusty Murdaugh has directed the company to appoint global support business manager Michelle Kruger as the Austal USA interim president.

“Prior to joining Austal USA 12 months ago, Michelle was vice-president of operations at General Dynamics Bath Iron Works where she led approximately 4,000 men and women and established a process disciplined approach to maximise safety and first-time quality,” said Gregg.

“In the past 12 months she has also led the pursuit of future government and commercial business opportunities and post-delivery initiatives.

“Rusty was promoted from chief financial officer to president during a period of considerable uncertainty for the USA business, and in his time as AUSA president, numerous shipbuilding orders, potentially worth billions of dollars have been secured for the business, which will underpin our USA operations for the next decade and beyond.”

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