Austal (ASX:ASB) share price sinks 13% on weak FY21 result

How did the company perform for the FY21 full-year? We take a look

| More on:
Businessman puts hand over eyes on a sinking boat in ocean

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 falling heavily on Tuesday morning. This comes after the shipbuilder released its full-year results for the 2021 financial year.

At the time of writing, Austal shares are down 13.55% to $2.17. It's worth noting the Austal share price touched a four-month high of $2.51 last Friday.

Austal share price plummets on disappointing revenue hit

The Austal share price is sinking today following the company's FY21 results for the 12 months ending 30 June, 2021. Here are some of the key results:

  • Total revenue of $1,572 million, down 24.6% on the prior corresponding period (FY20 $2,086 million);
  • Earnings before interest and tax (EBIT) of $114.6 million, down 12.1% (FY20 $130.4 million);
  • Net profit after tax (NPAT) of $81.1 million, up 9.7% (FY20 $89 million); and
  • Unfranked final dividend of 4 cents per share, bringing full-year dividend to 8 cents apiece.

What happened to Austal in FY21?

Austal advised that its financial results, predominantly revenue and EBIT, were in line with previous guidance estimates.

The company's numbers were affected by an appreciation of the United States dollar, which translated into a negative impact for EBIT. In addition, the Littoral Combat Ship (LCS) program decline, COVID-19-related border closures and travel restrictions, and resourcing challenges also weighed in.

Nonetheless, the EBIT, despite the fall, was driven by enhanced shipbuilding margins, particularly in the US and Australasia operations.

This led Austal to achieve its second-highest NPAT in its history. Furthermore, 19 ships were delivered to customers, a record amount in a year. However, this didn't stop the Austal share price from plunging this morning.

What did management say?

Austal CEO Paddy Gregg commented on the milestone achievement, saying:

I'm very pleased that Austal has delivered strong profit and earnings, as we strengthen our position to unlock significant long-term opportunities in the shipbuilding industry and broader defence sector.

…This is a testament to the durability of our operations and our ability to maintain a robust financial base, even amidst the challenges of a COVID-19 impacted environment in FY2021.

Importantly, the momentum we have generated by continuing to successfully deliver for key customers, despite COVID impacts, will enable the company to transition towards the next phase of business growth as our Littoral Combat Ship construction program winds down over the next three years.

What's next for Austal in FY22?

Looking ahead, Austal expects market conditions for FY22 to remain similar to FY21, with the pandemic having a mixed impact.

Consequently, the company refrained from providing EBIT guidance for FY22. It anticipates the next market update will be given to shareholders at its annual general meeting later this year.

It will be interesting to see what effect that has on the Austal share price.

So far, Austal holds a current order book of $2.5 billion, running through until FY25.

Austal CEO Paddy Gregg also went on to talk about the wind-down of the LCS program for the next 3 years, adding:

Fortunately, we are progressing through this transition period from a position of strength with a healthy balance sheet; opportunities that are real and already visible; and a supportive US Government which is directly investing in the future of our facilities.

Motley Fool contributor 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 and has recommended 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 Earnings Results

Photo of two women shopping.
Earnings Results

Premier Investments share price jumps 9% on results and demerger plans

The Smiggle and Peter Alexander owner has released its results. How did it perform?

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Earnings Results

Soul Patts share price struggles on falling profits

ASX 200 investment house Soul Patts reported its half year results this morning.

Read more »

a biomedical researcher sits at his desk with his hand on his chin, thinking and giving a small smile with a microscope next to him and an array of test tubes and beackers behind him on shelves in a well-lit bright office.
Earnings Results

Chemist Warehouse merger target Sigma reports 149% FY24 profit jump

This could be the last set of results from Sigma as we know it if its merger is approved.

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 »

A man sits on a bench atop a mountain with a laptop, making investments with a green ESG mind.
Earnings Results

ASX All Ords stock KMD tumbles as interim dividend cancelled

Investors are hitting the sell button on ASX All Ords stock KMD today.

Read more »

Coal miner holding a giant coal rock in his hand making a circle with his hand, symbolising a rising share price.
Energy Shares

New Hope share price charges higher despite profit crunch and huge dividend cut

Weaker coal prices have hit this miner's profits and dividend hard.

Read more »

A Chinese investor sits in front of his laptop looking pensive and concerned about pandemic lockdowns which may impact ASX 200 iron ore share prices
Earnings Results

Liontown share price tumbles 7% on half-year results

This lithium developer's results have been released this afternoon.

Read more »

A man in a hard hat and high visibility vest holds his thumb up in a gesture of confidence with heavy moving equipment in the background as on a mine site as the Chalice Mining share price rises today.
Earnings Results

Sayona Mining share price jumps despite $32m half-year loss

The Sayona Mining Ltd (ASX: SYA) share price is pushing higher on Thursday. At the time of writing, the lithium…

Read more »