Transurban Expects Higher Distribution in Fiscal Year 2025 — Update

By David Winning

SYDNEY--Transurban forecast another year of distribution growth after a solid traffic recovery on its toll roads in Australia and North America.

Transurban reported a net profit attributable to securityholders of 326 million Australian dollars (US$212.5 million) in the 12 months through June, compared to a A$64 million profit in the 2023 fiscal year. It expects a distribution of A$0.65 per security in the new fiscal year, up around 5% on the payout of A$0.62/security in fiscal 2024.

Proportional toll revenue--the company's preferred measure of the performance of its roads--increased by 6.7% to A$3.54 billion across the year. Proportional earnings before interest, tax, depreciation and amortization--or Ebitda--rose by 7.5% to A$2.63 billion.

Transurban said average daily traffic rose by 1.7% across the year, supported by growth in all regions and the opening of new roads such as the Rozelle Interchange of Sydney's WestConnex in November.

Still, the company faced some setbacks. Heavy rainfall kept many motorists off its Brisbane toll road in January and February. Hanging over Transurban's outlook is the New South Wales state government's review of toll roads.

In a recent report, Moody's Ratings said stretched household budgets, traffic congestion and limited transport alternatives are driving up community angst about toll rate increases, including their perceived fairness.

"We are committed to working with the NSW Government on potential toll reform, to explore solutions to improve customer outcomes while protecting the A$36 billion investment made by Transurban and its partners in Sydney over the past two decades," said Chief Executive Michelle Jablko.

Some investors have worried that Transurban's growth in Australia is constrained by its dominance in major metropolitan markets, while placing a bigger bet on North America carries significant risk. A proposed acquisition of a majority stake in Horizon Roads, owner of the EastLink toll road in Melbourne, was opposed by the Australian Competition and Consumer Commission on the grounds that it would be likely to substantially lessen competition for future toll road concessions in Victoria.

Transurban last month showed it retains opportunities at home by closing in on a contract to widen the Logan Motorway in Queensland state. Transurban said it has advanced to the Binding Upgrade Proposal stage with the Queensland government, which involves agreeing to the final scope and funding model for the project.

"Our weighted average cost of debt continues to be well managed and corporate liquidity of A$4.2 billion supports near-term commitments and provides capacity for existing and new growth opportunities," Jablko added.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

August 07, 2024 19:38 ET (23:38 GMT)

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