Post by ferryfast admin on May 27, 2011 10:10:23 GMT -5
Austal takes defensive position after rising dollar sinks exports
* Andrew Burrell
* From: The Australian
* www.theaustralian.com.au/business/industry-sectors/austal-takes-defensive-position-after-rising-dollar-sinks-exports/story-e6frg96x-1226062956155
* May 26, 2011 12:00AM
THE strong Australian dollar has forced shipbuilder Austal to downgrade its profit forecast for this year and launch a major review of the future of its Perth shipyards, in a move that sent its shares down almost 10 per cent yesterday.
In another example of the rising currency hitting an Australian manufacturer in the two-speed economy, Austal said the "unprecedented" strength of the dollar had slashed its profit forecast from $28 million to as low as $20m.
Chief executive Andrew Bellamy said the review would lead to a stronger focus in Australia on defence work rather than commercial vessels, which he admitted may need to be built offshore in future to counter the effects of the stronger dollar.
Mr Bellamy said the short-term future would be "painful" and Austal had already been forced to shrink its Australian operations to match its depleted order book, which had also been caused by softness in the European commercial ferry market.
"A ferry that we sold two years ago to Europe for E52m, today we've got to sell for E75m ($100m) just because of the Australian dollar," he said. "I can't get, and nobody can get, a European operator to pay 50 per cent more because of a currency shift."
The strength of the Australian currency is also affecting Austal's growing US operations, where its earnings are tied to US dollar contracts with the US Navy.
Austal said in December that it had won a potential $US3.7 billion ($3.5bn) contract with the US Navy to build 10 littoral combat ships (LCSs) over the next five years. The vessels are being built at Austal's US shipyards in Alabama.
Mr Bellamy said he expected the strength of the Australian dollar to continue for the foreseeable future. He said Austal would continue to seek commercial vessel opportunities, but the shipyards at Henderson, south of Perth, would be refocused towards defence work.
The review will consider all facets of the Henderson operations including products, geographical market segments, production costs and facilities.
Austal is aiming to win a contract from Australian Customs to build eight ships for about $300m and it is also involved in a tender to build scores of boats for the Saudi Arabian government.
Mr Bellamy said Austal may also seek to become the prime contractor on shipbuilding contracts.
"We've become the prime contractor in the US," he said.
_______________
"Australian dollar pushed higher by offshore equity buys"
* James Glynn Dow Jones Newswires
* From: The Australian
* www.theaustralian.com.au/business/australian-dollar-pushed-higher-by-offshore-equity-buys/story-e6frg8zx-1226064406744
* May 28, 2011 12:00AM
THE Australian dollar was higher yesterday, boosted by solid offshore demand for domestic equities, with leading miners and banks the focus of offshore buying interest.
The dollar touched a day's high of $US1.0718, its highest since May 11. At the close it was changing hands at $US1.0695, up US1.03c from Thursday.
Against the yen, the Australian dollar was at ¥86.51, down from ¥86.605.
But traders warned of volatility ahead with the coming week brimming with economic data, with the focus especially on first-quarter economic growth on Wednesday, expected to show a contraction of around 0.5 percentage points.
If delivered, it will be the first contraction since the fourth quarter of 2008.
Natural disasters in Queensland, which shut down coal production, costing the country $6 billion in export revenue, are expected to account for the weakness in the economy.
The Reserve Bank of Australia has said it will ignore the one-off blow, preferring instead to look forward to an expected economic rebound in the second half of the year.
However, Sean Callow, foreign exchange strategist at Westpac, said the expected size of the contraction in the economy in the first quarter might surprise even the RBA, prompting it to suspend its plan to raise interest rates for the next few months.
Westpac expects the economy to have contracted by a whopping 1 percentage point in the quarter, he said.
John Rothfield, chief economist at Bank of America Merrill Lynch, said there was a growing chance the RBA would raise interest rates once in the next few months before stepping back.
"One scenario gaining credence would have the RBA board effecting a single cash target increase in the near future to make good on its recent guidance," he said.
The unemployment rate, wage agreements in the non-mining sector and housing market indicators lead the list of things to watch for the RBA, he added.
All eyes remain focused on debt concerns in Europe, particularly on Greece with meetings involving the European Central Bank and the International Monetary Fund scheduled.
There were also reports that China's state-owned wealth fund, the China Investment Corp, may have set aside $US6bn ($5.7bn) to invest in New Zealand assets. The New Zealand dollar surged to a three-year high against the US dollar and peaked at a 15-week high against its Australian counterpart of 76.5 Australian cents.
