PERTH, AUSTRALIA (WKRG) — A report from The West Australian newspaper says Austal is under investigation by an Australian government agency. The report says “Austal disclosed the probe today, revealing it was ‘assisting an investigation by ASIC (the Australian Securities and Investments Commission) into market announcements’ leading up to its warning of a $122 million annual loss in June 2016.”
The report says the Australian Securities and Investments Commission is investigating “market disclosures linked to a cost blow-out on its $4 billion US Navy ship-building program three years ago.”
According to the report, that loss was blamed on a blow-out in the cost of building 11 Littoral-class ships for the U.S. Navy. The loss triggerd a steep drop in stock prices for the company.
The report says Austal disclosed the loss seven months after market updates that warned of margin pressure on the Littoral program. In June of 2016, Austal said cost of building the ships was gong to be “materially more” than expected due to changes in the design. Austal has said that the Australian agency was investigating the December updates.