Transurban share price in focus following record first half

The company also revealed its CEO will soon step down and announced a new major partnership.

| More on:
piggy bank at end of winding road

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Transurban share price could be in for a big day after the toll road operator revealed a record first half 
  • Its proportional toll road revenue jumped 42.6% to $1.66 billion last half, driven by record traffic on its roads
  • It also upped its full-year dividend guidance to 57 cents per share – representing a potential 39% year-on-year increase

The Transurban Group (ASX: TCL) share price is on watch after the toll road operator dropped its earnings for the first half of financial year 2023.

It also announced the upcoming departure of long-term CEO Scott Charlton and a new partnership with CDPQ.

The S&P/ASX 200 Index (ASX: XJO) infrastructure share last traded at $14.03.

Transurban share price surges on record earnings

  • Proportional toll revenue reached a record $1.66 billion – up 42.6% on the prior comparable period (pcp)
  • Proportional total revenue jumped 41.1% on the pcp to $1.72 billion
  • Proportional earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 53.7% to $1.24 billion
  • Post-tax profit of $55 million– up from a $106 million loss in the pcp
  • Free cash, including capital releases, increased 88% to $863 million
  • Declared a 26.5 cents per share interim dividend – a 76.7% increase

Transurban saw record traffic volumes last half, with its average daily traffic (ADT) surpassing 2.5 million trips in November 2022.

The company's record revenue and EBITDA were supported by such traffic levels, as well as inflation-linked toll increases.

Transurban continued work at many of its developments last half, with Sydney's M4-M8 link opening last month. Work also continued at Melbourne's West Gate Tunnel Project. The tunnel excavation is expected to be done by the middle of the year.

Transurban announces CEO resignation and new partnership

Transurban also announced its CEO of 11 years will be stepping down at the end of 2023. The company has begun a global search for a new CEO. Commenting on Charlton's resignation, chair Craig Drummond said:

Scott has been a visionary in the industry … under his leadership, the company has grown to become an ASX 20 listed entity, increasing its market capitalisation by more than five times to over $43 billion and has delivered total security holder returns of 289%.

Meanwhile, it's again partnered with global investment group CDPQ, this time on its A25 asset in Montreal, Canada. The group was also a co-investor in Sydney's WestConnex. CDPQ will take on a 50% partnership in the asset for CAD$355 million (around $383.7 million).

What did management say?

Charlton commented on the earnings release likely to drive the Transurban share price today, saying:

Our roads have benefitted from freight volumes which achieved an all-time high, ongoing traffic growth in our core markets, and the continued investment in business capability to improve the experience for our more than 10 million customers.

We have seen record traffic in Brisbane, as well as in Sydney … 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

What's next?

Charlton said around 68% of the company's toll revenue is linked to CPI escalations, but the timing of the escalations can be delayed.

As such, the flow through from recent higher inflation figures hasn't yet been recognised in some markets.

It also upped its previous full-year dividend guidance by 4% to 57 cents per share.

Transurban share price snapshot

The Transurban share price has been outperforming the ASX 200 as of late.

The stock has gained 9.5% year to date compared to the index's 8.5% increase.

Transurban shares have also risen 9.2% over the last 12 months. Meanwhile, the ASX 200 has lifted 6%.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

Business people discussing project on digital tablet.
Earnings Results

2 ASX All Ords shares surging over 10% on strong results

Investors are buying these shares in response to strong results this morning.

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Earnings Results

Xero share price rockets to record high on explosive half-year growth

The tech star delivered another impressive half year results this morning.

Read more »

A man cheers after winning computer game while woman sitting next to him looks upset.
Earnings Results

2 high-flying ASX 200 gaming shares splitting ways today

Which gaming giant is winning the admiration of investors amid results?

Read more »

Male building supervisor wearing high vis vest and hard hat stands and smiles with his arms crossed at a building site
Industrials Shares

This $23 billion ASX 200 stock is surging 6% while the market sinks. Here's why

This ASX 200 stock is shrugging off the wider market sell down today and racing higher. But why?

Read more »

Unsure man analysing data on laptop.
Earnings Results

ASX 200 tech stock sees red as investors punish Q3 results

Investors continue digesting the numbers.

Read more »

Female miner smiling in front of mining vehicle.
Resources Shares

Guess which ASX lithium share is racing 8% higher on record production

Investors are sending the ASX lithium share racing higher on Wednesday.

Read more »

A woman wearing yellow smiles and drinks coffee while on laptop.
Earnings Results

CBA shares on watch after delivering $2.5b quarterly profit

The banking giant has made a big quarterly profit. But will it be enough for the market?

Read more »

a farmer kneels on one leg and closely examines soil from his farm against a blue sky backdrop.
Earnings Results

ASX 200 consumer stock surges despite loss and dividend cut

Investors were quick to overlook the negatives.

Read more »