Transurban Group (ASX: TCL) has reported a net loss for its first-half operations with the cost of its Queensland Motorways acquisition weighing heavily on the toll road operator's results. However, investors were obviously impressed with what they saw, bidding the stock up 0.59% to $9.35 early in the session.
So What: For the six-months ended 31 December 2014, Transurban reported a 68% lift in revenue (from ordinary activities) to $964 million but a statutory net loss of $354 million, compared to an $81 million profit in the prior corresponding period.
However, net profit was $52 million when the $406 million of significant items related to the acquisition of Queensland Motorways in July are excluded. This was still 36% down from last year which the company attributed to higher depreciation and amortisation charges, as well as higher interest costs associated with acquisitions.
Pleasingly, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 37% to $636 million (excluding costs), driven by a 37% increase in toll road revenue ($761 million). This is an important measure as it measures Transurban's income relative to the company's stakes in its toll road assets, while depreciation and amortisation (non-cash charges) also make up a large portion of the company's overall expenses. Toll revenues grew 11.1% on the company's Sydney roads and 7.2% on its Melbourne roads.
Despite Transurban's swing to a net loss, the company surprised investors as it raised its full-year dividend guidance. It now expects to pay 39.5 cents per share (partially franked), up from its previous guidance of 39 cents, which will include a 19.5 cent interim dividend – up from 17 cents a year earlier.
Now What: Transurban owns and operates some of the country's most important toll roads, and with Australia's population set to continue growing rapidly, the company and its shareholders should benefit handsomely over the long term. Although Transurban's net loss might look bad at first glance, the company is setting itself up for an even better future and will pay investors while they wait with its generous 4.2% dividend yield.
