Australia's Austal wins defence shipbuilding contract; shares hit record high

Austal

05/08/2025 07:13

By Rajasik Mukherjee

Aug 5 (Reuters) - Australia's Austal ASB.AX said on Tuesday it has secured a government shipbuilding deal and raised its annual earnings view, sending shares to a record high as the country steps up defence spending and local weapons production.

A newly formed unit, Austal Defence Shipbuilding Australia will be the strategic shipbuilder for Tier 2 naval surface combatants at its Henderson shipyard in Western Australia, the company said in a statement.

It will oversee the design, construction and delivery of about 18 landing craft and eight heavier vessels for the army.

"(The contract) underwrites Austal's pipeline and signals the company’s standout capacity for shipbuilding, with few competitors of scale in this highly capital-intensive industry," said Ben Richards, co-portfolio manager at Seneca Financial Solutions.

Shares of the company jumped as much as 7.9% to a record high of A$6.93. It pared some gains to end 7.5% higher while the broader ASX200 benchmark index .AXJO closed 1.3% up.

The deal includes a safeguard clause allowing the government to take control of Austal’s local assets if any foreign investor acquires more than 20% of the company.

South Korea’s Hanwha Corp 000880.KS, which currently owns 9.9%, has been pursuing Austal since 2024, when the Australian shipbuilder rejected its A$1.02 billion bid, citing regulatory hurdles.

Separately, Austal raised its full-year EBIT forecast to at least A$100 million, up from A$80 million previously.

($1 = 1,388.8200 won)

 (Reporting by Rajasik Mukherjee in Bengaluru; Editing by Nivedita Bhattacharjee)

 ((Rajasik.Mukherjee@thomsonreuters.com;))