Transurban Group (ASX: TCL) shares are on the slide on Tuesday morning.
At the time of writing, the $41 billion ASX 200 stock is down almost 2% to $13.03
Why is this ASX 200 stock falling?
Investors have been selling the toll road operator's shares this morning after it released its first quarter update and revealed a decent start to the year. However, with the market tumbling today, this hasn't been enough to stop its shares from falling.
According to the release, for the three months ended 30 September, Transurban's average daily traffic (ADT) increased by 1.1%, averaging 2.5 million trips per day. Management notes that this result was supported by growth across all markets, except Melbourne.
Melbourne ADT decreased 1% in the quarter. This was driven largely by Western Link, which recorded a decline of 1.5%. This was due in part to continued construction works along Footscray Road and the West Gate Freeway as part of West Gate Tunnel Project works and reduced container volumes through the Port of Melbourne.
Traffic in Sydney grew by 1.9% during the quarter. This was due to an improvement in workday related trips and heavy vehicles. All freight corridors in Sydney experienced growth in heavy vehicles, particularly the East/West route along WestConnex (WCX).
The company revealed that WCX ADT increased 11.5%, benefiting from Rozelle Interchange traffic, which opened 26 November 2023, and Sydney Gateway's opening in early September. Ongoing negative impacts from construction projects continued to be experienced during the quarter.
Brisbane traffic increased 1.3% during the quarter, supported by a 2.9% improvement in freight related travel. Whereas North American traffic continued to grow, with traffic increasing 6.5%. The 95 Express Lanes ADT increased by 11.6%, supported by the Fredericksburg Extension which now represents 20% of all 95 Express Lanes trips.
Management commentary
The ASX 200 stock's CEO, Michelle Jablko, was pleased with the quarter. She said:
We are committed to providing value to customers, with 2.5 million average daily trips across our assets that come from moving goods and freight around cities, commuting and casual trips. Our roads serve a wide variety of customer needs and ultimately get people where they need to be safer and faster.
While parts of Sydney and Melbourne are being impacted by construction, once complete we expect to see benefits in the form of enhanced travel time savings and improved network traffic flows.
Ms Jablko also reaffirmed plans to pay a 65 cents per share dividend in FY 2025. She adds:
This supports our FY25 distribution guidance of 65 cents per security, which our Board has reaffirmed today. We continue to look for ways to remove complexity and generate further efficiencies in the way we operate. In addition, we are working on a number of opportunities that position us to grow both in existing and new markets.
This represents a 4.8% increase on the 62 cents per share dividend that the ASX 200 stock paid out in FY 2024. And based on its current share price, it will mean an attractive 5% dividend yield.