* Andrew Burrell
* From: The Australian
* www.theaustralian.com.au/business/industry-sectors/austal-takes-defensive-position-after-rising-dollar-sinks-exports/story-e6frg96x-1226062956155
* May 26, 2011 12:00AM
THE strong Australian dollar has forced shipbuilder Austal to downgrade its profit forecast for this year and launch a major review of the future of its Perth shipyards, in a move that sent its shares down almost 10 per cent yesterday.
In another example of the rising currency hitting an Australian manufacturer in the two-speed economy, Austal said the "unprecedented" strength of the dollar had slashed its profit forecast from $28 million to as low as $20m.
Chief executive Andrew Bellamy said the review would lead to a stronger focus in Australia on defence work rather than commercial vessels, which he admitted may need to be built offshore in future to counter the effects of the stronger dollar.
Mr Bellamy said the short-term future would be "painful" and Austal had already been forced to shrink its Australian operations to match its depleted order book, which had also been caused by softness in the European commercial ferry market.
"A ferry that we sold two years ago to Europe for E52m, today we've got to sell for E75m ($100m) just because of the Australian dollar," he said. "I can't get, and nobody can get, a European operator to pay 50 per cent more because of a currency shift."
The strength of the Australian currency is also affecting Austal's growing US operations, where its earnings are tied to US dollar contracts with the US Navy.
Austal said in December that it had won a potential $US3.7 billion ($3.5bn) contract with the US Navy to build 10 littoral combat ships (LCSs) over the next five years. The vessels are being built at Austal's US shipyards in Alabama.
Mr Bellamy said he expected the strength of the Australian dollar to continue for the foreseeable future. He said Austal would continue to seek commercial vessel opportunities, but the shipyards at Henderson, south of Perth, would be refocused towards defence work.
The review will consider all facets of the Henderson operations including products, geographical market segments, production costs and facilities.
Austal is aiming to win a contract from Australian Customs to build eight ships for about $300m and it is also involved in a tender to build scores of boats for the Saudi Arabian government.
Mr Bellamy said Austal may also seek to become the prime contractor on shipbuilding contracts.
"We've become the prime contractor in the US," he said.
_______________
"Australian dollar pushed higher by offshore equity buys"
* James Glynn Dow Jones Newswires
* From: The Australian
* www.theaustralian.com.au/business/australian-dollar-pushed-higher-by-offshore-equity-buys/story-e6frg8zx-1226064406744
* May 28, 2011 12:00AM
THE Australian dollar was higher yesterday, boosted by solid offshore demand for domestic equities, with leading miners and banks the focus of offshore buying interest.
The dollar touched a day's high of $US1.0718, its highest since May 11. At the close it was changing hands at $US1.0695, up US1.03c from Thursday.
Against the yen, the Australian dollar was at ¥86.51, down from ¥86.605.
But traders warned of volatility ahead with the coming week brimming with economic data, with the focus especially on first-quarter economic growth on Wednesday, expected to show a contraction of around 0.5 percentage points.
If delivered, it will be the first contraction since the fourth quarter of 2008.
Natural disasters in Queensland, which shut down coal production, costing the country $6 billion in export revenue, are expected to account for the weakness in the economy.
The Reserve Bank of Australia has said it will ignore the one-off blow, preferring instead to look forward to an expected economic rebound in the second half of the year.
However, Sean Callow, foreign exchange strategist at Westpac, said the expected size of the contraction in the economy in the first quarter might surprise even the RBA, prompting it to suspend its plan to raise interest rates for the next few months.
Westpac expects the economy to have contracted by a whopping 1 percentage point in the quarter, he said.
John Rothfield, chief economist at Bank of America Merrill Lynch, said there was a growing chance the RBA would raise interest rates once in the next few months before stepping back.
"One scenario gaining credence would have the RBA board effecting a single cash target increase in the near future to make good on its recent guidance," he said.
The unemployment rate, wage agreements in the non-mining sector and housing market indicators lead the list of things to watch for the RBA, he added.
All eyes remain focused on debt concerns in Europe, particularly on Greece with meetings involving the European Central Bank and the International Monetary Fund scheduled.
There were also reports that China's state-owned wealth fund, the China Investment Corp, may have set aside $US6bn ($5.7bn) to invest in New Zealand assets. The New Zealand dollar surged to a three-year high against the US dollar and peaked at a 15-week high against its Australian counterpart of 76.5 Australian cents.