Transurban's profit on the up

The owner of Sydney's Lane Cove Tunnel and Melbourne's CityLink reported a 27 per cent rise in net profit to almost $97 million for the six months to December. Toll revenues rose 6 per cent to $474 million.

Investors have seen Transurban as a relative safe haven in the midst of large financial stocks, such as Macquarie Group, warning of a bleaker outlook. Transurban's pre-tax earnings rose 7.5 per cent to $390 million for the half, which was higher than Goldman Sachs analysts had expected.

Shares in Transurban rose early yesterday before closing down 3? at $5.49.

"While they have had a fair chunk of roadworks, they have delivered steady growth in this environment," a senior research analyst at Legg Mason, Andrew Chambers, said yesterday.

"There weren't too many surprises [in the first-half earnings]."

Transurban's chief executive, Chris Lynch, said the latest result highlighted the "true defensive nature" of the toll-road owner "in the face of economic headwinds".

Mr Lynch said Transurban was set for a "strong second half" which would provide the free cash flow needed to deliver on its guidance for distributions of at least 29? a share for the full year.

Large shareholders have pressured Transurban in recent years to focus on its existing assets including the M5 and Westlink M7 motorways in Sydney rather than pursue acquisitions.

Brisbane's failed Clem7 tunnel is expected to be put up for sale by receivers in the next year, while Sydney's Cross City Tunnel could also be put on the market given its financial position.

While Transurban remained "open to look at other opportunities", Mr Lynch said "there is nothing there that is overly exciting at the moment" for it to run the rule over.

The former BHP executive handed in his resignation last week after he decided the "time was right" to pursue the "next stage" of his career, which is expected to include seats on more company boards.

Mr Lynch, who joined Rio Tinto's board last year, will leave in July.

Transurban will pay an interim distribution of 14.5? a share on February 14. The payout includes a fully franked component of 3.5?.