Truck parts builder Austin Engineering shares dip on capacity constraints
Shares in Austin Engineering have copped a hammering after the truck tray builder warned it would need to redirect an order meant to be supplied from Chile to Indonesia, putting pressure on margins.
The Jim Walker-chaired business on Wednesday told investors its preferred metric, underlying earnings before interest and tax, had been docked by about $9 million to $41m for the 2025 financial year as a result.
It comes as Austin works to fulfill an order of more than 100 truck trays at its factory in Chile under contracts it secured at the start of the financial year, a program the business told the market had been 'demanding and necessitated a major ramp up'.
To meet demand, and after being unable to negotiate on costs, a chunk of the orders have instead been directed to come from its manufacturing facility in Batam, Indonesia, in a move that will put pressure on margins in the interim.
Chief executive David Singleton, who is in the process of handing the reins over to a new CEO, said he was disappointed with the margin performance in Chile but was 'working to address and improve efficiency'.
'We remain confident about the potential size and longevity of the contract in Chile and therefore the potential for future profitable revenue growth, and we are committed to improve operational efficiencies in this business unit to achieve better margins.'
Shares in the company dropped 9.6 per cent following the update on Wednesday to 33¢, lows not seen since the start of 2024. The stock is down 35.9 per cent since the start of this year.
Investors were seemingly unfazed by Austin's upgrade to revenue guidance for the financial year from $350m to $370m, a rise it attributed to higher orders in the US and Chile.
Austin in February declared it had moved to shield itself from US President Donald Trump's tariffs by having truck parts assembled by Canadian subcontractors instead of at a facility in Wyoming. The group also ceased importing parts from Mexico to the US several months prior.
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