Shares in Austal (ASB) experienced a significant downturn on Monday, falling nearly 10 per cent following the release of a mixed trading update. While the company surpassed expectations in some areas, the report also raised concerns among investors. Austal is an Australian shipbuilder and defence prime contractor specialising in the design, construction, and support of defence and commercial vessels. The company has operations in Australia, the United States, and the Philippines.
Citi analyst Sam Teeger highlighted that Austal reported first-half earnings before interest and taxes (EBIT) of $60.3 million, which is 23 per cent above consensus estimates. This strong performance was reportedly underpinned by a record $17.7 billion order book. However, Teeger noted that this strength was somewhat “perplexing” in light of the company’s recent earnings downgrade.
Further complicating the picture, Teeger pointed out potential issues with Austal’s accounts. The audit report has been qualified, and this comes shortly after the company disclosed that incentives had been double-counted, resulting in a $US17 million earnings overstatement. Additionally, cash conversion was materially below expectations, adding to investor unease. As a result, shares in the company were down 9.8 per cent at the close of trading.
