The Austal Limited (ASX: ASB) share price tumbled 5.31% today as the broader S&P/ASX 200 Index (INDEXASX: XJO) experienced further falls.
Today's decline comes on a day that Austal announced to the market the delivery of the sixth Guardian-class Patrol Boat to the Australian Department of Defence. However, as the announcement was released right after the end of normal trading hours today, it won't be until trading resumes on Monday that any impact on Austal's share price can be fully assessed.
Details of the new vessel delivery
In today's release, Austal noted that the new vessel, named RFNS Savenaca, has been gifted to the Government of Fiji by the Australian Department of Defence. According to the release, this new ship is faster and has improved seakeeping, better amenities, and enhanced mission capabilities, including an integrated stern launch and recovery system.
The ASX shipbuilder added that the Guardian-class Patrol Boat will now provide the Fiji Navy with a significantly improved naval asset to carry out a range of essential activities, both domestically and internationally. These include border patrols and regional policing, as well as search and rescue activities and many other operations.
Austal had been awarded the Pacific Patrol Boat Replacement (PPB-R) Project back in 2016. An additional contract option award followed for the shipbuilder in 2018. This took the total number of vessels that Austal had under contract to 21, with a total value of more than $335 million.
12 Pacific Island nations including Papua New Guinea and Fiji will receive the vessels through to 2023. The PPB-R Project supports more than 200 direct jobs in Australian operations. In addition to this, more than 200 indirect jobs nationally are supported through the contracting of around 450 businesses located throughout Australia.
Commenting on today's announcement, Austal Chief Executive David Singleton said:
"Austal Australia's delivery of the Pacific Patrol Boat Replacement Project is achieving 68.5% Australian Industry Content, which is outstanding for a project of this size and complexity."
"Austal, and our valued suppliers, contractors and business partners are adding real value to Australian industry and contributing to genuine sovereign shipbuilding capability," he added.
Recap of recent financial results
Back on 20 February, Austal reported a solid set of half-year FY20 results. The ASX shipbuilder delivered a 22% increase in revenue to $1.04 billion, driven by a strong performance from both its US and Australia-based shipbuilding businesses.
Earnings before interest and tax (EBIT) grew even more impressively, increasing by 48% on the prior corresponding period to come in at $59.9 million. Improving margins in the US was a primary driver of this strong result.
Due to the stronger than expected first half, Austal upgraded its EBIT guidance for FY20, sending shares surging higher on the day of the announcement. The company now expects a minimum of $110 million EBIT, up from its previous guidance of a minimum of $105 million.
