Covid-19 hit defence supplier EOS in December

Disruptions to export logistics chains hit Canberra defence, space and communications manufacturer Electro Optic Systems in December.

The company told investors today that planned shipments in December exceeded any other month, making ‘the outcome for the full year unusually dependent on activity in the final weeks of December.

“The affected revenue, for which costs had already been incurred in 2020, exceeded $20 million.”

Profit expectations previously were between $20 and $30 million.

EOS said that around 12 days of December shipments were not received by their foreign customers due to international air freight bottlenecks and a fall in import license activity in the offices of the customer (foreign) governments.”

The supply interruption was the second major disruption to EOS’s business due to Covid-19, with the latest forcing the company to withdraw its full year profit guidance for underlying earnings.

EOS did not say what contract had been affected, however the size of the disruption suggests that exports of remote weapons stations (pictured) to a Middle East customer as part of a $450 million contract were affected.

In its latest update EOS said:

  • It had received a $5.1 million space systems contract from the federal government
  • The company was made prime contractor for the government’s $34 million C4 EDGE consortium order
  • Production of remote weapons stations commenced at the company’s Alabama factory
  • And its SpaceLink satellite communications system was detailed to investors.

In the latest quarter EOS was also hit by the rising Australian dollar, now 77 cents compared to expectations of around 72.

EOS’ manufacturing costs are largely A$ denominated.

Picture: Electro Optic Systems

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