Austal Limited (ASX: ASB), founded in 1988 and headquartered in Henderson, Western Australia, is a global leader in shipbuilding and defence contracting. The company is Australia’s largest defence exporter and the first ASX-listed shipbuilder, operating shipyards in Australia, the United States, the Philippines, and Vietnam. Over the past 35 years, Austal has delivered more than 350 vessels across 59 countries, supplying naval, commercial, and autonomous ships for various global clients. The company specialises in high-speed aluminium vessels but has also expanded into steel ship construction to meet growing defence and commercial demands. Currently, Austal shares are trading at $4.50 per share.
Expanding US Shipbuilding Capacity
Austal’s Final Assembly 2 (FA2) project at its Mobile, Alabama shipyard is a key part of its expansion plan, supporting the company’s ability to deliver large steel vessels for US military programs. The infrastructure project includes a new ship assembly building, waterfront improvements and ship lift system for large steel vessel construction.
The FA2 project is expected to be operational by FY26, with completion targeted for FY27. The investment is backed by a combination of equity raising and debt financing, including a letter of support from an Australian Government financing agency covering approximately 50% of the project’s financing requirements over a 10-year period.
Austal CEO Patrick Gregg stated that the expansion ensures Austal remains well-positioned in the US naval shipbuilding industry, supporting current and future defence contracts while enhancing production efficiency.
Record Order Book and Growth Prospects
Austal enters this expansion phase with a record $14.2 billion order book, reflecting strong demand for its naval and defence vessels. The company anticipates additional orders through its proposed Strategic Shipbuilding Agreement with the Australian Government, which could further increase its contract pipeline in 2H FY25.
The company also reconfirmed its EBIT guidance of at least $80 million for FY25, reflecting strong financial performance and revenue growth driven by existing contracts and future project execution.
Equity Raising and Shareholder Participation
The $200 million institutional placement involves the issue of 52.6 million new fully paid shares at $3.80 per share, representing a 15.6% discount to Austal’s last closing price of $4.50 on March 10, and a 5.5% discount to its 30-day volume-weighted average price (VWAP) of $4.02.
Austal’s largest shareholder, Tattarang, is fully supporting the placement and will nominate a Non-Executive Director to the company’s board.
Additionally, Austal has launched a $20 million Share Purchase Plan (SPP), offering eligible Australian and New Zealand shareholders the opportunity to subscribe for up to $30,000 of new shares at the placement price without brokerage fees.
Austal also announced a $50 million sell-down of shares held by Austro Pty Ltd, an entity associated with founder John Rothwell, as part of the overall equity raising strategy. No further Austro shares will be sold for at least six months following the allocation of the sell-down shares.
Outlook and Future Growth
With the FA2 expansion project, strong order book, and strategic financing in place, Austal is well-positioned to drive long-term growth in both the US and Australian defence shipbuilding sectors.
The company expects continued growth as it expands its steel shipbuilding capabilities, increasing its ability to secure large-scale US Navy contracts while maintaining its leadership in aluminium vessel construction.
Investors will be closely watching for further updates on the FA2 project milestones, the finalisation of the Strategic Shipbuilding Agreement, and any new contract wins that could further strengthen Austal’s market position.
