Key Highlights

  • Revenue for the year was $51.7 million, at the upper end of guidance of $50 million to $52 million, though down 25% on FY25.
  • EBITDA of $3.6 million was at the upper end of guidance, with second-half EBITDA of $3.8 million up $4.0 million on the first half.
  • A one-off non-cash Impairment of $24.8 million relating to gyrostabilisers drove a net loss after tax of $17.8 million, compared with a $3.0 million profit in FY25.
  • Cash flow from operations rose 64% to $4.8 million, while net Debt fell to $1.2 million following a $13.1 million net Capital raise.

VEEM Limited (ASX:VEE), an Australian defence manufacturer and designer of marine propulsion and gyrostabiliser systems, reported Revenue of $51.7 million for the year ended 30 June 2026, at the upper end of its guidance range of $50 million to $52 million, though down 25% on FY25. Second-half revenue of $28.3 million was up 21% on the first half, driven by higher defence revenue and an increase in propeller orders.

EBITDA for the year was $3.6 million, also at the upper end of the guided range of $3.25 million to $3.75 million. Second-half EBITDA of $3.8 million was up $4.0 million compared with the first half, which the company attributed to cost reduction measures implemented at the end of 2025, Economies of Scale from increased activity, higher defence workloads linked to the submarine refit program, a significant increase in propeller orders, and continued efficiency gains through automation.

Impairment Drives Net Loss for the Year

Net loss after tax was $17.8 million for FY26, a Reversal from the $3.0 million profit recorded in FY25. The loss reflected a pre-tax impairment of $24.2 million on capitalised gyro development costs, along with a further $0.6 million impairment on obsolete gyro inventory, together representing a combined one-off non-cash impairment cost of $24.8 million recognised in the first half. Earnings Per Share came in at negative 12.40 cents, down from 2.22 cents in FY25, primarily reflecting this impairment.

Gyro revenue fell $9.5 million compared with FY25, primarily due to a slowdown in the marine market that resulted in no gyro sales in the first half. The decline in sales relative to budget constituted an impairment indicator, prompting the impairment test that led to the write-down. Sales resumed in the second half of the year, with a current gyro order book of $1.0 million, and the company said it expects sales to increase with the rollout of the newly launched Mark III gyro range.

Cash Flow and Balance Sheet Improve

Cash flow from operations rose 64% to $4.8 million, up $1.9 million on FY25, as defence revenue increased and delivery into ASC orders accelerated. During the year, the company raised $13.1 million net of costs to support anticipated growth in the US defence market, with the Miocevich family contributing $1.0 million to the capital raising. This strengthened the balance sheet and reduced net debt to $1.2 million at 30 June 2026, even after taking on an additional $2.4 million in asset-related debt.

VEEM also held $7.1 million in combined undrawn overdraft and trade facilities at year end. During the year, the company invested more than $2.5 million in capital equipment, including a 3D printer and tooling for propeller manufacturing, and spent $4.5 million on formal Research and Development projects tied to the development of the VEEM Extreme propulsion range and the gyro Mark III range.

Defence Opportunities and Product Rollout

Defence revenue rose from $3.7 million in the first half to $8.6 million in the second half, an increase of 130%, as ASC orders that arrived late in the first half began delivering during the second half. VEEM received final technical specifications for blades and hubs required for the Hunter Class Frigate Program demonstrator for BAE Systems Australia, a process the company said took longer than initially envisioned. Successful completion would confirm VEEM as a qualified supplier and position it as one of only two global suppliers capable of producing components at this level of precision.

Demand for VEEM's fixed pitch propellers increased over the second half in line with the recovering marine market, supported by the launch of the VEEM Extreme range, which the company said delivers a 24.1% fuel saving against a standard propeller, rudder and bracket setup. Manly Fast Ferries is VEEM's launch customer for the Extreme range, with the rollout expected to gather pace in FY27. The company's factory extension was completed and handed over in June, and three new CNC machines are expected to be commissioned by September to support anticipated growth in propeller demand.

Conclusion

VEEM's FY26 result was shaped by a significant non-cash impairment tied to its gyrostabiliser business, which pushed the company to a net loss for the year despite revenue and EBITDA both finishing at the upper end of guidance. The improvement in second-half trading, driven by rising defence revenue and recovering propeller demand, alongside a strengthened balance sheet following the capital raise, positions the company to focus on commercialising its newly developed VEEM Extreme and Mark III gyro product lines in FY27.