Austal results “below expectations”

AUGUST 29, 2012 — Austal Limited (ASX:ASB) yesterday released full year results that included record revenue of Australian $653.0 million, up 29.7 percent, but an operating profit of only $A11 million. The shipbuilder’s order book stood at A$275 million, up 72.5 percent.

CEO Andrew Bellamy said the bottom line result was “certainly below our expectations.”  He said Austal had “identified where and how it can improve and is taking appropriate action.”

He said that results were adversely impacted by rapid growth, first-in-class issues at the U.S. operation and the strong Australian dollar. He said that U.S. operations would improve as work force experience grows and as the programs move into series production of follow-ships.

Mr. Bellamy said that the U.S. operation’s second half performance showed clear signs of recovery with earnings and EBIT increasing between halves by 49.1 percent and 136.2 percent respectively.

Austal’s Australian operations turned in a loss due to a low activity level as a result of a sustained economic downturn in historically important commercial markets and the scheduled low rate of initial production of the Cape Class Patrol Boat program.

A bright spot in the Austal picture appears to be its Philippines shipyard acquired in November. It is currently at full capacity and has work extending into the second half of 2013.

“We expect it to be profitable in its first full year of production,” said Mr. Bellamy.

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