Austal has been awarded a $US51 million contract to support a US Navy shipbuilding effort, with the contract potentially expanding out to a three-year, nearly $US200m deal.

Austal USA will help with the navy’s 11-ship $3.5 billion Littoral Combat Ship contract, with work including design services for upgrades to the LCS and preliminary design for the navy’s future frigate.

The contract modification is expected to increase to $US198.4m over three years if options are exercised, the company said in a release to the Australian Securities Exchange.

“This contract directly reflects our customer’s confidence in Austal’s ability to build and support highly advanced ships and to meet today’s changing requirements,” Austal chief executive Andrew Bellamy said.

Work will be performed at Austal’s ship manufacturing facility in Alabama in the US, with the remaining funding expected in two yearly increments 12 months after the initial awards.

“This agreement is a key indicator of our maturing support business in the US,” Mr Bellamy said.

The services to be provided include studies to support engineeering and design trade-offs and ongoing technical support for modifications and maintenance.

At 4.15pm (AEDT) official market close, Austal shares were up 6.44 per cent to $1.57 against a benchmark lift of 0.15 per cent.

Source: Business Spectator