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Transurban profit doubles as revenue rises

Lex Hall  |  07 Aug 2018Text size  Decrease  Increase  |  
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Toll road operator Transurban has doubled its annual net profit to $485 million, driven by an increase in toll prices and higher vehicle numbers.

An increase in average daily traffic of 2.2 per cent helped boost toll revenue for the multinational roads group to $2.34 billion - an above-average 8.7 per cent increase.

Transurban chief executive Scott Charlton said the widening of Melbourne's Citylink Tulla freeway - which increased high-toll-paying heavy freight vehicle traffic by almost 9 per cent - was a signficant contributor.

Transurban infrastructure road

Transurban is still waiting on regulatory clearance from the competition watchdog

"The escalation would be somewhere near 3 per cent, but because we've opened up some big enhancements on Citylink and also in relation to the M7 truck multiplier, there has been an increase," Mr Charlton told reporters, referring to the higher toll ratio used for trucks on Sydney's M7 motorway.

Transurban is fairly valued, according to Morningstar analyst Adrian Atkins. The stock carries a three-star Morningstar rating, and is trading at a 3 per cent premium to its fair value estimate of $11.50. 

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"TCL posted a solid result with proportional EBITDA up 10 per cent on an adjusted basis, as higher tolls, particularly for trucks, made up for soft traffic growth," Atkins said.

"Traffic growth continues to be impacted by construction works on and around TCL's roads, but should improve shortly. This should keep EBITDA rising solidly, though toll growth will slow. Volumes are already picking up in Melbourne after completion of the CityLink Tulla widening project."

Transurban recorded 2017/18 toll revenue growth of 13.4 per cent in Melbourne, while in Sydney large vehicle traffic also lifted toll revenue by 8.3 per cent.
Brisbane toll revenue lifted 2.1 per cent.

Transurban added to its one asset in North America this year when it finalised acquisition of a 7.2km toll road and bridge north of Montreal, Canada, for $861 million in June.
North American revenue lifted 7.1 per cent.

In July the toll road giant led a consortium bidding for 51 per cent of the WestConnex motorway in Sydney being sold by the NSW government.

But Transurban is still waiting on regulatory clearance from the competition watchdog which said company's dominance - it already runs seven of the state's nine toll roads - could stymie competition in the sector. The ACCC should decide by next month if Transurban can buy a stake in WestConnex. 

The company says its forecast distribution guidance of 59 cents per share for 2018/19 won't be impacted if the bid for the Sydney motorway is succesful.
Transurban declared a total final distribution and dividend of 28 cents.

Shares in the company were up 6 cents, or 0.5 per cent, to $11.96 at 1409 AEST.

TRANSURBAN FY PROFIT DOUBLES

  • Net profit attributable to security holders up 102.5pct to $485 million
  • Revenue from ordinary activities increased 20.7 per cent to $3,298 million
  • Toll revenue increased 8.7 per cent to $2,340 million
  • Final dividend 2.5 cents and final distribution 25.5 cents

 

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Lex Hall is content editor, Morningstar Australia

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

is senior editor for Morningstar Australia

© 2021 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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