Auditor baulks at Austal accounts as shipbuilder delivers bigger profit

Austal’s auditors have baulked at the shipbuilder’s move to recognise more than $100 million in revenue it is claiming for cost overruns on two US Navy projects at the company’s Alabama shipyard.

The Perth-based shipbuilder is pursuing up to $US150m in relief to cover the higher cost of delivering a floating dock and salvage and towing vessels, and has taken $107.5m to account in half-year results disclosed on Monday.

Austal says that based on its past experience with the US Navy, the revenue recovery is “highly probable”.

However, auditor Deloitte qualified the interim accounts on the basis it had not yet been able to obtain “sufficient appropriate evidence with respect to the contractual relief”.

While the qualification comes just two weeks after Austal revealed a profit-stripping accounting blunder at the US shipyard, chief executive Paddy Gregg insisted on Monday that the two issues were unrelated.

He told analysts it was “unfortunate the two things happened in such close proximity”.

“I think people will try to lock them together, when they are two very different things,” Mr Gregg said.

Nonetheless, Austal shares crashed 11 per cent to close the day at $5.61.

The financial results for the six months to the end of 2025 showed Austal recorded a stronger profit after its Australian business stepped out of the shadow of the group’s flagship US arm.

Austal’s Mobile, Alabama shipyard historically generates the lion’s share of the company’s profit, but it was the Australian division which took the kudos in the first half off the back of a 60 per cent jump in revenue.

Group profit was 21.1 per cent better at $30.5 million, with revenue rising 30.4 per cent to $1.1 billion.

But while US revenues accounted for $801m of the group result, US earnings before interest and tax fell $9.9m to $17m because of the increased cost of the salvage and towing vessel program and the floating dock.

By contrast, profit from the Henderson-based Australian division leapt to $29.2m from $1.9m on revenue that jumped 60.6 per cent to $309.9m thanks largely to its production of patrol boats for the Royal Australian Navy and Border Force.

“The diversification in Austal’s operations has again allowed the group to continue growing, while our different shipyards undertake periods of consolidation and infrastructure expansion as we continue to execute our robust long term order book,” Mr Gregg said.

“Australasian operations were the standout in the first half period, delivering a turnaround in earnings offsetting a reduction in contribution from the USA,” Mr Gregg said.

The results come just days after Austal was confirmed as the builder of landing craft for the Australian Army under $5b of contracts from the Federal Government.