Transurban troop in the fast lane

INVESTORS have piled into Transurban after the tollway heavyweight unveiled a 40 per cent jump in first-half profit and flagged a double-digit rise in its dividend.

Transurban chief executive Scott Charlton. Picture: AAP

INVESTORS have piled into Transurban after the tollway heavyweight unveiled a 40 per cent jump in first-half profit and flagged a double-digit rise in its dividend.

Shares in the group surged more than 6 per cent yesterday — their biggest one-day price rise in more than seven years.

The gains came after Transurban, which operates toll roads in Victoria, New South Wales, Queensland and the US, unveiled a net profit of $88 million for the six months to December, up 42 per cent on the same period a year earlier.

Revenue was up 26 per cent at $1.3 billion.

The better-than-expected payday prompted Transurban to upgrade its expected full-year dividend payment by 13 per cent to 51.5c.

Chief executive Scott Charlton said the group would likely need to tap investors for fresh capital to help fund the proposed $5.5 billion Western Distributor project in Melbourne.

Investment bank Credit Suisse estimates the group may need to raise $1 billion.

“I would still tend to say we will go to the equity markets at some stage … but we are certainly not going anytime soon,” Mr Charlton said.

Transurban is in discussions with the State Government to extend its lucrative CityLink concession — which allows it to charge motorists on those roads — for at least a decade to help fund the Western Distributor.

Mr Charlton said he remained confident the project would be bedded down by early next year despite the State Opposition threatening to block any CityLink concession extension unless more details on the financing of Western Distributor are made public. “We think the project speaks for itself,” he said.

“We remain confident.”

Mr Charlton said the group would keep an eye on any opportunities in the US if President Donald Trump unleashed a major spending program.

But he remained cautious about the final outcome.

“There’s been lots of talk about infrastructure,” he said.

“While we believe it’s positive, infrastructure takes a very long time and basically infrastructure is delivered in the US by the states.”

Transurban shares closed 6.4 per cent higher at $11.04.