Austal reels after multi-million dollar accounting error

Austal (ASX:ASB) has seen its projected record-breaking year sink following a significant accounting "blunder" that has gutted its annual profit forecast.

The company revealed that its 2026 financial year earnings guidance of $135 million was overstated by a staggering US$17.1 million, making it unlikely the firm will even match its previous year's performance.

The discrepancy originated at Austal’s shipyard in Mobile, Alabama, and was attributed to the double-counting of shipbuilding incentives related to a US Navy contract for towing, salvage, and rescue ships.

During a pre-earnings review, auditors discovered that Austal USA had mistakenly recognised certain incentives based on vessel completion percentages while simultaneously carrying the full value of those same incentives in its long-term forecasts.

"These incentives had already been recognised in Austal USA’s forecast at full value for the remaining part of the program," the company admitted in a late-session statement.

The fallout is immediate: Austal has slashed its EBIT forecast to $110 million, a sharp decline that falls short of last year's $130 million profit.

Despite the embarrassment, Austal maintains a massive $15 billion order book, primarily driven by US Coast Guard and Navy contracts.

The company remains a frontrunner for a slice of the $20 billion program to construct new frigates for the Royal Australian Navy.