VEEM Reports FY25 Revenue of A$68.6m, EBITDA Falls 38%, Secures $65m ASC Deal
VEEM Ltd reported a 15% revenue decline in FY25 amid rising costs and COVID impacts but showed a robust second-half recovery and secured a significant $65 million defence contract renewal.
- FY25 revenue down 15% to A$68.6 million
- EBITDA declined 38% to A$9.2 million despite 2H25 margin improvement
- Six-year $65 million ASC defence contract renewed, boosting FY26 outlook
- Capital investment of A$3.9 million in robotics and product development
- Achieved US submarine program supplier status, expanding defence footprint
FY25 Financial Overview
VEEM Ltd, a specialist in marine propulsion and defence engineering, released its FY25 results showing a challenging year marked by a 15% revenue decline to A$68.6 million and a 38% drop in EBITDA to A$9.2 million. The downturn was driven by increased raw material and freight costs, staff shortages, and ongoing COVID-related disruptions affecting customers and suppliers. Despite these headwinds, the company’s second half demonstrated a notable turnaround, with revenue rising 4% and EBITDA surging 36% compared to the first half.
Defence Segment – Cyclical Dip and Contract Renewal
The defence division experienced a revenue dip primarily due to the cyclical nature of the ASC submarine contract, which fell by $9.6 million to $6.5 million in FY25. However, other defence revenues partially offset this decline, increasing by $4.3 million. Importantly, VEEM secured a renewed six-year contract with ASC valued at $65 million, setting the stage for revenue acceleration in FY26, particularly in the second half. The company also advanced its position in the Hunter Class Frigate Program through a $1.7 million contract developing demonstrator blades, positioning VEEM as one of only two global suppliers capable of this precision engineering.
Propulsion and Gyrostabiliser Markets
Propulsion revenue remained steady at $35 million, consolidating the record performance of FY24. VEEM continued to invest in automation and robotics to enhance manufacturing efficiency, with facility expansion underway to increase capacity in FY26. Gyrostabiliser sales slowed to 13 units generating $9.6 million, down from 18 units and $12.3 million in FY24, a year boosted by an accelerated Strategic Marine contract. Nevertheless, the product’s market presence broadened with new commercial and recreational customers, supported by the launch of the Mark II model featuring a five-year warranty.
Capital Investment and Operational Efficiency
VEEM invested $3.9 million in capital expenditure and development, including robotics and product improvements, reflecting a commitment to innovation and operational excellence. Cost reduction initiatives implemented late in 2024 contributed to improved margins and cash flow in the second half. The company ended FY25 with $0.8 million in cash and $3 million in undrawn credit facilities, maintaining financial flexibility to support growth initiatives.
Strategic Positioning and Outlook
VEEM’s recent approval as a supplier for the US Virginia-class submarine program via the Huntington Ingalls Industrial Base Pilot Program marks a significant milestone, opening potential orders in FY26. The company’s diversified defence contracts, including naval patrol boats and army vehicles, alongside its propulsion and gyrostabiliser businesses, underpin a positive outlook. Management anticipates defence revenue growth in FY26, facility expansion benefits, and continued product development to drive future performance.
Bottom Line?
VEEM’s FY25 challenges underscore the cyclical defence market’s impact, but strategic contracts and operational gains position it well for FY26 growth.
Questions in the middle?
- How will the renewed ASC contract influence VEEM’s revenue and margins in FY26?
- What impact will US submarine supplier status have on VEEM’s international defence opportunities?
- Can VEEM sustain propulsion and gyrostabiliser sales growth amid global market uncertainties?