Austin Engineering (ASX:ANG) has revised its FY26 outlook after reviewing year-to-date performance and operating conditions. The company now expects revenue of $370–$380 million, down from $390–$410 million, and underlying EBIT from continuing operations of $30–$34 million, previously $40–$46 million. Management noted that, despite several consecutive years of growth and a solid order book—culminating in revenue increases across every business unit in FY25—the coming year will reflect both external and internal pressures that are now being actively addressed.
A key drag has been the commercial viability of an OEM contract entered in 2024. Capacity constraints in Chile prompted Austin to move production to Indonesia to fulfil orders, a decision that ultimately compressed margins in both regions. In response, the Company will suspend acceptance of new orders under that contract until terms and returns improve. No penalty applies. All current—but not yet built—orders will be completed in Chile at a cadence of five trays per month through March 2026.
“We have undertaken a thorough review of the internal and external factors that are impacting our business and moved to quickly implement measures to address and overcome them," Austin CEO and managing director, Sy van Dyk, said.
“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.
“I am also confident the firm measures we are taking and controls we are putting in place will enable us to ensure a strong, profitable business into the future.”
Headwinds in Indonesia
Further headwinds emerged in Indonesia, where a major local customer deferred work into the second half of FY26 following a significant operational disruption at its mine site. Combined with softer demand from the Australian coal sector, the deferral has left Austin under-recovering fixed costs in the country. The Company has reduced its Indonesian workforce to bring capacity into line with current demand.
Struggles in Chile
In Chile, profitability suffered from excess steel wastage on products completed between July and September 2025. This material overuse was tied to work-in-progress that preceded a broader overhaul of local processes. Austin has since tightened control: the North American team is overseeing the nesting process—planning steel cuts to minimise waste—and all steel processed from August 2025 has returned to acceptable scrap levels.
Shift rosters have been adjusted to improve oversight and efficiency, enabling a meaningful reduction in headcount and costs, while expense governance and shop-floor layout changes aim to further streamline flow through the plant.
Growth narrative
The Americas remain central to Austin’s growth narrative. North America has expanded rapidly, with FY25 revenue up 54% to $147 million, or 39% of group sales, supported by upgrades at the Casper facility and the addition of a leased site.
That speed of growth, however, has temporarily weighed on FY26 profitability as the business relied on contract labour—less efficient than long-tenured teams—and short-term outsourcing to meet demand.
With capacity now in place, the last of the major outsourced work moved through in July and August 2025, and management is rebuilding efficiency through its weld school, skills pipelines, mentoring programs, and a renewed focus on Lean manufacturing to reduce idle time.
Remaining confident
Across the group, Austin has introduced weekly reporting and oversight on key productivity and cost drivers—staff productivity, steel wastage, and consumables—to sharpen execution. Leadership has also been strengthened with a new Vice President, Americas and an upgraded Chilean management team, supported by proven North American systems and processes.
While the updated guidance reflects near-term pressure, Austin maintains confidence in its strategy. The company argues that the operational resets underway—tighter controls, better labour mix, restored in-house capacity, and disciplined capital deployment—position the business to stabilise margins and deliver sustainable profitability beyond FY26.