Austal gains US Navy Approval on USS Mobile
- Austal receives testing approval for new littoral combat ship (LCS) the USS Mobile
- The company has an additional five LCS's currently under production
- Austal’s current Order book currently sits at USD 4.3 billion
Australian Shipbuilder, Austal (ASX: ASB) has had a third naval ship, successfully completed trials by the United States Navy in 2020 alone. The USS Mobile was constructed in Alabama and is the 13th Littoral combat ship built by Austal in its history.
Austal has grown over the last 30 years to become one of the largest shipbuilders in the world. They have produced more than 300 vessels across 54 countries and has a current order book of USD 4.3 billion.
In the past twelve months, Austal has experienced booming business in the United States, in particular from the US Government. Their reputation as one of the leading shipbuilders in the world has allowed them to breach and solidify themselves into the US Market. Military expenditure in the United States is estimated to be around $934 billion in FY21 and remains a crucial market for Austal’s continued success. The companies US production facility is located in Mobile Alabama, which their most recent Ship was rightly named after.
The specific build is described by Austal as “a high-speed shallow-draft surface combatant with an aluminium trimaran hull that provides class-leading, multi-mission capacity.” The ship is capable of fast maneuverable, network surface-combat, surface warfare, mine warfare and anti-submarine warfare missions.
The USS Mobile saw the successful execution of a variety of tests that assessed the ships major systems and equipment. The Austal USA-led team determined the successful completion of the acceptance trials for the US Navy. The Ship is set be delivered before the end of October.
As of the 13th of October 2020, Austal is trading at $3.44, still down 5.5 per cent year to date. The company has been trading sideways for a number of months between $3 -$4, consolidating at a level it only briefly traded at in mid-2019. Moving forward Austal has 5 more independent-class littoral combat ships (LCS), currently under production. In particular, the USS Savannah is preparing for trials, and the USS Canberra is reaching the final assembly stages.
The company is currently focused on 45 ships, 31 of which are intended for the US and Australian Navies. To accommodate this growth in demand, Austal has allocated $100 million USD to its current production plant in Mobile Alabama, which will allow it to expand production by 300 per cent.
The Industry itself is primed for growth and expansion in Australia, with the sector as a whole receiving a boost from the 2021 federal budget. Treasurer Josh Frydenberg and the coalition have brought forward $1 billion in planned defence spending, in an attempt to stimulate the economy. Ultimately the defensive nature of a growing company such as Austal makes it one of the countries top defense stocks.