While the S&P/ASX 200 Index (ASX: XJO) reverses by 0.4% in late morning trade, the Atlas Arteria share price has climbed 0.9% to $8.04.
Atlas Arteria share price rallies as COVID recovery continues
Here's a summary of the headline results from Atlas' first-half report:
- Weighted average traffic was 22.7% above 1H21 and just 1.3% below 1H19
- Toll revenue came in at $53.8 million, up 25% on the prior corresponding period (pcp) of 1H21
- APRR toll revenue grew by 20% on the pcp to €1,290 million
- Statutory net profit after tax (NPAT) soared 184% on the pcp to $117.1 million
- Distribution guidance of 20 cents for 1H22 and a further 20 cents for 2H22
A record full-year distribution of 40 cents would represent an 11% increase over FY21. It puts Atlas shares on a prospective forward dividend yield of 5%.
However, for now, this is simply guidance. Atlas expects to announce its first-half distribution in September.
On the whole, Atlas' first-half growth was driven by increased traffic across the APRR network and the easing of COVID restrictions.
APRR is the second-largest toll road network in France and the fourth-largest motorway group in Europe.
Atlas holds a 31.14% indirect interest in APRR, which brings in the lion's share of the group's revenue. In the first half, APRR contributed to 90% of Atlas Arteria's revenue.
What else happened in 1H22?
APRR traffic was the highlight, increasing by 23.4% on the pcp on the back of a busy winter holiday period, strong domestic tourism, and reduced COVID restrictions across Europe. Notably, these traffic levels were 2.3% higher than pre-COVID levels of 1H19.
During the half, APPR expanded its network with the addition of the A79 motorway in southern France. Construction of the 88km road upgrade is expected to finish in late 2022, with tolling to commence on opening.
The roll-out of electric vehicle charging stations across the APRR network continues. Around 70% of motorway service areas are now equipped with high or very high power terminals.
At Dulles Greenway in the United States, Atlas' second-largest contributor of revenue, traffic increased by 12.3% on the pcp. However, traffic remained 34% lower than 1H19 due to the delayed return to office-based work.
What did management say?
Commenting on the results, Atlas Arteria CEO Graeme Bevans said:
Atlas Arteria delivered a strong result during the period, driven by improved operating conditions across France, Germany and the USA.
Atlas Arteria is well positioned in the current high inflationary environment. In 2022 we are absorbing some inflationary impacts in our costs given higher pricing, however with toll prices at APRR, ADELAC and Warnow Tunnel directly linked to inflation and a high proportion of fixed debt across the portfolio, securityholders stand to benefit from 2023 onwards.
Commenting on the outlook, Atlas noted that its financial performance was positively correlated to inflation. Thus, shareholders stand to benefit during a high inflationary environment.
This is because most of the toll prices across Atlas' network are directly linked to inflation. In other words, it can hike up toll prices as inflation soars.
Rounding out its outlook statement, Atlas believes it has strong organic growth potential within the current portfolio and continues to focus on improving average concession life.
Atlas Arteria share price snapshot
Since Atlas benefits from rising inflation, the Atlas Arteria share price has bucked the broader ASX 200 this year to punch in strong gains.
In the last six months, the Atlas Arteria share price has jumped 24%. Zooming out further, Atlas shares are up 17% in the last year.