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- 9 News
Expert says Australia's 'chronically over-budget' warship project should be scrapped
Your web browser is no longer supported. To improve your experience update it here Chronically over-budget, significantly delayed and lacking firepower - that's the expert assessment of a major warship project they say should be scrapped. The Hunter Class frigate project is already seven years behind schedule and many billions of dollars more expensive than initially anticipated. In 2018, British company BAE Systems won a $35 billion tender to build nine frigates, or $3.8 billion each, with the first scheduled to be in service by 2027. Australia's next Hunter-class frigates will be based on this British design. (Nine) By 2020 the price tag had blown out to $45 billion or $5 billion a piece, and Defence is now estimating it will cost $27 billion to build just frigates, or $9 billion each, with the first to be in service by 2034 - seven years late. BAE Systems is the company that will build Australia's AUKUS nuclear-powered submarines. Strategic Analysis Australia director Michael Shoebridge said the Hunter Class project was the "high point of decadence" in Defence decision-making. He said Defence adjusted the original BAE British design with a series of add-ons, including different combat and radar systems - which made it massively more expensive. "That frigate program is beyond scandalous - It's entered ludicrous mode for a wasteful use of taxpayer money and a very slow, small contribution to Australian military power," Shoebridge said. Australia's next Hunter-class frigates will be based on this British design. (Nine) He said the Hunter had just 32 missiles, which was a third of the weaponry of the Chinese cruiser that circumnavigated Australia in March. "We're in a very dangerous world and a very dangerous period in the world, and waiting to the mid-2030s and into the 2040s for three frigates for this amount of money, makes no sense. "We could go to the Japanese or the South Koreans and get a properly armed cruiser much faster than BAE is delivering this program." Defence analyst Dr Marcus Hellyer was equally scathing of the Hunter frigate, saying Navy's adjustments to the design had not only significantly increased its cost, but the frigate's weight, taking it from 8000 tonnes to more than 10,000 tonnes, making it slower. "It is monstrously expensive," Hellyer said. "And I would say, if you're in a hole, stop digging. "The government itself has decided it can't wait for the Hunter Class frigate, so it has kicked off a new frigate program and it is considering a competition between a German design and a Japanese design. "So the government itself has pretty much said we need to do something different - in a sense, they're halfway there already." Defence Industry Minister Pat Conroy said the Hunter frigate project would not be cut despite its problems. "I wish I had a time machine to go back to 2016 and avoid the mistakes that the Coalition government made, but we've moved on," Conroy said. "We've got the project on track. Steel is being cut right now, we've signed the contract, there are about 2500 people working on this project right now. "The fastest way of delivering new capability for the Royal Australian Navy, is following through on this, building this project, now that we've fixed up many of the mistakes the Coalition government made." navy Australia defence national CONTACT US Auto news:Is this the next Subaru WRX? Mysterious performance car teased.
Yahoo
14-04-2025
- Business
- Yahoo
Prediction: 12 months from now, the BAE share price could turn £5,000 into…
With most stocks taking a tumble in recent weeks, the BAE Systems (LSE:BA.) share price seems to be an exception. The British aerospace and defence business has seen its valuation surge by over 35% since 2025 kicked off. And looking at the latest analyst forecasts, this upward trajectory could continue over the next 12 months. Just over half the institutional analysts following this enterprise currently have a Buy or Outperform recommendation on BAE shares. And it's not exactly difficult to see why. Amid growing geopolitical tensions worldwide, the company posted a record order backlog valued at £77.8bn – an £8bn increase versus 2023. This was predominantly driven by renewed demand for its Hunter Class frigates in Australia, CV90 combat vehicles in Denmark and Sweden, along with 25 and 24 new Typhoon aircraft orders for the Spanish and Italian Air Forces respectively. Combined, this surge in orders translated into a 14% boost in revenue and underlying operating profits. Free cash flow did underperform by comparison, coming in essentially flat year-on-year at £2.5bn. However, that's still significantly larger than the £1.5bn management was aiming for courtesy of higher-than-expected customer advanced payments paired with 'strong operational cash conversion'. What's more, demand's expected to continue growing as Europe begins to ramp up its defence spending. So with all that in mind, it's not entirely surprising that one analyst expected the BAE Systems share price to rise to as high as 2,450p over the next 12 months. That's a 58% potential increase from today's valuation, suggesting that a £5,000 initial investment could grow to £7,903 by this time next year. The prospect of making just over £2,900 over the next year is understandably exciting. However, it's important to remember that forecasts aren't set in stone. Furthermore, this outlook's the most optimistic among analysts. And when taking the average of all current projections, the BAE share price is expected to reach just 1,540p. That's roughly in line with where shares are trading right now. This implies that all the expected growth from higher EU spending and order growth has already been baked into the stock price. Another risk that seems to be going ignored is the potential for a cut to the US defence budget. Suppose Europe is more capable of defending itself. In that case, America may be able to achieve some cost savings within the military to fund proposed tax cuts as well as pay down the national debt. And with almost half of BAE's revenue stream coming from across the pond, growth could stall as defence spending redistributes from one country to another. Nevertheless, BAE's substantial order book should keep it busy for many years to come. And even at current levels, the valuation on a forward price-to-earnings basis is a fairly reasonable 21, behind the European industry average of 25.8. As such, while investors aren't getting a massive bargain, BAE shares could merit further research by those seeking exposure to the aerospace and defence industry. The post Prediction: 12 months from now, the BAE share price could turn £5,000 into… appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended BAE Systems. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Sign in to access your portfolio
