Austal secures landmark $4 billion Landing Craft Heavy contract
Austal Limited (ASX: ASB) has been awarded a contract by the Commonwealth Department of Defence, valued at approximately $4 billion for the construction of eight Landing Craft Heavy (LCH) vessels. The contract, awarded under the Strategic Shipbuilding Agreement with the Commonwealth of Australia, establishes a record order book for the company and provides over a decade of contracted work extending to 2038.
Construction of the 100-metre vessels will commence in 2026 at Henderson, Western Australia, using Austal facilities and the Common User Facility. The vessels are based on the Damen LST100 design and will support amphibious operations, logistics, humanitarian assistance and disaster relief across Australia’s region of interest. The eighth and final vessel is scheduled for delivery to the Commonwealth in 2038, representing a 12-year construction program.
Chief Executive Officer Paddy Gregg stated the contract reinforces Austal’s position as the Commonwealth’s sovereign shipbuilder and a trusted partner to the Australian Defence Force. The contract generates a record order book for Austal, provides a long-term demand signal for the supply chain, and creates the incentive to invest in capability uplift. Construction at Henderson will create and develop thousands of new, skilled jobs in Western Australia while providing opportunities for the local defence industry supply chain.
What are Landing Craft Heavy vessels?
Landing Craft Heavy vessels are amphibious military ships designed to transport heavy equipment, vehicles, and troops from sea to shore during military operations. The LCH vessels will provide the Australian Defence Force with critical maritime capability, supporting amphibious operations, logistics, humanitarian assistance and disaster relief across Australia’s region of interest. These vessels serve as essential tools for projecting military force in littoral environments and responding to emergencies in remote locations.
The design is based on the Damen LST100 platform, a proven naval architecture optimised for amphibious operations. The vessels’ operational capability enables the Australian Defence Force to deploy heavy armoured vehicles, mechanised infantry units, and substantial troop numbers directly from ship to shore, even in locations without established port infrastructure. This capability enhances Australia’s ability to respond to regional security challenges and humanitarian crises.
| Specification | Detail |
|---|---|
| Length | Approximately 100 metres |
| Beam (Width) | 16 metres |
| Displacement | Approximately 3,900 – 4,000 tonnes |
| Troop capacity | Over 200 embarked soldiers |
| Vehicle capacity | 6 x M1A2SEP3 Abrams Tanks or 9 x Redback Infantry Fighting Vehicles |
Understanding the vessel capability helps investors appreciate why the Commonwealth is investing $4 billion and the strategic value Austal delivers. The vessels’ capacity to transport main battle tanks and infantry fighting vehicles represents a step change in Australia’s amphibious warfare capability, positioning the Australian Defence Force to conduct large-scale operations across the Indo-Pacific region.
Geographic earnings diversification strengthens investment thesis
The Landing Craft Heavy contract balances the company’s geographic earnings split, reducing reliance on US operations that have traditionally dominated the defence order book. Chief Executive Officer Paddy Gregg noted the contract reflects the growing strength and success of Austal’s Australian operations within the national shipbuilding and sustainment enterprise. This LCH construction contract balances out the split and provides greater geographic diversity of earnings.
The 12-year delivery timeline provides earnings and employment stability through 2038, creating exceptional revenue visibility for investors. This long-term demand signal incentivises the supply chain to invest in capability uplift, potentially creating multiplier effects across Western Australia’s industrial base. The contract substantially de-risks the investment case by providing predictable cashflows over more than a decade.
Chief Executive Officer, Paddy Gregg
“While Austal’s US business has traditionally accounted for a large share of our defence order book in recent years, this contract reflects the growing strength and success of Austal’s Australian operations — and Australian industry — within the national shipbuilding and sustainment enterprise. This LCH construction contract balances out the split and provides greater geographic diversity of earnings. It also provides earnings and employment stability for the next 12 years.”
Strategic Shipbuilding Agreement momentum
Executive General Manager Strategic Shipbuilding Gavin Stewart noted the Landing Craft Heavy represents the second major construction contract awarded under the Strategic Shipbuilding Agreement, following the $1.029 billion Landing Craft Medium design and build contract awarded in December 2025. The combined indicative value of both programs demonstrates significant pipeline strength and establishes decades of continuous naval shipbuilding work in Western Australia.
