Austal Shares Surge 7.6% as Defence Shipbuilder Extends Rally Amid Bidding Interest in Its US Business

SYDNEY — Shares of Austal Ltd. climbed more than 7% on Tuesday, extending a recovery for the Australian defense shipbuilder as investors weighed potential interest in its U.S. operations.

Austal shares rose 0.295 Australian dollars, or 7.55%, to A$4.205 in afternoon trading. The stock traded between A$3.99 and A$4.27, with nearly 2.5 million shares changing hands. The company's market value stood at about A$1.8 billion.

It was not immediately clear whether Austal had released new information to the market Tuesday. The shares remain down nearly 38% over the past year.

About Austal

Based in Henderson, Western Australia, Austal designs, builds and supports naval and commercial vessels, including warships, patrol boats and support vessels. It operates major shipyards in Australia and the United States, along with facilities in the Philippines and Vietnam.

The company also provides command and control systems, communications technology and maintenance services for vessels in operation.

A tough year

Austal's shares tumbled earlier this year after its first-half results and a cut to its earnings guidance, which raised concerns about cost pressures on major U.S. shipbuilding programs. At one point, the stock had fallen more than 60% from its January peak.

The company lowered its fiscal 2026 EBIT guidance to about A$110 million, down from about A$135 million.

Strong order book

Despite those setbacks, Austal's order book has grown significantly. In August, the company reported fiscal 2026 revenue of about A$2.03 billion, up 11% from the prior year, though it posted a statutory loss.

Revenue from its Australasian business rose 49%, and its Australasian defense order book jumped to about A$5.6 billion, from A$700 million a year earlier. Chief Executive Paddy Gregg said the company's contract pipeline could allow it to double Australasian revenue over the next five years.

Austal's growth in Australia has been supported by the Commonwealth's Strategic Shipbuilding Agreement, which positions the company as a key builder for the Australian Defence Force. That includes a contract worth more than A$1 billion to build 18 landing craft for the Australian Army.

The company's U.S. order backlog stands at about A$10.9 billion, and Austal has been expanding its capacity to manufacture submarine modules for the U.S. Navy.

Interest in Austal USA

Investor sentiment has also been lifted by potential interest in Austal's U.S. business.

South Korean defense and shipbuilding group Hanwha, which has received approval to raise its stake in Austal to 19.9%, has made a proposal for the shares in Austal USA's holding entities. The proposal excludes Austal's listed shares and its Australasian operations. Austal's board said the proposal merited further evaluation and allowed Hanwha to carry out due diligence.

Austal has also confirmed that it held an initial discussion with Wildcat Infrastructure, a U.S. investment firm, after media reports identified it as another potential buyer of Austal USA.

The prospect of competing interest in the U.S. business has fueled speculation about a possible bidding war, helping drive Austal shares more than 30% higher from their July levels.

A sale could strengthen Austal's balance sheet and allow it to focus on its growing Australian defense business.

Defense spending tailwinds

Austal is benefiting from increased defense spending in Australia and among its allies, amid heightened geopolitical tensions in the Indo-Pacific and beyond. Governments have sought to expand naval capabilities and strengthen domestic shipbuilding industries.

What to watch

Investors will be watching for any developments on the potential sale of Austal USA, including whether a formal offer emerges or other parties join the process.

Updates on major contracts, execution of U.S. shipbuilding programs and progress under the Strategic Shipbuilding Agreement will also be closely followed.