Tollway operator Transurban has upgraded the amount it expects to pay investors for the full year after a strong performance from its portfolio of roads.
Transurban now expects to pay a distribution of 39.5 cents per security for 2014/15, up from its previous forecast of 39 cents and the 35 cents paid in 2013/14.
The upgrade came as Transurban reported a first half loss of $185 million, mainly because of $406 million in costs related to the acquisition of Queensland Motorways, including stamp duty of $384 million.
Excluding those costs, profit was $52 million, down from a profit of $81 million in the prior corresponding period.
Net profit excluding significant items was lower largely due to higher depreciation and amortisation charges and higher interest costs associated with the acquisition of Queensland Motorways and Sydney’s Cross City Tunnel.
Transurban said improvements to its portfolio of roads, and newly acquired businesses, had helped generate strong growth in traffic volumes and toll revenue.
“We’ve had strong traffic growth across the portfolio, in particular Sydney on the back of the M2 which leads into the M7 and Lane Cove Tunnel, and good growth in Melbourne,” Transurban chief executive Scott Charlton said on Thursday.
Mr Charlton said good traffic growth in Sydney, Melbourne and Brisbane was partly underpinned by the movement of people back to the major cities after the end of the mining boom, and increased activity in the housing sector in the wake of lower interest rates.
Average daily traffic grew by 3.5 per cent during the first half.
Toll revenue increased 36.7 per cent to $761 million.
Transurban’s assets include Melbourne’s CityLink and Sydney’s M2, M5, M7, Eastern Distributor and Cross City and Lane Cove tunnels.
Transurban took control of Queensland Motorways, which controls Brisbane’s toll road network, in July 2014.
In the US, Transurban has control of the 495 Express Lanes and the 95 Express Lanes in Virginia.
Mr Charlton said Transurban had achieved several strategic milestones in the first half, including the completion of the M5 widening in Sydney, the opening of the 95 Express Lanes in northern Virginia, and the financial close of the NorthConnex tunnel project in Sydney.
He said there were significant development opportunities in all of Transurban’s markets.
ACQUISITION COSTS BEHIND TRANSURBAN LOSS
- First half net loss of $185m, down from a net profit of $81m in 2013/14
- Revenue of $964m, up 68.6 pct, from $572m
- Interim distribution of 19.5 cents per security, up 1.5 cents on the previous year, with 3.5 cents of it again fully-franked