How Austal’s Strategic Shipbuilding Deal Fuels Record FY25 Earnings
Austal Limited reported a robust FY2025 with revenue up 24% and EBIT doubling, underpinned by a landmark Strategic Shipbuilding Agreement with the Australian Government and significant US contract wins.
- FY25 revenue rises 24.1% to A$1.8 billion
- EBIT doubles to A$113.4 million with margin improvement
- Record order book grows to A$13.1 billion
- Strategic Shipbuilding Agreement cements Austal’s role in Australian naval construction
- FY26 EBIT guidance set at A$135 million, driven by SSA and Asian expansion
Strong Financial Performance
Austal Limited has delivered a standout financial year for FY2025, reporting revenue of A$1.8 billion, a 24.1% increase over the prior year. Earnings before interest and tax (EBIT) more than doubled to A$113.4 million, reflecting operational improvements and a strengthened margin of 6.2%, up 240 basis points. Net profit after tax surged over 500% to A$89.7 million, while earnings per share rose to 23.6 cents, signaling robust profitability and efficient execution across its shipbuilding operations.
Strategic Shipbuilding Agreement and Order Book Growth
Central to Austal’s momentum is the Strategic Shipbuilding Agreement (SSA) signed with the Australian Government, designating Austal Defence Australia as the Commonwealth’s prime contractor for surface combatant vessels. This landmark deal secures Austal’s role as a strategic shipbuilder in Western Australia and is expected to drive significant contract volume in FY2026 and beyond. The company’s order book reached a record A$13.1 billion, including options, reflecting a steady 2.9% growth and underpinning years of future revenue visibility.
Expansion in US and Asian Markets
Austal’s footprint continues to expand globally, with a US$450 million contract awarded to grow submarine module manufacturing capacity at its Mobile, Alabama shipyard. Construction of the third Module Manufacturing Facility (MMF3) and a new Final Assembly hall (FA2) are underway, positioning Austal to meet increasing demand from the US Navy. In Asia, Austal secured contracts for innovative sustainable vessels, including a 66-metre wind-powered cargo trimaran and a 130-metre hydrogen-ready ferry, highlighting the company’s commitment to environmental innovation alongside defence projects.
Sustainability and Technological Innovation
FY2025 saw Austal advance its Environmental, Social, and Governance (ESG) initiatives, embedding energy-efficient technologies and alternative fuel capabilities into its vessel designs. The company leads the US Navy’s Additive Manufacturing Centre of Excellence, enhancing high-margin technology offerings. Scenario analyses on climate resilience are underway, reflecting Austal’s strategic focus on sustainability amid evolving regulatory and market expectations.
Outlook and Guidance
Looking ahead, Austal has set FY2026 EBIT guidance at A$135 million, surpassing previous records. This optimistic outlook is supported by a robust order book, anticipated contract conversions under the SSA, and growth in Asian commercial shipbuilding. The company’s balance sheet has been strengthened through successful equity raises and debt refinancing, providing a solid foundation for continued expansion in a geopolitical environment that increasingly prioritizes defence capabilities.
Bottom Line?
Austal’s FY25 results and strategic contracts position it well for sustained growth amid rising defence demand and technological innovation.
Questions in the middle?
- How will Austal manage risks related to government funding and geopolitical uncertainties?
- What are the timelines and milestones for the full execution of the Strategic Shipbuilding Agreement?
- How will Austal’s sustainability initiatives impact its competitive positioning and cost structure?
