Insights

Austal (ASX: ASB) share price down 8% after earnings downgrade

The shipbuilder’s share price is plunging to two-year lows. Let’s take a look.
The post Austal (ASX: ASB) share price down 8% after earnings downgrade appeared first on The Motley Fool Australia. –

The Austal Ltd (ASX: ASB) share price is taking a beating this morning. This comes after the global shipbuilder and defence contractor announced a negative FY21 earnings update.

At the time of writing, Austal shares are down 7.73% trading at $2.15.

Guidance downgrade

In today’s statement, Austal advised it now expects earnings before interest and tax (EBIT) to be in the range of $112 million to $118 million, with revenue of approximately $1.55 billion.

This compares to its previous guidance of $125 million EBIT and revenue of approximately $1.65 billion for FY21.

From a year-on-year perspective, in FY20, Austal delivered an EBIT of $130.4 million and revenues of $2.1 billion. This means that today’s earnings downgrade will result in a greater year-on-year decline in earnings, with EBIT falling between 9.5% and 14%, and a 26% slide in revenue.

Why earnings are sliding

Austal had previously flagged COVID-19 related issues in its 1H21 results, citing delays as a result of the pandemic had shifted revenue into FY22.

Today’s announcement has revealed a continuation of these challenges, with the company advising “delays experienced on programs and associated costs caused by COVID-19 related border closures, travel restrictions and resourcing challenges that are impacting Austal’s shipbuilding operations in Australia and the Philippines”.

Another drag on earnings was the company’s “requirement to (provide) for expected future expenses” associated with civil penalty proceedings commenced by ASIC in the Federal Court recently.

After investigating its behaviour in 2016, ASIC has started a civil case against the shipbuilder over allegations Austal was holding back information about a major earnings downgrade.

Austal share price at 2-year lows

Austal shares staged a meteoric rise in 2019, surging from ~$2.00 in January to as high as $4.99 by November.

In recent times, the Austal share price has struggled to perform, despite the S&P/ASX 200 Index (ASX: XJO) rallying to record all-time highs.

At current ~$2.20 levels, it’s almost back to square one for Austal shares.

The post Austal (ASX: ASB) share price down 8% after earnings downgrade appeared first on The Motley Fool Australia.

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 May 24th 2021

More reading

Quarterly rebalance: Appen kicked out of ASX 100, Uniti added to ASX 200

5 things to watch on the ASX 200 on Tuesday

ASX 200 rises, Woolworths acquisition approved, Austal in rough waters

ASX company, ex-CEO accused of failing to reveal massive earnings downgrade

Why the Austal (ASX:ASB) share price is rising today

Motley Fool contributor Kerry Sun 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.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!