Vessel builder Austal Limited (ASX: ASB) surged in early trade this morning after the company’s USA segment Austal USA won another transport vessel contract from United States Navy.
In today’s announcement to Australian Securities Exchange, Austal Limited announced that it has secured materials order from the US Navy for the value of US$57,854,366 million. The contract includes the procurement of long lead-time materials for the building of an additional 103-meter Expeditionary Fast Transport (EPF).
The construction of this additional EPF will mark the thirteenth vessel order by the US Navy to Austal while three such additional vessels are already under construction at Austal USA.
As per the terms of contract, Long lead-time material required for the building of additional EPF will include water jets, diesel engines, and reduction gears.
The contract to design and builds the 103-meter EPF was first wheeled by US Navy in November 2008, and since then Austal has delivered total of nine Spearhead-class EPFs
Let’s understand what is EPF?
Expeditionary Fast Transport (EPF) is a high-speed shallow draft catamaran used to support joint force operations of the army as a part of EPF programme initiated by the United States Navy. The principal role of EPF is to transport troops, cargo, military vehicles and equipment for defense operations or for other serval global missions. The rapid speeds of 35+ knots empower EPF to rapidly deploy conventional and special-forces with their equipment and supplies.
These vessels are operated by Military Sealift Command and built by Austal USA, a part of global shipbuilder Austal Limited. Austal USA is principally engaged into the designing and construction of defense vessels that includes the chartering of a vessel to the United States Navy's Military Sealift Command. It also provides training and on-going maintenance and support of these vehicles to United States Navy. Since 2008, Austal has been delivering the affordable solution to meet the Military Sealift Command’s ship build requirements.
Currently, three additional Expeditionary Fast Transport (EPF) are under construction process at Austal USA while the delivery of USNS Burlington EPF10 is expected by the end of this year.
Littoral Combat Ship (LCS) Progress
Recently in September, Austal USA was awarded with construction contract for two additional combat ships for a value of US$584 million per ship. The contract awarded by United States Navy includes the construction of Littoral Combat Ships which were told to be the sixteenth and seventeenth in the independence class.
First, the design of combat ship is prepared by Austal’s Australia segment, the Austal center for excellence in maritime design located in Henderson, Western Australia. This design is then transferred to Austal’s USA segment, Austal USA which then builds the vessel in company-owned built shipyard located in Mobile, Alabama USA.
So far Austal has delivered eight Littoral Combat Ships (LCS) and is expected to start the construction of LCS 32 in 2019 and deliver LCS 34 in mid FY2023.
With the news of an additional EPF materials contract, the share price of Austal Limited jumped 1.389% to $1.825 on 19 October 2018 (1:40 PM AEST). The stock has seen a performance change of +3.15% over the past one year.
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