Toll road operator ramps up dividend guidance
Australia's largest toll road operator said some motorway ramps - which it termed "its canary in the coalmine" - that led into the cities' CBDs had experienced a significant rise in traffic in the past six months.
"You can see certain ramps, where all the lawyers and investment bankers get off into the city, start to pick up," Transurban chief executive Scott Charlton said.
The company said its net profit would more than triple to $175 million for the year to June. The increase to its bottom line was magnified because it had been hit in the previous year by a $138 million write-down on a US toll road. Using its preferred metric, proportional pre-tax earnings rose almost 6 per cent, to $991 million.
Transurban, which owns nine toll roads in Sydney, Melbourne and the US, will pay a final dividend of 15.5¢ a share on August 14. It will take its total payout for the year to 31¢. The company delivered on market expectations of a forecast distribution for the new financial year of 34¢. It will be fully paid out of cash received from its assets.
Shares in Transurban closed up 3 per cent at $6.96 following the better than expected earnings.
Mr Charlton said the company's confidence in the outlook for this financial year was based on increased traffic and toll revenue from roads in Sydney's north-west. He also revealed that Transurban will not make an expression of interest for the East West Link in inner Melbourne because the proposed structure - known as an "availability-payment model" - "just doesn't make sense for us".
Transurban is also hopeful of opening up parts of the new lanes on the M5 West in south-western Sydney earlier than expected. The project, which involves adding an extra third lane in each direction, is not due to be completed until the end of next year.
"The lane widening is going very quickly. The way it is progressing ... as some of the major sections come up ... we would go ahead and make them available," Mr Charlton said.
Transurban also anticipates a shortlist of bidders to build the so-called "missing link" between the F3 and M2 roadways in northern Sydney to be unveiled within the next two weeks. The cost of the project is about $2.65 billion.
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Transurban raised its dividend guidance for the year and will pay a final dividend of 15.5c per share on August 14, taking the total payout for the year to 31c. The company also delivered market-expected guidance for a forecast distribution of 34c for the new financial year.
Transurban says an improvement in economic activity in Sydney and Melbourne has driven more traffic. The company noted significant rises on motorway ramps into CBDs — described by CEO Scott Charlton as a “canary in the coalmine” — showing more commuters returning to city centres.
Transurban reported net profit more than tripled to $175 million for the year to June. Using its preferred metric, proportional pre-tax earnings rose almost 6% to $991 million. The year-on-year comparison was magnified because the prior year included a $138 million write-down on a US toll road.
Shares in Transurban rose following the results, closing up 3% at $6.96 after the better-than-expected earnings and upgraded dividend guidance.
No. Transurban said it will not make an expression of interest for the East West Link because the proposed availability-payment model “just doesn’t make sense for us,” according to CEO Scott Charlton.
Transurban is hopeful parts of the new lanes on the M5 West can open earlier than expected. The project adds a third lane in each direction, is progressing quickly, and is due for completion by the end of next year, with major sections potentially being made available as they finish.
Transurban said a shortlist of bidders to build the so-called ‘missing link’ between the F3 and M2 is expected to be unveiled within the next two weeks. The project is estimated to cost about $2.65 billion.
Transurban stated the payouts will be fully funded from cash received from its assets, meaning dividends and the forecast distribution are expected to be paid out of operating cash flows from its toll roads.
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