Among ASX listed companies, a growing defence prime, delivering for the defence and commercial sectors is turning out to be one of the best growth stocks to buy now. Delivering strong growth in earnings, it is fast finding its place among growing companies to invest in.
Austal Limited (ASX: ASB)
Austal Limited has delivered strong financial growth in the first half of FY25, with revenue increasing by 15.1% to $825.7 million, primarily driven by strong U.S. shipbuilding contributions and a recovery in Australasian operations. Earnings Before Interest and Tax (EBIT) rose 33% to $42.7 million, while Net Profit After Tax (NPAT) more than doubled to $25.1 million, reflecting higher operating margins and improved project execution.
The company’s cash position significantly improved, with total cash and equivalents reaching $353.9 million, up from $173.5 million in June 2024. This growth was largely fueled by milestone payments from a major U.S. Navy submarine module contract and other infrastructure projects. Austal also reported a net cash position of $212.6 million, a major turnaround from just $3.9 million at the end of FY24. Despite this strong financial performance, no dividend was declared, as the company focuses on investing in shipbuilding capacity and strategic growth initiatives.
Austal now holds a record order book of $14.2 billion, securing major U.S. and Australian defence contracts. A key highlight was the US$450 million contract from General Dynamics Electric Boat for the construction of a submarine module fabrication and outfitting facility at Austal USA’s Mobile shipyard. Additionally, a US$152 million contract from the U.S. Navy was awarded to enhance shipyard infrastructure, supporting the Navy’s goal of producing one Columbia-class and two Virginia-class submarines annually. The Strategic Shipbuilding Agreement (SSA) in Australia also presents further opportunities for securing long-term defence projects.
In the U.S. segment, revenue grew to $634 million, with shipbuilding revenue rising by 13.8% to $517 million. Strong progress was made on the Tactical Auxiliary General Ocean Surveillance (T-AGOS) and Offshore Patrol Cutter (OPC) programs, offsetting reduced throughput from the Littoral Combat Ship (LCS) program, which is nearing completion. Austal also submitted a formal Request for Equitable Adjustment (REA) to the U.S. Navy regarding contract modifications for its Towing, Salvage, and Rescue Ship (T-ATS) program, with ongoing negotiations expected to impact project timelines.
Australasian operations saw a strong recovery, with revenue rising 36% to $193 million, driven by new commercial ferry contracts in the Philippines and Vietnam and increased defence projects. The company secured an A$137 million contract extension for two additional Evolved Cape-class Patrol Boats for the Australian Border Force and advanced work on the Landing Craft (Heavy) program, expected to provide further growth opportunities.
Austal's financial position remains robust, with net operating cash inflow reaching $238.3 million, largely due to milestone payments for its U.S. expansion programs. With a current cash balance of approximately $500 million, the company is well-positioned to fund upcoming capital investments and shipyard expansions.
Looking ahead, Austal has upgraded its full-year EBIT guidance to not less than $80 million, with potential upside from additional Australian and U.S. defence contracts. The company is focused on expanding its shipbuilding capacity, securing long-term defence agreements, and delivering sustainable growth across its global operations.
Source: Company’s Report
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