Perth-based shipbuilder Austal (ASB) has confirmed the extent of the loss from its big US Navy shipbuilding program produced a $115 million write down a month or so ago.
That write down saw the company report a loss of $84.28 million for the year to June because the contract to build war ships for the US Navy took longer than expected.
Revenue at Australia’s largest shipbuilder fell 5.3% to $1.34 billion and EBIT (earnings before interest and tax) loss of $120.9 million, compared to a $85.3 million EBIT profit in 2014-15, was within new guidance issued last month. Despite the loss the company declared a final dividend of 2 cents a share fully franked, down one cent or a third from the 3 cents a share paid for the final half of 2014-15. That reversed the increase in the interim from 1 to 2 cents a share. The full year payout is 4 cents unchanged from the previous year.
CEO David Singleton said in yesterday’s announcement that the outlook is positive for Austal, despite the higher costs on the Littoral Combat Ship (LCS) program. And Austal reiterated EBIT guidance for this financial year of $45 million to $55 million.
“The impact of the one-off downward adjustment to the LCS program has had on our earnings this year was disappointing, but Austal still has a strong order book and is generating strong cash flows from its efficient vessel construction,” says Singleton.
He says the $US4 billion ($A5.3 billion) Littoral Combat Ship program will be profitable across its remaining life because the company now has a much clearer understanding of the design required and margins that will be generated.
He says Austal is well placed with an order book of $3.4 billion across its three shipyards, a strong balance sheet, and significant pipeline opportunities for defence and commercial vessels in the US and Australia.
The cost of building the Littoral Combat Ships to meet shock rating standards and US Navy rules turned out to be a lot more than estimated.
The lack of any more write downs or new losses saw investors boost the shares by 12.8% to $1.32, despite a slide in the wider market.