Mining services player Austin Engineering downgrades FY26 guidance; shares fall -25%

Austin Engineering Ltd (ASX:ANG) has sparked ire in some HotCopper users on Wednesday as the company reported it’s downgrading FY26 guidance from a ceiling of $410M down to $380M with pre-tax earnings notched down from $40M-$46M to $30-$34M.

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It’s been enough to see shares in the company fall -25% intraday with the company reporting it will now swing into boosting up placements in its ‘weld school’ for trainees; undertaking a mentoring program for some reason to “develop less experienced staff,” and, continuing to reduce wait times for parts when needed as part of its operations. Still, that wasn’t enough to halt a sharp sell-off.

“Commercial viability of an OEM contract entered into in 20241 continues to prove challenging,” Austin wrote. “After constraining capacity in Chile, production was moved to Austin’s Indonesian operations to fulfill the order. The contract has negatively pressured the profitability of both businesses.”

That contract references a Chilean operation where Austin was to provide “OEM style truck trays for circa A$7M” in a deal that when announced in March last year was meant to run for up to nine years.

What exactly has gone so wrong isn’t too clear; in March last year, manufacturing was always meant to take place in Indonesia according to the contemporaneous disclosure. At any rate, the company’s winding that contract back and no new orders will be taken; still-pending assets for delivery will now be manufactured in China.

Additionally, the company pointed to existing issues at its Indonesian operations, ultimately as one key customer pushed back a contract into 2HCY26 and the company is having issues finding coal. As for Chile, there the company is also reporting “steel wastage on product completed between July and September 2025.”

All in all, not a great combination of factors. “While it’s extremely disappointing to have to adjust guidance, I am confident in our overarching business, our strategy, the products we deliver, and future demand for them,” ANG CEO Sy van Dyk said. 1Y returns are currently down -60%.

ANG last traded at 21cps.

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