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Highlights:
- Saunders International Limited (ASX:SND) offers a wide range of services to support the Defence sector.
- The company ended CY22 securing a new defence project for the RAAF Base Tindal in Katherine, Northern Territory.
- In 2021, the company secured a Design & Construct contract worth AU$165 million for a US defence fuel storage facility in Darwin.
- Saunders highlights that the company is encouraged by improving levels of activity with strong growth in its pipeline within the sector.
Saunders (ASX:SND), an ASX-listed multi-disciplined engineering and construction firm, is an innovative and cost-effective solutions provider for several strategically important sectors in Australia.
One such sector where Saunders is tapping opportunities is the Defence sector in Australia. The company is keeping close track of the government’s Defence Fuels Transformation Program (“DFTP”), which is focused on the installation and the update of fuel storage facilities across the country.
Per the government's defence website, the DFTP campaign will cover twenty-four defence sites across the nation and include four types of defence fuel installation facilities:
- Aviation fuel (A)
- Ground vehicle fuel (G)
- Power generation fuel (P)
- Maritime asset fuel (M)
DFTP: AU$500 million worth opportunity from 2022 to 2026
The transformational program for the Australian Department of Defence is aimed at:
- Enhancing resilience throughout the defence fuel network (“DFN”).
- Establishing industrial networks.
- Executing new initiatives to enhance services and bring down the ownership cost across the DFN.
- Delivering a guaranteed fuel supply to increase activity while maintaining the industry benchmark.
The second leg of the program is currently in progress, i.e. DFTP Tranche 2, holds a budget of AU$500 million for the period from 2022 to 2026, focusing on projects targeting risk reduction and delivering long-term improvements to the DFN.
Saunders has a positive outlook on the program based on its defence fuel expertise. For defence-related projects, the company undertakes design, construction and maintenance services, along with civil works, structural, electrical and instrumentation, process controls, cyber security, mechanical and piping work.
AU$8.5 million defence Design & Build contract
Saunders ended CY22 on a very positive note. In December, the company was awarded the contract with Nova Nacap to design and construct two bulk liquid fuel storage tanks at the RAAF Base Tindal in Katherine, Northern Territory.
The project is subcontracted through the Nova Nacap Joint Venture, which is contracted to the Naval Facilities Engineering Command Pacific, with the US Department of Defence.
Saunders scope of work under the project includes the design and construction of two four-megalitre aviation fuel tanks, with revenue and earnings to contribute through FY23 and into FY24.
(Source: Company Information)
The defence project worth AU$165 million from Crowley to construct jet fuel tanks for a US Defence fuels facility in Darwin, secured in 2021, is currently in progress. The project, the largest-ever for Saunders, was awarded by the US Defence Logistics Agency to Crowley. To know more, read here
Saunders considers the Nova Nacap project win as a significant step towards its Defence sector strategy and believes that the company is positioned well to tap further opportunities in the future.
Saunders’ shares traded at AU$1.12 on 13 January 2023. The shares have delivered a market return of over 10% over the past six months. The current market capitalisation of Saunders stands at AU$123.24 million.
