Earnings dip fails to derail Transurban (ASX:TCL) share price today

Government COVID restrictions are easing but still impacting traffic figures.

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Key points

  • Transurban share price edges up
  • COVID restrictions reduced traffic numbers
  •  Proportional earnings declined

The Transurban Group (ASX: TCL) share price is edging higher in early trade, up 0.5%.

Transurban shares closed yesterday at $12.88 and are currently trading for $12.95 per share.

Below we take a look at the ASX toll road developer and operator's financial results for the half year ending 31 December (1H22).

Transurban share price edges up despite earnings dip

  • Total revenue (proportional) of $1.22 billion, down 0.4% year-on-year
  • Proportional earnings before interest, taxes, depreciation and amortisation (EBITDA) of $805 million, down 4.1% from 1H21
  • Loss from continuing and discontinued operations of $106 million, down from $448 million loss in the prior corresponding half year.
  • Free cash (including capital releases) declined 1.6% to $459 million
  • Dividend of 15 cents per share (cps), unfranked, the same as in 1H21

What else happened during the financial half year?

A 4.8% drop in average daily traffic across its portfolio continued to throw up headwinds for the Transurban share price during the half year.

The company said COVID-19 restrictions put into place by governments reduced vehicle numbers on its roads. But numbers picked up in the second quarter as these restrictions eased.

Transurban increased its proportional ownership in WestConnex to 50% "alongside strategically aligned partners". This extended the company's weighted average concession life to roughly 30 years.

In other major developments during the half year, Transurban reached an agreement over "long standing disputes" surrounding Victoria's West Gate Tunnel Project. Under the reworked agreement, the project is now expected to be completed towards the end of 2025. All parties will pitch in extra funding. Transurban reported that its contribution consists of a"$1.7 billion contribution to the cost of the D&C contract plus approximately $300 million in additional costs including insurance and project management costs".

The company said its 15 cps dividend was entirely covered by its half year free cash. The dividend will be paid on 22 February and the Distribution Reinvestment Plan (DRP) is active.

What did management say?

Commenting on the results, Transurban CEO Scott Charlton said:

The progress we have made during the half allows us to commence 2022 with a focus on our operations and the delivery of the pipeline of development and enhancement projects across our markets…

We are investing in transportation networks that will be in operation for decades. In the past 10 years we have expanded from seven to 21 assets across five markets, resulting in an average concession life of around 30 years.

What's next?

Transurban said it expects FY22 dividends to be in line with its free cash, excluding capital releases.

The company has a large pipeline of opportunities progressing in its core market of North America and Australia, which could be helping support the Transurban share price moves today.

Looking ahead, Charlton said, "We continue to manage our balance sheet to support our investment in future growth and distributions to our security holders."

Atop the FY22 dividend payment, Charlton said, "We are likely to use a portion of the additional WestConnex Capital Releases resulting from the acquisition to minimise dilution associated with the equity raise."

Transurban share price snapshot

The Transurban share price is down 8% so far in 2022, trailing the 3% year-to-date loss posted by the S&P/ASX 200 Index (ASX: XJO).

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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