Transport operator Kelsian says public transport provides easy emissions wins

Kelsian says public transport needs to be marketed more heavily as a way to cut emissions, while delivering a solid uplift in underlying earnings.

Kelsian chief executive Clint Feuerherdt.

Governments need to put some marketing heft behind getting the public to use public transport more often if they’re serious about reducing carbon emissions in a meaningful way, Kelsian managing director Clint Feuerherdt says.

While releasing the company’s first half result - a 21.6 per cent increase in underlying profit to $26.5m - Mr Feuerherdt said transport was Australia’s third largest source of greenhouse gas emissions, with the highest rate of growth.

About half of this was down to car use, Mr Feuerherdt said, and making the transition to public transport would provide an easy win. And while his industry - Kelsian is the now the largest bus operator in the Sydney market for example - was naturally heading down the path of decarbonisation, taking cars off the road in favour of electric or even diesel buses delivered far better emissions outcomes than investing in the fleet alone, he said.

Mr Feuerherdt said while governments had broadly made their commitments around where they wanted to get to in terms of emissions reductions, the strategies for how that would be achieved were still being worked through.

“The transport strategy is going to be a key pillar in the decarbonisation of major cities,’’ he said. “And it’s not just changing out a diesel bus for an electric one. It’s to start promoting public transport as a zero emissions path to work.

“It’s marketing that journey to the public, to leave your car home and take the electric bus to work, but really what’s going on is a mode shift out of cars and into public transport.’’

Increasing frequency of services would also help in making public transport more attractive, Mr Feuerherdt said.

Kelsian increased revenue for the first half by 6.2 per cent to $678.3m, delivering an underlying net profit of $26.5m, up21.6 per cent. Once one-offs including acquisition costs were factored in this fell to a $17.2m profit, down 18.9 per centon the previous result.

Mr Feuerherdt said a rebound in domestic tourism led to strong growth in Kelsian’s marine and tourism business, while contract indexation mechanisms effectively hedged inflation in its bus businesses. Kelsian said its defensive contract portfolio put it in good stead.

“The balance sheet strength offers resilience and creates optionality to continue to pursue the growth strategy via organic growth including diversification into adjacent markets such as education and by acquisitions in the key target markets of UK, Europe, and USA,’’ it told the ASX.

Kelsian declared a fully-franked interim dividend of 7.5c per share, up from 7c. Brokers gave the Kelsian profit result a warm welcome, with Macquarie putting an “outperform” on the stock with an $8.10 price target and Barrenjoey having an $8 target.

Kelsian shares closed up 5.4 per cent at $6.60.

Originally published as Transport operator Kelsian says public transport provides easy emissions wins