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Earnings: Transurban share price on watch after reporting full year revenue decline

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The Transurban Group (ASX: TCL) share price will be on close watch this morning following the release of the company’s full year financial results.

Full year earnings decline driven by fall in traffic volumes

As had been widely anticipated by the market, Transurban’s full year financial performance was significantly impacted by the coronavirus pandemic.

Transurban saw its proportional earnings before interest, tax, depreciation and amortisation (EBITDA) and before significant items fall by 6.4% to $1,888 million for the full year. Overall, Transurban recorded a statutory loss amounting to $153 million. Proportional toll revenue saw a more modest fall of 3.4% to $2,492 million during FY 2020.

The fall in revenue and earnings for Transurban was driven by a decline in average daily traffic (ADT) throughout the 12 month period. ADT fell 8.6% across all its operations.

In Sydney, proportional toll revenue increased by 2.8%, while it fell by 8.1% in Melbourne. Proportional toll revenue fell sharply by 13.9% in North America, due to harsher lockdown restrictions over there.

The second half of the financial year had seen operating conditions deteriorate, both locally and overseas for the toll road operator. However, Transurban did point out that a gradual improvement was recently evident across all its locations apart from Melbourne, due to tougher recent restrictions.

Long-term expansion strategy remains on track

Transurban remains confident about its long-term future expansion strategy. The toll road operator recently completed three major toll road projects. These include the New M4 tunnels, Logan Enhancement Project and 395 Express Lanes. A further eight major projects are now in the pipeline.

Chief Executive Officer, Scott Charlton, commented:

“Long-term and proactive management of our balance sheet and organisational capability means we are able to pursue the significant pipeline of opportunities in our existing markets. As always, this will be balanced alongside maintaining our strong investment-grade credit metrics and distributions for security holders.”

Final dividend announced

Transurban announced a final dividend distribution of 16 cents per share to be paid on 14 August 2020 for H2 FY 2020. This takes Transurban’s full year dividend distribution for FY 2020 to 47 cents per share, with 2 cents of this to be fully franked.

How has the Transurban share price performed recently?

The Transurban share price took a significant hit in the early phase of the coronavirus pandemic from February to mid-March. It fell from $16.33 on 11 February to $10.50 on 20 March. That was a decline of 36%. Since that time, it has recovered just over half of those losses and is currently trading at $13.93.

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Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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