Melbourne tolls offset Sydney's falling traffic
But at odds with the optimism seeping into financial markets, its chief executive, Scott Charlton, said there remained lingering "softness" within the economy, pointing out that while traffic numbers were "resilient" they remained subdued.
"These are great assets and they are resilient in the downtimes, but I'm still not quite as bullish as the rest of the market," he said.
"I think there's still some softness around the economy. We're quite comfortable with our position, but we're still not seeing the traffic growth [at] where it was pre-GFC days."
Transurban reported a net profit of $81.1 million for the six months to December. This was down from $96.6 million on last year, though the previous period benefited from an infrastructure bond adjustment of $33.4 million.
The toll road operator increased its like-for-like half-year earnings by 7 per cent to $416.9 million.
Overall toll revenue in the six months to December was $397.7 million, up 3.1 per cent on the same period in the previous corresponding period.
Transurban owns Melbourne's CityLink and the M2 and Lane Cove Tunnel in Sydney. It also holds a major stake in Sydney's Eastern Distributor and a 50 per cent interest in Sydney's M7 and M5.
Mr Charlton said CityLink would continue to benefit from the southern link upgrade which opened about a year ago. Its Sydney traffic had been disrupted by upgrades on the M2, due to be finished by the middle of the year.
Mr Charlton said traffic from its 495 Express Lanes in Virginia in the United States, which opened in November, had "disappointed with some of the early ... numbers", but he hoped for improvement by the end of the year.
"It's the biggest change to the network since 1960s, [so] it's going to take some time for some adjustment," he said.
Favoured by pension and sovereign wealth funds for its promise of stable long-term returns, Transurban declared an interim distribution of 15.5¢ per stapled security, up from 14.5¢. It expects to pay 31¢ per security for the year.
The company's free cash flow, closely watched by analysts as a guide to future distribution payments, rose 4.6 per cent to $192.8 million, below some analyst expectations.
Shares in Transurban closed 6¢ higher at $6.16 on Tuesday.
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Transurban's half-year performance was supported by higher tolls on Melbourne's CityLink, which helped offset falling traffic on Sydney's M2. The company reported a net profit of $81.1 million for the six months to December (down from $96.6 million the prior year, which benefited from a $33.4 million infrastructure bond adjustment). Like‑for‑like half‑year earnings rose 7% to $416.9 million and overall toll revenue was $397.7 million, up 3.1% year‑on‑year.
Transurban said traffic numbers have been resilient but remain subdued. Falling traffic on Sydney routes such as the M2 has been partly offset by higher CityLink tolls and benefits from the southern link upgrade in Melbourne. CEO Scott Charlton cautioned there is still some 'softness' in the economy, so traffic growth hasn't returned to pre‑GFC levels.
Transurban declared an interim distribution of 15.5 cents per stapled security, up from 14.5 cents in the prior period. The company expects to pay a total of 31 cents per security for the full year.
Free cash flow, which analysts watch as a guide to future distribution payments, rose 4.6% to $192.8 million for the half. While this increase supports distribution capacity, the result was below some analyst expectations, which investors may want to factor into income forecasts.
Transurban owns Melbourne's CityLink and Sydney's M2 and Lane Cove Tunnel. It also holds a major stake in Sydney's Eastern Distributor and a 50% interest in Sydney's M7 and M5.
The 495 Express Lanes in Virginia opened in November, but early traffic 'disappointed with some of the early numbers.' CEO Scott Charlton said he expects improvement by the end of the year and noted the project is the biggest change to the network since the 1960s, so it will take time to adjust.
Transurban said Melbourne's CityLink continues to benefit from the southern link upgrade that opened about a year ago. In Sydney, traffic on the M2 has been disrupted by upgrades that are due to be finished by the middle of the year, which has weighed on short‑term traffic volumes.
Following the update, Transurban shares closed 6 cents higher at $6.16 on Tuesday, reflecting a positive but measured market response to the company's results and outlook.
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