VEEM Ltd’s FY25 Revenue Falls 15% to $68.6M, Profit Drops 57%

Financial Performance Highlights

VEEM Ltd’s FY25 results reveal a challenging year marked by a 15% decline in revenue to AUD 68.6 million and a substantial 57% drop in net profit after tax to AUD 3.0 million. The downturn was largely driven by the cyclical nature of the ASC submarine maintenance contract, with revenue from this segment falling from AUD 16.1 million in FY24 to AUD 6.5 million in FY25. Gyrostabiliser sales also softened, reflecting the completion of a significant Strategic Marine contract in the prior year.

Despite these headwinds, the company maintained a solid net tangible asset backing of AUD 0.264 per share, up slightly from AUD 0.258 the previous year, underscoring a stable balance sheet amidst revenue volatility.

Strategic Contract Wins and Defence Sector Momentum

VEEM’s renewal of its ASC contract for a further six years, valued at AUD 65 million, signals confidence in its role as a trusted supplier for the Collins Class submarine maintenance program. This contract extension is expected to drive a revenue rebound in FY26, particularly in the second half. Additionally, VEEM achieved approved supplier status with Huntington Ingalls Industries Newport News Shipbuilding, positioning the company to participate in the US submarine industrial base under the AUKUS partnership.

The company is also advancing its involvement in the Hunter Class Frigate Program, having secured a demonstrator contract for precision blades with BAE Systems Australia. VEEM’s unique capabilities in producing high-precision defence components could open doors to further naval shipbuilding opportunities domestically and internationally.

Innovation and Operational Investments

VEEM continues to invest heavily in capital equipment and research and development, spending AUD 4.1 million on R&D during FY25. This includes enhancements to its flagship gyrostabiliser product, culminating in the launch of the Mark II model, with the Mark III anticipated later in the calendar year. The company’s focus on automation, including additional robotics and overhead cranes, aims to improve manufacturing efficiency and reduce reliance on skilled labour.

In propulsion, VEEM’s fixed pitch propellers remain a premium product globally, with stable revenue despite a record prior year. The rollout of the innovative Sharrow by VEEM propeller design, which promises fuel efficiency and reduced emissions, is ongoing but has experienced slower than expected initial sales. VEEM is collaborating closely with Sharrow to refine customer engagement and scale production capacity.

Dividend and Shareholder Returns

Reflecting the profit contraction and strategic reinvestment priorities, VEEM’s directors have elected not to declare a final dividend for FY25. This contrasts with the prior year when a final unfranked dividend was paid. The company continues to balance shareholder returns with funding growth initiatives and maintaining liquidity, supported by expanded banking facilities totaling AUD 12.5 million.

Outlook and Market Positioning

Looking ahead, VEEM expects defence revenues to strengthen in FY26, buoyed by the ASC contract ramp-up and new defence program qualifications. The gyrostabiliser market remains a key growth area, with VEEM holding a dominant position as the sole major supplier in the large marine segment. The company’s ongoing product development and market expansion efforts aim to capitalize on increasing adoption in commercial and recreational marine sectors.

VEEM’s strategy to lead in marine propulsion and stabilisation technologies, combined with its bespoke engineering services for defence and mining, positions it well to navigate market cyclicality and leverage emerging opportunities, including those arising from the AUKUS partnership.