VEEM's Defence Contract Delays Meet a Delayed Market Reaction
Major defence contract delays sank the stock nearly 40%, before a positive trading update was masked by tax-loss selling and only later fully rewarded.
31 Aug 2026 · 2 min read
In short
VEEM fell 39.6% after major delays in defence contracts with the Australian Submarine Corporation, Northrop Grumman and the Hunter Class Frigate program hit first-half earnings guidance.
A positive June trading update showed FY26 revenue and EBITDA guidance ahead of consensus, supported by completion of a factory expansion, though gains initially unwound on tax-loss selling.
VEEM later rose 26.6% as a delayed market reaction to the positive update combined with the unwind of tax-loss selling, with second-half trading improving on increased defence activity and marine propulsion recovery.
VEEM, a precision manufacturer supplying components for defence submarine programs and marine propulsion, fell nearly 40 percent after major contract delays hit earnings guidance, before a positive trading update showing above-consensus FY26 guidance and completion of a factory expansion was initially well received, then unwound on tax-loss selling before finally rallying once the delayed reaction and tax-loss overhang cleared.
A steep decline on defence contract delays
Perennial Partners said VEEM fell 39.6 percent after providing lower than expected earnings guidance for the first half of FY26, caused by delays in several major defence-related contracts, generating little revenue in the half from selling components to the Australian Submarine Corporation, Northrop Grumman for US submarines, and the Australian Hunter Class Frigate program, though all three may rebound in the second half and become significant growth drivers for VEEM.
VEEM declined after providing lower than expected earnings guidance for 1H26, caused by delays in several major defence related contracts. Veem generated little revenue in the half from selling components to Australian Submarine Corporation, Northrop Grumman for US submarines, and for the Australian Hunter Class Frigate program. However, all three may rebound in the second half.
— Perennial Partners, Monthly Report, November 2025
A well-received update unwound by tax-loss selling
Perennial Partners said VEEM finished lower for June despite a positive trading update during the month, providing an update on FY26 revenue and EBITDA guidance that was ahead of consensus, supported by defence and Australian Submarine Corporation order fulfilment, while also highlighting completion of its factory expansion and commissioning of new manufacturing equipment, with the update initially well received, sending the stock up 26.0 percent intra-month, before gains unwound into month-end, likely reflecting tax-loss selling.
The company provided an update on FY26 revenue and EBITDA guidance, which was ahead of consensus, supported by defence and ASC order fulfilment, while also highlighting the completion of its factory expansion and commissioning of new manufacturing equipment. The update was initially well received, with the stock trading up 26.0% intra-month, however gains unwound into month-end, likely reflecting tax-loss selling.
— Perennial Partners, Monthly Report, June 2026
A delayed rally once the overhang clears
Perennial Partners said VEEM rose 26.6 percent, reflecting a delayed reaction to the positive trading update released in June, as well as an unwind of the tax-loss selling that had weighed on the stock late in the financial year, with the update highlighting a significant improvement in second-half trading supported by increased defence activity and a recovery in marine propulsion demand, with FY26 revenue and EBITDA guidance reaffirmed and the factory expansion now complete with new machinery being commissioned.
What fund managers say they are watching next is delivery of the reaffirmed FY26 revenue and EBITDA guidance, continued ramp-up of the completed factory expansion and new manufacturing equipment, resolution of the previously delayed defence contracts across ASC, Northrop Grumman and Hunter Class Frigate programs, and continued recovery in marine propulsion demand.
Questions
Why did VEEM's share price fall nearly 40%?
VEEM fell after providing lower than expected first-half FY26 earnings guidance, caused by delays in major defence-related contracts with the Australian Submarine Corporation, Northrop Grumman and the Hunter Class Frigate program.
Why did VEEM's positive trading update initially fail to hold gains?
VEEM's stock traded up 26% intra-month after a positive June trading update showing above-consensus guidance, but gains unwound into month-end, likely reflecting tax-loss selling rather than any change in fundamentals.
What drove VEEM's later 26.6% rally?
The rally reflected a delayed market reaction to the positive June trading update combined with an unwind of the tax-loss selling that had weighed on the stock, alongside improving second-half trading from defence activity and marine propulsion recovery.
3 managers, 6 comments, with each manager's latest recorded position.
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