Crowley terminates contract with Saunders for Darwin fuel storage facility

Crowley has terminated the AU$165 million contract with Saunders International Limited (ASX: SND) for the construction of a US Defense fuel storage facility in Darwin, NT, citing strategic reasons. The contract comprised an AU$140 million deal for 11 tanks for a jet fuel storage facility, and an AU$25 million contract for the delivery of the fuel facility and marine loading and unloading facility. Saunders is nearing completion of the 11 jet fuel storage tanks, and the notice of termination takes effect on Friday, 14 April 2023.

Despite the termination, Saunders will continue to collaborate with Crowley and their US based partner organization as they complete the project, and will provide ongoing services as required. The FY23 financial results of Saunders International will be affected, with revenue expected towards the lower end of the previously issued guidance of AU$190-AU$220 million, and EBIT expected to remain in the range of 6.5% to 7.5%. The termination will also impact the company's order book, with a reduction of approximately AU$40 million, but the company expects to compensate for this with other secured projects during Q4.

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