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Transurban expects results to be strong in 2nd-half year

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Toll road operator Transurban expects a strong performance in the second half of the financial year as it continues major construction projects in Australia and United States and finalises contracts on other developments.

Transurban on Tuesday booked a net profit for the six months to December 31 of $93.2 million, up 24.9 per cent on the prior corresponding period, boosted by greater toll revenues and traffic numbers.

Transurban owns Melbourne’s CityLink, and Sydney’s M2 and Lane Cove Tunnel.

It also holds major stakes in Sydney’s M1 Eastern Distributor, Westlink M7 and the M5, plus the Pocahontas Parkway in Virginia in the United States.

“I look forward to a strong second half, which will provide the free cash (cash available for distribution to securityholders) necessary to deliver on the board’s guidance of a distribution totalling at least 29 cents for the financial year,” Transurban chief executive Chris Lynch said.

Mr Lynch said Transurban had performed well in the first half despite the patchy economy and traffic disruption on four of its six operating assets in Australia as a result of construction activity.

Mr Lynch said an upgrade of the M2 was 50 per cent completed and expected to be finished in the first half of 2013.

The $2 billion development of express lanes on the Capital Beltway in Virginia in the US – Transurban’s major US project – was more than 80 per cent completed and on target to be finished at the end of 2012.

Transurban was in the final stages of talks with the NSW government to widen the M5.

Also, Transurban and its development partner, Fluor, were in final contractual talks to develop express lanes on the I-95 road in Virginia in the US. The I-95 is connected to the Capital Beltway.

Mr Lynch said Transurban remained open to new growth opportunities but was focused at the moment upon executing its current agenda.

Transurban said growth in toll revenue in the first half was strongest on CityLink and the Lane Cove Tunnel.

Traffic numbers grew on the CityLink, the M1 Eastern Distributor, M7 and M5, but fell on the M2 and Lane Cove Tunnel.

Construction work to widen the M2 affected traffic and revenue, while the same work also affected traffic numbers on the connecting Lane Cove Tunnel.

Transurban’s proportional toll revenue in the first half of the financial year was $473.8 million, up six per cent on the same period in the prior year.

Transurban declared an interim distribution of 14.5 cents per stapled security, including 3.5 cents fully franked.

“While we’re not going to give specific guidance as to future levels of franking, we do retain capacity to provide a franked component at about that level to expected distributions in the near term,” Mr Lynch said.

Securities in Transurban were six cents higher at $5.58 at 1307 AEDT on Tuesday.