Austal (ASX:ASB) share price lower despite new contract bid

The shipbuilder's shares are struggling to float despite news of a new contract opportunity.

| More on:
A ship captain looking through a pair of binoculars.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Austal Limited (ASX: ASB) share price is sinking into negative territory during lunchtime trade. This comes after the shipbuilder announced its new bid to supply upgraded littoral manoeuvre capability for the Australian Army.

At the time of writing, Austal shares are swapping hands for $2.23 apiece, down 1.33%.

Austal enters tender process

Investors are dragging the Austal share price lower despite the company announcing its new contract opportunity.

In a statement to the ASX, Austal advised it will submit a proposal to design, build and service the Australian Army's next generation of littoral — or shoreline — capability.

The Department of Defence's LAND 8710 (Phase 1) project is seeking to develop a new amphibious vehicle and independent landing craft. They're scheduled to replace the Army's lighter amphibious cargo vehicle and current landing craft mechanised (LCM-8) vessels.

The Australian-built amphibious vehicles and landing craft will aim to provide improved speed and protection in transporting land forces.

In February this year, the federal government announced plans to invest $800 million into the project. The new vehicles and vessels are expected to be integrated into the Army from 2026.

Austal CEO Paddy Gregg reinforced the company's capability, saying:

Austal is Australia's proven defence prime contractor that has designed, constructed and sustained multiple naval shipbuilding programs for Australia, and export markets around the world, for more than 20 years.

Drawing upon this local strength in defence capability, including Australia's largest team of naval architects, Austal is confident of offering an exceptional new littoral manoeuvre capability for the Australian Army that may be relied upon throughout its working life.

The company has vessel manufacturing and service facilities across Western Australia, Queensland, and the Northern Territory. As Australia's premier shipbuilder, Austal supplies some of the world's most advanced defence vessels.

Currently, the company is partnering with more than 1,200 businesses across the country to deliver projects such as replacing the guardian-class patrol boats used as part of Australia's maritime security program in the South Pacific.

About the Austal share price

It's been a difficult 12 months for the company's shareholders, watching their holdings fall in value by almost 40%. Although the Austal share price has failed to launch recently, for the company, it's business as usual.

Austal has been busy completing its guardian-class patrol boats contract, with 12 vessels now delivered. A total of 9 patrol boats remains to be fulfilled, with 6 currently under construction.

Austal has a market capitalisation of roughly $803 million, ranking it 332 out of the 2,255 companies on the ASX.

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 Industrials Shares

Man pointing at a blue rising share price graph.
Mergers & Acquisitions

Guess which ASX 300 stock is rocketing 10% on a $985 million cash bid!

Investors are piling into the ASX 300 stock on the back of a $985 million cash takeover bid.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Earnings Results

Brickworks share price tumbles on disappointing half-year loss

This loss didn't stop the company from increasing its dividend again.

Read more »

Man sitting in front of a laptop and analysing an earnings report.
Industrials Shares

Own Brickworks shares? Here's your half-year results preview

Is Brickworks going to post a sharp profit decline next week?

Read more »

People sit in rollercoaster seats with expressions of fear, terror and exhilaration as it goes into a steep downward descent representing the Novonix share price in FY22
Industrials Shares

DroneShield share price down 36% in 6 days. Should you buy the dip?

A top broker weighs in.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Industrials Shares

Why is the Graincorp share price having such a bumper week?

Shareholders are smiling this week. And could the gains keep coming?

Read more »

Person with thumbs down and a red sad face poster covering the face.
Earnings Results

2 ASX industrials shares crashing up to 22% on earnings

Investors haven't responded positively to these results.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Earnings Results

Guess which ASX 200 stock is nosediving 20% on half-year results

This company is claiming strong results for 1H FY24 but investors appear to disagree.

Read more »

a happy plumber smiles while repairing bathroom fittings in a home.
Earnings Results

Reece share price jumps 13% on stronger than expected half-year profits

Investors have been impressed with this half-year result.

Read more »