Atlas Arteria (ASX:ALX) share price jumps after net profit soars 800%

Atlas Arteria shares are on the move due to a strong first half performance.

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The Atlas Arteria Ltd (ASX: ALX) share price has stepped into the green on Thursday as the toll-road developer reported its FY21 half-year results.

Atlas shares are currently changing hands at $6.38 apiece, a 1.83% jump on the day.

Let's investigate further.

Atlas Arteria share price climbs on strong profit and recovery in road traffic volumes

  • Weighted average traffic in the first half was 17.5% above the same time last year
  • Statutory next profit after tax (NPAT) of $71 million, from a loss of $123 million a year ago
  • Excluding "notable items", NPAT grew by 845% year on year to $86 million from $9.1 million
  • More than $250 million in capital expenditure "delivered across all businesses" in 1H 2021
  • First half distribution guidance of 15.5 cents per security.

What happened in FY21 for Atlas Arteria?

In a positive for the Atlas Arteria share price, the company recognised a recovery in weighted average traffic volumes towards pre-pandemic levels. It recorded an approximate 18% year on year increase in traffic volumes, however, this was still about 20% below 2019 levels.

The company's APRR business grew its traffic numbers by 19% year on year, resulting in an 18.6% increase in toll revenue to $1.68 billion. This carried through to an EBITDA of $1.3 billion, which is a 23% growth on the year prior.

For its Warnow Tunnel toll road, traffic decreased almost 9% this half, which also reduced toll revenue by 7% to $8.5 million. Atlas explained that Warnow was "more significantly impacted by COVID-19" than any other site in 2020, due to a resurgence in cases there.

Furthermore, at its Dulles Greenway asset, toll revenue gained 1.8% to $34.6 million and EBITDA grew by 2% for this business also. Compared to the first half in 2019, "traffic was down 41.2%, toll revenue was down by 39.8% and EBITDA was 45.3% down".

At the end of the first half, the Dulles Greenway business had US$196.9 million in cash reserves on its balance sheet.

As a result, the company grew its overall NPAT to $86 million, an 844% growth from the year prior, although a 2.4% decrease from 2019.

Finally, there is another point that could weigh in on the Atlas Arteria share price. The company declared first-half "distribution guidance" of 15.5 cents per security, reflecting "underlying performance" of its businesses.

What did management say?

Speaking on the results, Atlas Arteria CEO Graeme Bevans said:

Our roads provide critical infrastructure that connect communities. Our European businesses have benefitted from the COVID-safe operation of French industry and growing European trade. We are well positioned to take advantage of increasing travel in response to improving vaccination levels and the new EU health pass encouraging safe mobility through the region.

Regarding the company's financial position, Bevans added:

Our balance sheets are very well positioned. At the corporate level we currently have no debt, ample liquidity, strong cash flows from APRR and Warnow Tunnel and remain well placed to pursue growth opportunities as they arise.

What's next for Atlas Arteria?

Management did not provide explicit guidance in terms of figures in its report, however, it did explain that European summer traffic "has been averaging more than 5% above 2020 and 2019 levels".

In regards to the second half of 2021, the company is "well-positioned to benefit from increased travel" as COVID-19 restrictions ease in Europe.

Other than this, Atlas seems focused on driving ESG and other sustainability initiatives throughout the coming periods.

The Atlas Arteria share price has posted a loss of 1.46% since January 1. This result had lagged the S&P/ASX 200 Index (ASX: XJO)'s return of around 14% this year to date.

The author Zach Bristow has no positions 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 Bruce Jackson.

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