Highlights

  • VEEM (ASX:VEE) reported FY26 Revenue of $51.7 million and EBITDA of $3.6 million, both at the upper end of company guidance.
  • Operating cash flow increased 64% to $4.8 million, while net Debt reduced to $1.2 million following Capital raising activity.
  • Defence revenue increased significantly in the second half, supported by submarine-related work and accelerated deliveries.
  • The company is focused on commercialising its VEEM Extreme propulsion range and Mark III gyro technology during FY27.

VEEM (ASX:VEE) has entered FY27 with a renewed focus on commercialising recently developed marine technologies, expanding defence-related activity and improving operational performance following a transitional FY26.

The Perth-based defence manufacturer and marine technology company delivered full-year results within its previous guidance range, supported by stronger second-half activity, increased defence revenue and improved operational efficiency. While the year included challenges across marine markets and a significant non-cash impairment, VEEM is now focused on converting its product development investments into future growth.

FY26 Performance

VEEM reported revenue of $51.7 million for FY26, compared with $68.6 million in FY25, reflecting softer conditions across marine markets during the year.

Despite lower revenue, the company achieved EBITDA of $3.6 million, reaching the upper end of its guidance range of $3.25 million to $3.75 million.

Second-half performance improved significantly, with revenue of $28.3 million increasing 21% compared with the first half. EBITDA in the second half reached $3.8 million, representing a substantial improvement from the prior period.

The company recorded a net loss after tax of $17.8 million, primarily due to a one-off non-cash Impairment charge of $24.8 million relating to gyrostabiliser development costs and obsolete inventory.

Excluding the impairment impact, operational performance showed improvement as defence activity increased, propeller Demand recovered and cost reduction initiatives supported margins.

Cash Flow and Balance Sheet

VEEM delivered improved cash generation during FY26, with Operating Cash Flow increasing to $4.8 million, up 64% compared with the previous year.

The company strengthened its Balance Sheet through a capital raising, generating net proceeds of $13.1 million. This contributed to a reduction in net debt to $1.2 million at 30 June 2026, compared with significantly higher debt levels previously.

VEEM also maintained access to additional financial flexibility through available overdraft and trade facilities.

The stronger financial position provides support for continued Investment in production capability, while allowing the company to focus on commercial execution rather than further expansion of its balance sheet.

Defence Growth

Defence remains an important growth area for VEEM, with activity increasing during FY26.

Defence revenue rose from $3.7 million in the first half to $8.6 million in the second half, representing growth of 130%.

The increase was supported by accelerated deliveries linked to Australian submarine-related work and higher defence workloads.

VEEM also progressed technical specifications for blades and hubs for the Hunter Class Frigate Program demonstrator for BAE Systems Australia. Successful completion of this stage would support VEEM’s position as a qualified supplier and potentially create additional defence opportunities.

The company continues to position itself within Australia’s defence Manufacturing Supply chain through its specialised propulsion and engineering capabilities.

Marine Technology

A key focus for VEEM during FY27 is the commercial rollout of its recently developed product range.

The company completed development of the VEEM Extreme propulsion range and the Mark III gyro stabiliser during FY26, with management now shifting focus towards commercialisation.

Demand for VEEM’s fixed-pitch propellers improved during the second half, supported by recovering marine market conditions and increased customer interest following the launch of VEEM Extreme.

The company highlighted demonstrated fuel efficiency improvements from the VEEM Extreme system, which could support adoption across fast ferry and commercial vessel markets.

The Mark III gyro range also represents a future opportunity, with sales activity expected to improve as the product gains market traction.

Operational Expansion

VEEM completed its factory extension during FY26, expanding manufacturing capability at its Perth facility.

The company invested in additional production equipment, including CNC machinery and advanced manufacturing capabilities, to support future propeller demand and increased production volumes.

VEEM also invested in Research and Development during FY26, including development work related to its new propulsion and gyro products.

During FY27, management expects the focus to shift from product development towards commercial execution, with existing investments supporting future revenue opportunities.

Key Focus Areas

Investors will be monitoring whether VEEM can convert its technology investments into stronger commercial outcomes during FY27.

The pace of defence order execution, marine market recovery and adoption of VEEM Extreme products will be important indicators of future growth.

The company’s ability to maintain positive cash generation while expanding production volumes will also remain a key consideration.

Further progress on defence programs, including potential opportunities linked to naval manufacturing projects, could provide additional growth visibility.

Risks

VEEM remains exposed to cyclical marine market conditions, where demand can fluctuate based on economic conditions and vessel investment cycles.

Defence revenue can also be uneven due to procurement timing, contract schedules and government approval processes.

The significant impairment recognised during FY26 highlights the potential Volatility associated with product development investments and changing market conditions.

The company must also successfully commercialise its recently launched products to justify continued investment in manufacturing capacity and research activities.

Future Outlook

VEEM enters FY27 with a stronger balance sheet, improved operational momentum and a portfolio of newly developed marine technologies.

The company’s strategy is centred on commercialising VEEM Extreme, expanding defence-related opportunities and rebuilding growth across marine markets.

While FY26 was a transitional year impacted by softer marine demand and a major impairment, second-half improvements in revenue, EBITDA and defence activity provide a foundation for future recovery.

The ability to convert its technology pipeline, manufacturing investments and defence relationships into sustainable revenue growth will remain central to VEEM’s outlook.