Shares in shipbuilder Austal Ltd (ASX: ASB) have fallen significantly in early trade after the company announced it had overstated its potential earnings for the year.
Late on Thursday the company issued a brief statement to the ASX saying that in preparation for publishing its half year accounts it had identified some discrepancies.
As the company said:
Austal Limited advises that in preparation of its half year accounts, the company identified that some incentives related to its T-ATS program were recognised by its US subsidiary, Austal USA, in line with percentage of completion. These incentives had already been recognised in Austal USA’s forecast at full value for the remaining part of the program. The US$17.1m (approx.) overstatement had been included in the Company’s FY2026 EBIT guidance. As a result, Austal is updating its EBIT guidance for FY2026 to approximately A$110m.
Guidance well down on previous outlook
Austal had previously been guiding to earnings of $135 million with that figure announced in October.
The company’s shares plunged 22.9% on the news on Friday morning to be changing hands for $4.86.
The shares are trading near the lower end of their range over the past 12 months, with the stock trading between $8.82 and $3.50 over the period.
The company has had some good news in recent months, with the company saying in mid-December it had been awarded a contract extension to build another two Evolved Cape Class patrol boats for the Australian Border Force.
As Austal said at the time:
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 vessels would strengthen maritime borter command’s 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,” Mr Gregg said. “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.
Austal was valued at $2.66 billion at the close of trade on Thursday.
The post Why are Austal shares plunging more than 20% today? appeared first on The Motley Fool Australia.
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