The Austal Limited (ASX: ASB) share price is on watch in early trade this morning after an after-market earnings guidance update for FY19 and FY20.
What was in Austal's earnings update?
Austal announced that it expects FY19 earnings before interest and tax (EBIT) of approximately $92 million, with group revenue consistent with Austal's previous revenue guidance of $1.8 billion–$1.9 billion (subject to completion of the full year audit).
Management said that, while it doesn't usually provide EBIT guidance, following a preliminary consolidation of FY19 results, Austal's associated outlook for FY20 and a comparison with analysts' expectations, the company considered it appropriate to update the market for next year.
Austal expects EBIT of not less than $105 million in FY20, with the increase over FY19 numbers largely driven by improvement from Austal's Australasia shipyards as well as continued strong performance on Austal's two major vessel programs for the United States Navy.
According to management, Austal now holds a substantial order book of commercial ferry contracts, with recent major investments made at the company's Australasia shipyards now driving growth in shipbuilding throughput.
The company's investments include an expansion of its Philippines shipyard, which has trebled its construction capacity, and the establishment of a leased shipyard in Vietnam.
Management said the extent of earnings growth from Austal Australasia in FY20 will become clearer as the commercial ferry contracts are completed, with Austal scheduled to release its FY19 results by 30 August 2019.
How has the Austal share price performed in 2019?
The Austal share price is trading at $3.56 per share at the time of writing and could rise beyond its 52-week high of $3.63 per share.
Investors in the Aussie shipbuilding company have seen their investment surge 86% in 2019 alone on strong half-year earnings as Austal has climbed into the S&P/ASX 200 (INDEXASX: XJO) index.
Austal currently boasts a market cap of $1.24 billion, which could be set to swell in coming months, particularly if it can land work on the US Navy's FFG(X) guided-missile frigates program, which it remains in the running for.
