Australian shipbuilder Austal secured a AU$4 billion ($2.82 billion) government contract on Friday, cementing its role as a core partner in the federal government's naval modernisation drive.
The contract is the second major defence award Austal has bagged under Australia's strategic shipbuilding agreement with the company, following the AU$1.03 billion landing craft medium deal in December.
"This contract generates a record order book for Austal, provides a long-term demand signal for our supply chain and provides the incentive to invest in uplifting our capability," said CEO Paddy Gregg.
Shares of the company closed 5.5 per cent higher after rising as much as 7.5 per cent earlier in the day.
"Austal is unique in the listed Australian defence sector and the highest quality in the peer group," said Richard Ivers, portfolio manager at Prime Value Asset Management.
"It’s smart of the government to provide this certainty for Australia’s defence manufacturing base and underpins the long-term outlook for Austal which is good for shareholders."
Under the deal, Austal Defence Shipbuilding Australia, the company's private defence shipbuilding arm, has been tasked with the construction of eight 100-metre landing craft heavy (LCH) vessels, using both its own infrastructure and common-user facilities at Henderson.
Construction works for the vessels are scheduled to begin this year and the final vessel is slated for delivery in 2038.
Meanwhile, the shipbuilder's US unit is also building up to 12 smaller landing craft utility vessels for the US Navy at its shipyard in Mobile, Alabama.
(Reporting by Sneha Kumar Jasmeen Ara Shaikh in Bengaluru; Editing by Jonathan Ananda and Subhranshu Sahu)