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Transurban Returns to Profit on Asset Sales, Traffic Hurt by New Covid Restrictions

   By David Winning 
 

SYDNEY--Transurban Ltd. returned to profit as it banked proceeds from asset sales, but warned the spread of the highly contagious Delta variant is threatening the recovery in traffic on its network of global toll roads.

Transurban reported a net profit attributable to securityholders of the stapled group of 3.30 billion Australian dollars (US$2.42 billion) in the 12 months through June, compared to a loss of A$111 million a year ago.

The result benefited from the sale of a 50% stake in several North American toll roads, collectively known as Transurban Chesapeake, to a consortium of pension funds. Transurban reported a A$3.73 billion gain on sale of those assets.

Stripping out discontinued operations, Transurban reported a net loss of A$256 million.

Annual proportional toll revenue--the company's preferred measure of the performance of its roads--declined by 0.3% to A$2.49 billion.

Until recently, Transurban had been experiencing a solid recovery in Australian traffic on its toll roads as the economy recovered from the pandemic. It has said the trend toward working from home doesn't appear to be fundamentally altering the long-term outlook for traffic growth, citing similar peak-hour traffic patterns to before the pandemic and consumers preferring to use their own car over private transport.

However, outbreaks of the Delta variant after the 2021 fiscal year ended are clouding Transurban's outlook and reducing mobility once again. Sydney is in a prolonged lockdown that won't end until late August at the earliest, with residents of some suburbs unable to travel more than 5 kilometers from home.

On Monday, Transurban said traffic across Sydney, Melbourne and Brisbane had been impacted by restrictions introduced by authorities to counter the spread of Covid-19.

"Fortunately, experience has shown us that traffic rebounds quickly when restrictions are lifted although the rate of recovery depends on the length and nature of ongoing restrictions," said Chief Executive Scott Charlton.

In June, Transurban said it would pay a distribution of 21.5 Australian cents per security for the six months through June, higher than a year earlier when it sought to conserve cash during the early phase of the pandemic. It brought the annual distribution to 36.5 cents per security.

Transurban said it expects distributions in fiscal 2022 to be in line with free cash, excluding capital releases.

In addition to the pandemic's impact on traffic, investors are focused on whether Transurban will buy the New South Wales government's 49% stake in the WestConnex highway to fully own the asset. A deal could weigh on Transurban's distributions in future, depending on the purchase price. However, Transurban's sale of the Chesapeake assets has bolstered its balance sheet.

 

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

 

(END) Dow Jones Newswires

August 08, 2021 18:51 ET (22:51 GMT)

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