VEEM Faces Revenue Cycles Despite $65M Collins Contract Extension
VEEM Limited has renewed a six-year, $65 million contract to supply critical components for Australia's Collins Class submarines, reinforcing its long-standing defence partnership and projecting stronger financial performance in FY26.
- Six-year, $65 million contract renewal with ASC Pty Ltd
- Continued supply of specialised parts for Collins Class submarines
- Preliminary FY25 EBITDA between $8.5m and $9.5m
- FY25 NPAT expected between $2.75m and $2.85m
- Orders anticipated to accelerate in second half of FY26
A Renewed Commitment to Defence Manufacturing
VEEM Limited (ASX, VEE), a Perth-based manufacturer known for its high-technology marine propulsion and stabilisation systems, has secured a significant six-year contract renewal valued at $65 million with ASC Pty Ltd. This agreement ensures VEEM will continue supplying specialised components critical to the maintenance of Australia's Collins Class submarines, a relationship that has spanned over three decades.
The renewed contract, effective from 27 June 2025 through to 27 June 2031, underscores VEEM’s reputation for precision engineering within the stringent standards of defence manufacturing. As the sole Australian supplier for Flowserve Flow Control (UK) Ltd Defence valves used in the Collins Class submarines, VEEM’s role remains pivotal in sustaining Australia's naval capabilities.
Financial Performance and Outlook
Preliminary unaudited results for the fiscal year ended 30 June 2025 indicate VEEM expects to report revenue between $68 million and $69 million, with EBITDA ranging from $8.5 million to $9.5 million, and net profit after tax (NPAT) between $2.75 million and $2.85 million. Despite a notable decline in revenue from ASC contracts in the second half of FY25; dropping approximately 60% compared to FY24; the company anticipates a rebound in FY26, particularly in the latter half, driven by the cyclical nature of the defence contract.
Managing Director Mark Miocevich highlighted the collaborative effort behind the contract renewal, emphasizing the importance of in-country manufacturing and service programs. He also pointed to the contract as a foundation for VEEM’s involvement in the upcoming AUKUS defence partnership, signaling potential growth opportunities beyond the Collins Class program.
Strategic Positioning in Defence and Beyond
Defence remains a significant and expanding segment for VEEM, complementing its work in luxury yachts, fast ferries, and commercial vessels. The company’s involvement extends to other major defence projects such as the Hunter Class Frigate program, supported by enhanced security clearances in Australia and the United States. VEEM’s manufacturing capabilities, including Australia’s largest non-ferrous foundry, position it well to meet increasing demand for specialised marine components.
With a skilled workforce of nearly 200 employees and a strong research and development focus, VEEM continues to invest in innovation while delivering consistent profits and dividends. The contract renewal not only secures a steady revenue stream but also reinforces VEEM’s strategic importance within Australia’s defence industrial base.
Bottom Line?
VEEM’s contract renewal cements its defence foothold, setting the stage for growth amid evolving naval programs.
Questions in the middle?
- How will VEEM’s involvement in the AUKUS program evolve beyond the Collins Class submarines?
- What impact will the cyclical nature of defence contracts have on VEEM’s revenue stability in FY26 and beyond?
- Can VEEM leverage its manufacturing capabilities to expand into new defence or commercial marine markets?
