VEEM Completes Factory Expansion and Eyes $50M+ Revenue as Defence Orders Ramp Up
VEEM completes factory extension, flags $50m-$52m revenue and stronger FY27 outlook
VEEM Ltd (ASX: VEE) has completed construction of its factory extension and issued trading guidance for FY26, with revenue expected between $50 million and $52 million and EBITDA of $3.25 million to $3.75 million. The Australian Defence manufacturer, which specialises in marine propulsion and gyrostabiliser systems, described FY26 as a transition year positioning the business for stronger growth in FY27.
The completion of the approximately 1,000m² extension coincides with the imminent arrival of three CNC machines, providing operational leverage as defence orders ramp up and new propulsion products enter commercial service. Management expects the June 2026 cash balance to remain consistent with 31 December 2025 levels, indicating solid cash generation through the second half.
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Factory extension unlocks 1,000m² for propulsion growth
Construction of the factory extension is now complete, with building handover to the company imminent. The approximately 1,000m² of additional space has been designed to accommodate VEEM Extreme products, which require longer machining times due to the high tensile nature of the materials used.
Three CNC machines on order are due for delivery this week and will immediately begin installation and commissioning, expected to be completed during Q1 FY27. Following commissioning of these units, space will remain within the building for further machines and equipment, underwriting near-term growth potential without requiring additional capital works.
The flexibility of existing and future equipment means growth can be facilitated across propulsion, defence, and engineering segments. Management described the completion as the culmination of several years of planning, providing tangible capacity runway as order books build across multiple product lines.
What are CNC machines and why do they matter for manufacturing?
CNC (Computer Numerical Control) machines automate precision cutting, drilling, and shaping of materials using pre-programmed instructions. This technology allows manufacturers to produce complex components repeatedly to exact specifications without manual intervention.
For VEEM, CNC capacity is critical to high-precision propeller and defence component manufacturing, which requires tight tolerances that CNC delivers consistently. The ability to machine high tensile materials like those used in VEEM Extreme propulsion systems depends on advanced CNC equipment capable of handling harder, more demanding materials.
More CNC capacity means higher throughput and the ability to take on larger or more complex orders without production bottlenecks. The investment signals anticipated production volume growth rather than speculative capital expenditure, particularly as defence and propulsion order pipelines strengthen.
3D printer commissioned, $600k grant funding received
The company has taken delivery, installed, and commissioned a 3D printer part-funded by the Defence Industry Developments Program – Sovereign Industry Priorities Stream via a $1 million grant. VEEM previously received $400,000 and has now received the remaining $600,000 balance.
The 3D printer provides additional capabilities anticipated to improve accuracy and speed, which is expected to improve margins and expand the scope of VEEM’s offering to existing and new customers. Grant-funded capital expenditure allows the company to enhance manufacturing capability with minimal shareholder dilution, a particularly relevant consideration for investors monitoring capital allocation efficiency.
FY26 trading update signals defence-led recovery
VEEM expects revenue for the financial year to be between $50 million and $52 million, with EBITDA between $3.25 million and $3.75 million. Growth is being driven, as previously advised, by fulfilment of ASC orders received in late 2025 and the first quarter of 2026, resulting in a significant increase in defence revenue in 2HFY26 compared to 1HFY26.
Cash generation has remained solid, with the June 2026 cash balance expected to be consistent with 31 December 2025 levels. Management framed FY26 as a technology transition year, as costs incurred in new product development (VEEM Extreme and Gyro Mark III) and entering new markets (US Defence) start to yield revenues anticipated to increase in FY27.
| Metric | FY26 Guidance |
|---|---|
| Revenue | $50m – $52m |
| EBITDA | $3.25m – $3.75m |
| Cash position (Jun 26) | Consistent with Dec 25 |
Segment performance breakdown
Second half performance has shown improvement across key segments:
- Defence: Significant improvement led by fulfilment of ASC orders in hand, driving the increase in 2HFY26 revenue compared to the first half
- Propulsion: Recovery in orders and sales continued from early in the calendar year, with work on delivering to the first VEEM Extreme customers (led by Manly Fast Ferries) continuing
- Gyrostabilisers: No sales recorded in 1HFY26, but 1 x VG140 sold in 2HFY26. Enquiries have been boosted by the release of the Mark III, with sales expected to continue to increase into FY27
Defence provides near-term earnings stability while propulsion and gyrostabiliser segments offer growth optionality as new products gain commercial traction and order pipelines strengthen.
Management outlook
Mark Miocevich, Managing Director
“We have noted FY26 will be a transition year and 2HFY26 has continued to lay the foundations for a stronger FY27. We are pleased with the progress we have made with the factory extension and imminent arrival of machinery which will facilitate this growth into the future.”
Factory completion and equipment commissioning set up operational leverage for FY27, with capacity expansion coinciding with defence order fulfilment and commercial rollout of new propulsion and gyrostabiliser products. The transition year framing positions investors to view FY26 performance through the lens of capacity building and product development investment rather than purely earnings growth.
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VEEM’s investment case at a glance
- Factory extension complete, adding approximately 1,000m² of manufacturing capacity designed for high tensile propulsion products
- Three CNC machines arriving this week with commissioning expected during Q1 FY27, with space remaining for further equipment
- 3D printer operational following successful commissioning, with $600,000 grant funding received (balance of $1 million total grant)
- FY26 revenue guidance $50m-$52m and EBITDA $3.25m-$3.75m, with cash position expected consistent with 31 December 2025
- Defence segment driving near-term earnings stability through ASC order fulfilment, while propulsion and gyrostabiliser segments positioned for FY27 growth following product development investment
The announcement consolidates multiple operational milestones coinciding with guidance that frames FY26 as a transition year. Investors gain visibility on capacity expansion, grant-funded capability enhancement, and segment-level performance trends heading into FY27.
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