Thursday, March 30, 2023
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Transurban CEO decides to hit the road

Transurban’s (ASX:TCL) chief executive Andrew Charlton says he will depart the toll road giant this year as the company reported record results for the December half year, with increased traffic and high inflation bumping up toll prices.

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The group dominates toll roads in Melbourne, Sydney and Brisbane, as well as investments in the US, reported record proportional toll revenue of $1.66 billion for the six months to December while total revenue topped $2 billion.

Earnings before interest, tax depreciation and amortisation (EBITDA) topped the billion-dollar mark at $1.07 billion.

Transurban raised forecasts for distributions to its investors based on the positive outlook. It said that that total 2022-23 distribution is expected to be 57.0 cents per share, up 39.0% growth on 2021-22 and 4.0 cents per share above previous guidance.

First half distribution was 26.5 cents per security, up from 15 cents for the December, 2021 half year.

The news saw the company’s securities eased half a per cent to $13.95. That could have been linked to the CEO’s impending departure.

Transurban said the result was boosted by record traffic in Sydney and Brisbane as well as freight and weekend travel.

“Our roads have benefitted from freight volumes which achieved an all-time high, ongoing traffic growth in our core markets,” Charlton said.

“We have seen record traffic in Brisbane, as well as in Sydney even when excluding NorthConnex and M8/M5 East.

“This performance was underpinned by the urban nature of our roads, demonstrating that the diversity of everyday journeys across commuting, travel and leisure trips provides resilience throughout economic cycles.”

He highlighted the strength of the business model in a rising inflation and interest rate environment.

“Around 68 per cent of Transurban’s toll revenue is linked to CPI escalations, creating inbuilt inflation protection. Timing of escalations can be delayed depending on the asset, meaning that the flow through from recent higher inflation numbers has yet to be recognised across some of our markets,” he said

In Tuesday’s statement Mr Charlton said, “I am proud of the achievements of Transurban and its management team over the past decade and to have led the business during a period of significant growth.

“Traffic is now exceeding pre-COVID levels with iconic assets becoming operational, while a strong balance sheet continues to position the company for ongoing growth. I am confident in Transurban’s future,” he said.

Mr Charlton will continue to lead Transurban until a new CEO commences, to ensure that there is a smooth transition.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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