Australian shipbuilder Austal bags $2.8 billion government contract (updated)

Austal

19/02/2026 22:55

Shares close up 5.5% at highest level since Feb 12

Contract to build eight landing craft heavy vessels

Recasts paragraph 1, adds analyst comments in paragraphs 5-6, and share moves in 4

By Sneha  Kumar, Jasmeen Ara Islam Shaikh and Rajasik Mukherjee

Feb 20 (Reuters) - Australian shipbuilder Austal ASB.AX secured a A$4 billion ($2.82 billion) government contract on Friday, cementing its role as a core partner in the federal government's naval modernisation drive.

The contract is the second major defence award Austal has bagged under Australia's Strategic Shipbuilding Agreement with the company, following the A$1.03 billion Landing Craft Medium deal in December.

"This contract generates a record order book for Austal, provides a long-term demand signal for our supply chain and provides the incentive to invest in uplifting our capability," said CEO Paddy Gregg.

Shares of the company closed 5.5% higher after rising as much as 7.5% earlier in the day.

"Austal is unique in the listed Australian defence sector and the highest quality in the peer group," said Richard Ivers, portfolio manager at Prime Value Asset Management.

"It’s smart of the government to provide this certainty for Australia’s defence manufacturing base and underpins the long-term outlook for Austal which is good for shareholders."

Under the deal, Austal Defence Shipbuilding Australia, the company's private defence shipbuilding arm, has been tasked with the construction of eight 100-metre landing craft heavy (LCH) vessels, using both its own infrastructure and common-user facilities at Henderson.

Construction works for the vessels are scheduled to begin this year and the final vessel is slated for delivery in 2038.

Meanwhile, the shipbuilder's U.S. unit is also building up to 12 smaller landing craft utility vessels for the U.S. Navy at its shipyard in Mobile, Alabama.

($1 = 1.4178 Australian dollars)

 (Reporting by Sneha Kumar & Jasmeen Ara Shaikh in Bengaluru; Editing by Jonathan Ananda and Subhranshu Sahu)

 ((Sneha.Kumar@thomsonreuters.com;))