Australian shipbuilder Austal marked down its earnings forecast in May, sending its stock down 10 percent and hammering home a likely trend for the company—more ships being built in the U.S., in Alabama.
Austal CEO Andrew Bellamy told investors that export losses, owing to the “unprecedented” strength of the Australian dollar, required the cut in forecast profits from $AUD 28 million to as low as $AUD 20 million. Continuing a theme he introduced in remarks in April, Bellamy said the strong Australian dollar would probably mean shifting more of the company’s commercial vessel contracts to the Austal USA shipyard in Mobile.
Austal USA is in full expansion mode to fulfill U.S. defense contracts, including a potential $US 3.7 billion contract with the Navy to build 10 littoral combat ships over the next five years.
Austal’s shipyards in Perth have been focused on the high-speed ferry market in Europe, but that work may now be added to the booming yards in Alabama.
“A ferry that we sold two years ago to Europe for E52 million, today we’ve got to sell for E75 million ($AUD 100 million) just because of the Australian dollar, ” Bellamy said. “I can’t get, and nobody can get, a European operator to pay 50 percent more because of a currency shift.”
By Chris McFadyen