When investors think of ASX industrial success stories, shipbuilding may not be the first sector that comes to mind.
However, two Australian companies — Austal Ltd (ASX: ASB) and Civmec Ltd (ASX: CVL) — are changing that narrative.
Both have seen their share prices surge over the past year: At the time of writing, the Austal share price has more than doubled, while Civmec is up around 40% in six months. Behind those gains lies a combination of national defence spending, export growth, and expanding infrastructure projects.
Australia's strategic shipbuilder
Austal is best known as the designer and builder of advanced defence and commercial vessels. With operations in Australia, the US, the Philippines, and Vietnam, it has become one of the world's leading aluminium shipbuilders and Australia's largest defence exporter.
In FY25, Austal delivered a standout performance. Revenue rose 24% to $1.8 billion, while net profit after tax jumped more than 500% to $89.7 million. Its order book swelled to $13.1 billion, including multi-year options, and the company ended the year with more than $450 million in net cash.
A key driver has been the Strategic Shipbuilding Agreement (SSA) with the Australian Government. This 20-year partnership establishes Austal as the country's strategic shipbuilder, responsible for key naval programs such as the Landing Craft Medium (LC-M) and Landing Craft Heavy (LC-H). The company is also set to construct a version of the Mogami-class General Purpose Frigate, in partnership with Mitsubishi Heavy Industries.
Across the Pacific, Austal's US business continues to expand, supported by a US$450 million contract for submarine module manufacturing and a US$150 million investment into America's submarine industrial base.
Meanwhile, in Europe, Austal recently signed a $270 million deal to build a 130-metre "hydrogen-ready" high-speed ferry for Sweden's Gotlandsbolaget, the largest vessel in its history.
Taken together, these projects provide Austal with exceptional forward visibility, featuring multiple new manufacturing facilities under construction to increase production capacity through FY26 and beyond.
Building Australia's heavy industry backbone
While Austal is known for its ship design, Civmec is the engineering powerhouse behind some of Australia's biggest industrial and defence projects.
Headquartered in Henderson, Western Australia, Civmec operates across construction, heavy engineering, maintenance, and naval shipbuilding. Its facilities are among the largest of their kind in the Southern Hemisphere.
The company's Q1 FY26 results highlighted steady growth, with revenue of $190.4 million and a record order book of $1.15 billion. Its acquisition of Luerssen Australia, now renamed Civmec Defence Industries, cements its role in sovereign shipbuilding. The group is currently constructing several Arafura Class Offshore Patrol Vessels, the largest steel naval project ever undertaken in WA.
Civmec is also winning work across resources and infrastructure. Projects include Iluka Resources Ltd (ASX: ILU)'s Eneabba Rare Earths Refinery, Fortescue Ltd (ASX: FMG)'s process water installations, and the CSBP Sodium Cyanide expansion.
With its growing involvement in low-carbon and green energy projects, Civmec sees major opportunities ahead — especially as government investment in the Henderson Defence Precinct increases. The company expects activity to accelerate in the second half of FY26, supported by a healthy pipeline of Early Contractor Involvement (ECI) projects.
The bigger picture
Both companies are benefiting from a powerful global trend: an increased focus on national industrial strategy. As nations invest in defence capability and critical infrastructure, Australian firms like Austal and Civmec are finding themselves in prime position.
Neither stock comes without risk. Shipbuilding and heavy engineering are capital-intensive industries, and project delays or contract timing can impact earnings. However, the record order books and long-term government partnerships offer a solid footing for future growth.
