Mystery As Australian Shipbuilder Suspends Trading
Problems at US operations cited by observers yet FT recently reported positive outlook.
LCS MONTGOMERY launched at Austal, Mobil
Austal, the Australian shipbuilder has suspended trading in its shares for two days, a move that leads some observers to believe that bad news is on the way for its shareholders.
The Australian shipbuilder is reported to be in trouble over costs and delays on one of its Littoral Combat ships it is building for the US Navy at its American naval yard.
The company said in an announcement that it has requested the halt to trading so that it could review its US performance and then it would issue guidance on 2016's performance so far.
"Austal will update the market via an investor teleconference at 9.00am (Eastern Standard time) on Monday 4 July 2016 – details of this teleconference will be provided as part of an announcement prior to the commencement of trade on that day.”
Suspending shares two days before the weekend, which means no trading till Monday, gives the company four days to prepare whatever news is coming. It seems unlikely it is good news according to press comments.
In a US Shipbuilding Progress Update issued in December of last year Austal reported "schedule and margin pressure" on the Littoral Combat Ship program. Austal operates the Mobil naval yard and is the prime contractor for LCS 2 Independence-class and the EPF 1 Spearhead-class.
It is known that pressures on the company have increased, as the contracts for the US Navy are fixed-price, and cost over-runs or delays are the shipbuilders worries and delays have occurred on the program.
Austal delivered two of the ships it is building to the US Navy this month and only recently announced winning contracts to build three fast ferries at its Australian yard.
Despite what the press is speculating on, the FT only recently reported that the consensus as of June 24th was that Austal would out-perform the market, with one Buy recommendation.
This contrasts sharply with concerns about the US program's effects on the company and it will be a tense four days before shareholders and employees are let in on the mystery.