Transurban’s profits up thanks to busier roads
Transurban has raised its dividend guidance for this financial year amid signs more motorists are using its toll roads thanks to an improvement in economic activity in Sydney and Melbourne.
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 announced a more than tripling in net profit to $175 million for the year to June. The size of the increase to its bottom-line performance 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 toll-road operator 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 toll-road 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 roadways in Sydney's north-west.
He also revealed that Transurban would 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".
"We prefer to take revenue and patronage risk," he said.
However, it is interested in talking to the Victorian government about connections to the company's largest toll road, CityLink. Transurban gains half its earnings from CityLink, which delivered a 6.5 per cent rise in toll revenues last financial year.