Austal (ASX:ASB) share price on watch following profit surge

The Austal (ASX: ASB) share price will be on watch today following the release of the company’s first-half results. Here are the highlights.

| More on:
asx share price on watch represented by investor peering over top of bench

Image source: Getty Images

Austal Limited (ASX: ASB) shares will be on watch today following the release of the company’s first-half results. At market close yesterday, the Austal share price finished the day 2.7% higher at $2.30.

Let’s take a closer look and see how the shipbuilder’s performance has tracked for the period.

Why will the Austal share price be in focus?

The Austal share price could be on the move today as investors digest the company’s latest results.

According to its release, Austal delivered a robust performance despite continuing to navigate through COVID-19 challenges.

For the six months ending 31 December 2020, Austal reported total group revenue of $840.3 million. While this reflected a 19% fall from the prior corresponding period, the company noted revenue was impacted by a number of factors. These included unfavourable currency exchange movements, a reduction in United States commercial shipbuilding and vessel support activities, as well as longer than expected commissioning of Australian ships.

However, in further news that could impact the Austal share price, earnings before interest and tax (EBIT) rose to $70.5 million, a lift of 17.6% over the H1 FY20 term. The growth was attributed to improved shipbuilding margins in both geographical segments and lower overhead corporate costs.

Net profit after tax (NPAT) surged to $52.4 million, representing a 29% jump on the comparable period.

Austal closed the calendar year with cash in the bank of $371.9 million, and $111.7 million of gross debt. Overall, this leaves the company with a net cash position of $260.2 million, slightly below FY20’s amount of $272.4 million.

The board declared an unfranked interim dividend of 4 cents per share to be paid to eligible shareholders on 22 April 2021. This is a 33% increase over the H1 FY20 interim dividend. Also worth noting is the fact the board has decided not to continue with its dividend reinvestment plan (DRP), holding off until further notice.

CEO commentary

Austal CEO Paddy Gregg touched on the group’s performance, saying:

The strong interim financial results were driven by excellent shipbuilding operating margins in both of our USA and Australasia operations, which flowed through to an enhanced bottom line.

This highlights the success of the pragmatic initiatives Austal has implemented to increase our efficiency, reduce our cost base and set the business up for sustained profitability.

Outlook

Looking ahead, Austal maintained its FY21 EBIT guidance of $125 million and revenue of $1.65 billion. The company noted, though, based on the appreciating Australian dollar against the United States dollar, it may be forced to reassess EBIT and revenue guidance.

Austal share price snapshot

Over the last 12 months, the Austal share price has fallen 37% due to the pandemic heavily weighing down its operations. Just last week, Austal shares sank to a multi-year low of $1.98 following an update on an investigation by United States authorities.

The Austal share price is a long way from its pre-COVID levels of around the $4 mark.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Austal Limited. 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 Bruce Jackson.

More on Share Market News