Video of Interview at: http://www.finnewsnetwork.com/archives/finance_news_network12266.html
28 August 2009 - CEO Bob Browning talks about its full year results to June 30 and work with the US Navy.
Bob Browning: Sure, yeah the Hawaii Super Ferry contract really was quite unusual. We were actually helping that company get started and put $30 million of mezzanine debt into the business which then allowed us to contract to build two large catamaran ferries for them. And strategically was important because it allowed us to build our workforce up in Mobile, Alabama which then allowed us to win the Joint High Speed Vessel program which is a very close derivative to that hull form. So while it was unfortunate that Hawaii Super Ferry filed for Chapter 11, it was an unusual thing that we normally wouldn’t do, but it did position us for a much more lucrative contract with the Navy...
Bob Browning: It really was a conscious decision...
Full Interview Below:
TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH AUSTAL LTD (ASX:ASB) CEO, BOB BROWNING
Clive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me for the first time from ship-builder Austal Ltd (ASX:ASB), is CEO Bob Browning. Bob welcome to FNN. You’ve just released your full year results to June 30 with net profit down 82 per cent to $9.2 million on revenue of $500 million, can you explain the result?
Bob Browning: Sure, and it’s important to realise that the impact in our income statement was really some accounting treatments, non-cash write-downs. Our underlying business would have produced about $38.5 million this year which was ahead of analyst expectations but we had the Hawaii Super Ferry write-down and a derivative instrument that we put in place on a multi-ship program that has locked in a big upside for that program going forward from a commercial basis.
Clive Tompkins: Given the substantial hit you took to your bottom-line on the Hawaii Super Ferry contract, are you going to change the way you get paid for similar deals?
Bob Browning: Sure, yeah the Hawaii Super Ferry contract really was quite unusual. We were actually helping that company get started and put $30 million of mezzanine debt into the business which then allowed us to contract to build two large catamaran ferries for them. And strategically was important because it allowed us to build our workforce up in Mobile, Alabama which then allowed us to win the Joint High Speed Vessel program which is a very close derivative to that hull form. So while it was unfortunate that Hawaii Super Ferry filed for Chapter 11, it was an unusual thing that we normally wouldn’t do, but it did position us for a much more lucrative contract with the Navy.
Clive Tompkins: Austal has built a global dominance producing and selling car and passenger fast ferries, but has also been producing a fair number of military vessels, where do you get the bulk of your work from these days?
Bob Browning: Right now it comes primarily from the commercial side of the industry in large catamaran ferries down to passenger ferries. If we fast forward upwards of two years I would expects about two thirds of our income from multi-ship U.S. Navy awards going forward.
Clive Tompkins: And is this a conscious decision, or have you just followed the work flow?
Bob Browning: It really was a conscious decision. We were actually prevented form operating or selling in the United States through some protectionist legislation called the Jones Act, and so the establishment of our facility in Mobile Alabama was designed to allow us to produce ships for that market. We then saw an opportunity with a vessel we produced for a customer in the Canary Islands that we thought an adaptation of that would fit the Navy’s Littoral Combat Ship program and were successful in winning that contract...>>Rest of interview here>>
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1 comment:
Austal has never made any secret of the fact that their US operations were geared toward US military contracts from the outset. That has been their very public and stated goal since 1999. They have achieved that. In the interim, they have built about 9 commercial vessels in the last ten years that are in service on the Great Lakes (1), NYC (3), Miami (1) and a couple of off shore supply vessels (2), along with the ill fated HSF (2).
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