Amidst the banks, biotechs and myriad of other businesses is boatbuilder Austal (ASX: ASB).
The global shipbuilder designs and constructs commercial and defence ships for varying purposes.
For 30 years, the Company has been producing vessels for over 100 operators across 54 countries, earning them a reputation as innovators in the niche field of shipbuilding, a global market valued at $142 billion as of 2020, and projected to reach $195 billion by 2030.
The United States Navy are obviously big fans of Austal’s ships, having already commissioned multiple vessels such as the Littoral Combat Ship, a warfare ship, and the Expeditionary Fast Transport Ship for high speed transport and humanitarian relief.
Adding to their fleet, the US Navy has awarded Austal with a $225.5 million contract for the construction of two more vessels, increasing the order to four with their initial order lodged in October 2021.
The four vessels will be Navajo-class Towing, Salvage, and Rescue Ships. The ships will be specifically designed to support the US Navy’s fleet operations, built with multiple capabilities in mind such as oil spill response, humanitarian assistance, search and rescue and surveillance.
Having the confidence of such a well funded government agency like the Navy is a positive for Austal, especially with the Navy allocated over $163 billion for the 2022 fiscal year.
The move is part of a larger plan to grow the US naval fleet to 355 prompted by bipartisan concern over tenuous Chinese and Russian relations.
Austal’s existing and established relationship as a naval ship provider may see them fare well throughout this growth process.
“It’s a great sign of confidence by the Navy, in the Austal USA team’s ability to deliver both steel and aluminium ships simultaneously, that they have awarded a contract for another two vessels,” said Austal CEO, Paddy Greg.
“Congratulations to Austal USA on yet another multiple steel vessel contract, which will go even further to demonstrate the company’s diverse capabilities, in aluminium and steel.”
Construction on the two ships will begin in the second half of CY23 and the first half of CY24. Delivery of the completed vessels is expected for the second half of CY25 and the first half of CY 26 (respectively).
In addition to these ships, Austal has also been awarded a USD $3.3 billion contract for construction of 11 Offshore Patrol Cutters for the United States Coast Guard.
Samantha Freidin is a business journalist at Emerald Financial whilst also completing a Masters of Marketing and Digital Communications at Monash University.
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