The Strategic Shipbuilding Agreement contracts secured to date include:
- Landing Craft Medium contract awarded December 2025 ($1.029 billion)
- Landing Craft Heavy contract awarded February 2026 (approximately $4 billion)
- Total Strategic Shipbuilding Agreement value: approximately $5 billion secured
This pipeline visibility represents material contracted revenue extending beyond 2038, providing investors with confidence in sustained earnings generation. The agreements demonstrate the Commonwealth’s commitment to developing sovereign shipbuilding capability at Henderson, positioning Austal as the cornerstone of Australia’s naval construction industry for decades.
Western Australian jobs and supply chain expansion
The construction program will create thousands of new, skilled jobs in Western Australia while providing opportunities for the local defence industry supply chain to participate in vessel construction. Austal Defence Australia is looking forward to expanding and developing industrial capabilities at Henderson and beyond, creating a reliable shipbuilding enterprise to support the Commonwealth’s objectives of sovereign shipbuilding capability.
The scale of the program necessitates substantial workforce development, skills transfer, and capital investment across Austal’s Henderson facilities. Local content requirements embedded in defence contracts typically mandate significant Australian industry participation, creating opportunities for small to medium enterprises across engineering, manufacturing, and logistics sectors. This broader economic multiplier effect extends the program’s benefits beyond Austal’s direct operations.
Executive General Manager Strategic Shipbuilding, Gavin Stewart
“These Programs under the Strategic Shipbuilding Agreement represent decades of continuous naval shipbuilding work, to be delivered here in Western Australia.”
The continuity of work across both Landing Craft Medium and Landing Craft Heavy programs enables Austal to maintain a stable, skilled workforce and justify long-term capital expenditure on facilities and equipment. This creates a virtuous cycle where improved capabilities position the company for additional contract awards, further extending the order book and revenue visibility.
Austal’s broader defence portfolio
The Landing Craft Heavy contract adds to Austal’s substantial defence order book across both Australian and US operations, demonstrating the company’s position as a trusted partner to multiple defence forces. Austal’s current defence programs include:
- Austal USA: Constructing up to 12 Landing Craft Utility vessels for the US Navy at Mobile, Alabama
- US programs: Offshore Patrol Cutters for the United States Coast Guard, nuclear submarine modules for Virginia and Columbia class submarines, auxiliary vessels for the United States Navy
- Australian programs: Landing craft and patrol boats for the Department of Defence
- Company history: Nearly 40 years of operations, more than 360 vessels contracted for over 122 commercial and defence operators in 59 countries
The company’s appointment as Australia’s sovereign shipbuilder in November 2024 reinforced its position as the Commonwealth’s preferred partner for major naval construction programs. Austal’s track record of delivering complex military vessels on time and to specification has established the company as a reliable prime contractor capable of executing multi-billion dollar programs over extended timeframes.
The diversification across Australian and US defence markets provides earnings resilience, as contract awards in each jurisdiction follow independent procurement cycles. The company’s capability to deliver both smaller craft and large complex vessels positions it to compete for additional programs as defence forces modernise their fleets in response to evolving strategic circumstances.
Next steps and outlook
The contract was executed on 20 February 2026 at Henderson following ministerial announcements earlier in the day. Construction is scheduled to commence in 2026, with the eighth and final vessel scheduled for delivery to the Commonwealth in 2038. The 12-year delivery horizon provides exceptional revenue visibility and positions Austal for sustained earnings growth through FY38.
Austal stated the contract provides the incentive to invest in uplifting capability across its Henderson operations. This suggests forthcoming capital expenditure on facilities, equipment, and workforce development to support increased production capacity. Investors should monitor announcements regarding capital allocation and facility expansion plans as indicators of management’s confidence in securing additional work beyond the current contracts.
The Landing Craft Heavy contract fundamentally reshapes the company’s earnings profile, providing material contracted revenue extending beyond current guidance periods. Combined with the Landing Craft Medium program and ongoing US defence work, Austal has secured a defence order book exceeding $5 billion, establishing one of the strongest forward revenue positions in the company’s nearly 40-year history.
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