Austal’s share price fell sharply today after it disclosed an agreement to build offshore patrol vessels for the Philippines navy had fallen through.
It had been working with the Australian and Philippines governments on the plan to construct OPVs at its Philippines shipyard.
It has previously disclosed a budget of 30 billion pesos – equal to about $A785 million – had been approved in the Philippines for the OPV contract, which had an expected duration of seven years.
For context, the total contract value was about half Austal‘s global revenue last year.
The company said today it has been advised that the Philippines navy (PN) plans to sole-source foreign-built vessels rather than buying Austal-built vessels.
“Its disappointing that after several years of working together with PN to develop an agreed specification and price for this project, at the final stages of negotiation PN elected to pursue an offshore build on different terms,” chief executive Paddy Gregg said.
He added that Austal remained very enthusiastic about the capabilities of its Cape platform for OPVs.
Austal plans to focus on securing orders for commercial ferries for its Philippines shipyard.
Its shares closed 11.25 per cent lower at $1.775 today.
