As modern warfare and surveillance changes ASX-listed Orbital Corporation is centre-stage as a world leader in the design and manufacture of integrated engine systems for military drones.  

Perth-based Orbital Corporation (ASX:OEC) has established a leadership position over the past decade as a designer and manufacturer of integrated engine systems in the global $3B tactical unmanned aerial vehicle (UAV) market.

OEC CEO and managing director Todd Alder said the company’s proven patented technology is overcoming challenges of the ‘one-fuel policy’ of allied defence forces.

“The preferred fuel types for all equipment used by defence forces around the world are kerosene-based fuels – also known as heavy fuels – such as JP-5 and JP-8. With a higher flashpoint temperature and easier accessibility on military compounds or vessels, these fuels provide significant safety and logistical benefits to troops in the field.

“The challenge within the tactical UAV domain is that the preferred propulsion unit for these vehicles tends to be a two-stroke or rotary engine, due to their power to weight ratio. However, both these engine types are notoriously difficult to run efficiently on heavy fuel,” he said.

Orbital’s patented fuel injection technology overcomes this challenge, says Alder.

“Our in-theatre proven technology enables us to run our two-stroke engines efficiently using heavy fuels,” said Alder. “Our engines offer 500 hours between overhauls, instant start capability regardless of environment, and pass manned aerospace reliability standards,” he said.

On growth trajectory with BIG names

The changing face of warfare, as seen in the Ukraine conflict, has seen an increased focus on the capabilities of autonomous vehicles. Defence forces around the world are acquiring tactical drone capability for the first time or enhancing their existing equipment with the objective of managing rising border intrusions and improving their intelligence, surveillance and strike capabilities.

The annual global tactical UAS market is valued at $3 billion with ~$300 million p.a. for engines.

OEC currently operates two engine model production lines for tactical UAVs produced by Boeing subsidiaries Insitu Inc and Insitu Pacific Pty Ltd. Last year Orbital UAV commenced shipping of engines directly to Queensland-based Insitu Pacific, in support of the Australian Army’s LAND 129 Phase 3 tactical UAV program.

From its manufacturing facility in Perth, the company has three additional engine models scheduled to enter production by the end of calendar year 2023, amounting to five engine model production lines in total.

Two of the new engine models in development are for Textron Systems, the world’s largest supplier of tactical UAVs to the US Army. The two engines will support vehicles in Textron Systems’ Aerosonde program.

The third new engine model is for a major Singapore defence customer, with the company announcing a $2 million continuation contract in March that will complete the development phase of the program and move towards initial production.

OEC is also in talks with a number of additional UAV specialists including Anduril, AeroVironment Inc, Animal Dynamics and Skyways as it targets $60 million revenue by FY27.

For FY23 the company is forecasting revenue plus other income of $20 to $25 million.

“Our proven engine and fuel delivery technology and manufacturing capability within the tactical UAV domain continues to set the industry benchmark, as demonstrated by our existing contracted production and development programs,” Alder said.

“An increasing number of new business opportunities highlight the growth and opportunity that remains in the UAV market.”

Defence Strategic Review

Alder said Australia’s Defence Strategic Review, the biggest review of the Australian Defence Force since World War II could also benefit the company.

The Federal Government has committed to working with Australian industry as it improves Australia’s defence capabilities.

“Following the release of the DSR, we are now waiting to see what the Defence Industry Development Strategy will set out later this year,” Alder said.

He said the Development Strategy will be focussed on building the defence industry needed to support the ADF’s priorities.

“Sovereign industrial capability related to autonomous systems and AI, and surveillance and intelligence gathering will likely remain key to this strategy, along with the plan to increase Australia’s defence exports,” he said.

“As such, Orbital is looking forward to supporting these efforts as the opportunities arise.”




This article was developed in collaboration with Orbital Corporation, a Stockhead advertiser at the time of publishing.


This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.