In the midst of ongoing confusion surrounding Sydney's troubled Rozelle traffic interchange, Transurban (ASX:TCL), the toll road giant, remains resolute in its financial projections. Despite the interchange's tumultuous reception since its late 2023 opening, the Melbourne-based company is forecasting a robust 7% rise in distributions for the fiscal year ending June.
CEO Michelle Jablko, in a statement released Thursday, appeared unperturbed by the interchange's controversies, emphasizing that the completion of the interchange marks the final piece of the WestConnex puzzle, aligning with the company's assumptions.
"While we acknowledge some diversionary traffic effects on other assets due to the completion of WestConnex, we remain committed to meeting the travel needs of our customers," Jablko stated.
The interchange's operational woes have prompted significant governmental intervention, with the New South Wales government investing millions of dollars to rectify the complex's poorly planned infrastructure. Now, a NSW Upper House Committee is poised to investigate the matter further, potentially subjecting Transurban's interactions with the government and overseeing public servants to public scrutiny.
Despite these challenges, Transurban reported that its interim distribution of 30 cents per security was well covered by free cash, totaling 32.5 cents per security (minus releases), with total cash amounting to 47.5 cents per security. Jablko expressed confidence in the company's performance, citing traffic growth across all markets, averaging approximately 2.5 million trips per day.
"This solid traffic result, coupled with disciplined operational and financial cost management, has bolstered our financial performance in the first half of FY24," Jablko affirmed.
Looking ahead, Transurban anticipates a 7% increase in distributions to 62 cents per security for the full fiscal year, in line with previous forecasts made in August alongside the 2022-23 results.
Beyond Sydney, Jablko noted positive traffic trends in Brisbane, supported by net migration, and improved performance in North America, attributed to the return to office trends. Increased toll prices, coupled with additional access points, further enhanced the company's performance.
"Melbourne continues its steady recovery, achieving its highest half-year result since 2019, despite short-term construction disruptions along the western corridor," Jablko added.
With Transurban's unwavering focus on financial resilience and growth, the company remains poised to navigate the challenges posed by Sydney's infrastructure woes and maintain its trajectory of success in toll road operations worldwide.
