Austal wins second major contract in as many days, sending its shares sharply higher

Austal Ltd (ASX: ASB) has won its second contract in as many days, with the shipbuilder saying on Friday it will build another two vessels for the Australian Border Force.

The win follows Austal’s announcement on Thursday, which stated that it had been awarded a $1.029 billion design and construct contract to build 18 Landing Craft Medium (LCM) vessels for the Australian Army under the Commonwealth’s Strategic Shipbuilding Agreement.

Contract extension

Under the new deal announced on Friday, Austal will build another two Evolved Cape-class Patrol Boats.

The company went on to say:

This latest award, valued at over $135 million, brings the total number of Evolved Cape-class Patrol Boats contracted to Austal to 14 vessels, reinforcing the long-standing partnership between Austal, the Australian Border Force and the Royal Australian Navy in delivering critical maritime capability for Australia’s national security.

Austal Chief Executive Officer Paddy Gregg said the new vessels were strengthening the Border Force’s readiness and operational reach.

He went on to say:

Over the past five years the Evolved Cape-Class Patrol boats have proven themselves as highly capable, reliable assets for Australia’s border protection missions. With nine Evolved Capes already delivered and performing exceptionally with the Royal Australian Navy, and two more already under construction for the Australian Border Force, this new order further enhances Australia’s maritime surveillance and response capability across Northern Australia and our vast maritime domain.

The Evolved Cape-class design features expanded accommodation for up to 32 personnel, Austal said, enhanced “quality of life” systems, and advanced sustainment technologies “to maximise operational availability”.

Construction of the newly ordered boats will take place at Austal’s Henderson shipyard in Western Australia.

WA shipyard in favour

The LCM order announced on Thursday will also be built at Henderson, with the first of those to be built in 2026 and the final landing craft to be delivered in 2032.

Each of those vessels would be capable of transporting loads of up to 80 tonnes.

Mr Gregg said this contract was the first awarded to the company under the Federal Government’s Strategic Shipbuilding Agreement.

He went on to say:

This Landing Craft Medium design and build contract awarded to Austal Defence Australia is the first vessel construction in the Government’s commitment to delivering continuous naval shipbuilding at Henderson, Western Australia, enlivening decades of opportunity for individuals and businesses to engage, collaborate and invest in defence programs.

Austal shares were trading 5.4% higher at $6.57 in early trade on Friday. Austal was valued at $2.5 billion at the close of trade on Thursday.

The post Austal wins second major contract in as many days, sending its shares sharply higher appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.