ASB updates T-ATS program, leading to substantial FY2023 earnings guidance revision

Key Highlights: -

• Austal issues an update regarding its US Towing, Salvage, and Rescue Ship (T-ATS) program
• FY2023 EBIT guidance revised to a range from AU$58 million to potential AU$10 million loss
• The company has conducted an additional review of the T-ATS project's forecasts

Austal Limited (ASX: ASB) has recently provided a significant update regarding its US Towing, Salvage, and Rescue Ship (T-ATS) program, which has resulted in a notable revision to the earnings guidance for FY2023.

Additionally, the company has encountered efficiency issues with the newly commissioned steel manufacturing line, which involves labour hours and overhead recovery, and these aspects have been subsequently adjusted. As Austal progresses with the construction of the T-ATS vessels, these efficiency issues are expected to improve over time. However, they have caused some delays in the progress of the initial vessels in production.

During the financial year-end process, Austal conducted a thorough review of the T-ATS project's forecasts, utilizing the same methodology as previously applied. This comprehensive review led to bringing all project losses forward and encompassing the entire program, along with the updates mentioned, in the FY2023 reporting.

As a result of this review, Austal has revised its EBIT guidance for FY2023, now ranging from zero profit to a potential loss of AU$10 million, compared to the earlier earnings guidance of approximately AU$58 million. Despite this significant reduction in the earnings outlook, Austal maintains a healthy cash position, with approximately AU$179 million in the bank as of 30th June 2023, compared to AU$184.9 million as of 31st December 2022.

Austal remains dedicated to resolving the challenges faced in the T-ATS program, actively working on optimizing the efficiency of the steel manufacturing line and enhancing the progress on the initial vessels in production while also mitigating the associated cost pressures.

Despite the adjustments and challenges experienced in the T-ATS program, Austal's financial position remains robust, providing a solid foundation to navigate through the current difficulties and capitalize on future opportunities.

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