Coronavirus empties Transurban toll roads

The volume of traffic travelling down Transurban’s toll roads nearly halved during March, as the company stands firm on toll increases.

Transurban has been slammed for increasing tolls as the rest of the economy battles against coronavirus restrictions. Picture: David Pattinson.

Transurban has seen traffic volumes plummet by nearly half across its sprawling toll road network in late March as the coronavirus economic shutdown keeps drivers off roads.

Average daily traffic in Melbourne plunged 54 per cent in the week starting March 29 on the same period a year earlier as drivers obeyed government orders and stayed at home.

In Sydney — where it operates seven of the city’s nine toll road concessions — traffic fell 42 per cent in the same period while Brisbane tumbled by 39 per cent.

Transurban suffered its biggest fall in North America with traffic dropping 67 per cent across its three roads in Washington and Montreal following mandated lockdowns, in line with peer toll road operators in Europe which dived between 60 and 80 per cent due to lockdowns.

Its overall average daily traffic fell by 48 per cent for the week starting March 29.

Heavy truck traffic also cratered, down 13 per cent in both Melbourne and Sydney for the week starting March 29 and off by 29 per cent in Montreal.

The fall was less pronounced when spread through the overall March quarter with average daily traffic falling 4.8 per cent due to COVID-19 restrictions.

Sydney fell 5.2 per cent, Melbourne fell 6.7 per cent and Brisbane fell 2.2 per cent while North America rose by 2.1 per cent.

RBC said Australian traffic looks to be flatlining at 40 to 50 per cent declines with the US approaching 70 per cent falls.

“With Australia so far seeming to be successful in limiting the spread of COVID-19, we think that if anything there could be potential upside to our traffic estimates from here if travel restrictions start to be lifted later in the June quarter,” RBC analyst James Nevin said.

Still, with a number of its assets now on a negative outlook from credit ratings agencies, the market would remain focused on its near-term performance.

“We don’t expect knee-jerk reactions from the rating agencies who will take a longer-term view on where key credit metrics will end up over a 12-18 month view, but this position will require a close eye as we believe Transurban would look to defend its credit ratings,” Mr Nevin said.

The company also confirmed it would proceed with planned toll increases across its Australian road network, despite a political uproar over the decision.

It has $3.5bn of funds available from April to the end of the 2021 financial year, with $2.9bn committed through capital spending or debt refinancing. It raised an extra €600m ($1.08bn) in the European bond market on April 2.

Transurban abandoned its second-half dividend guidance on April 1 and UBS expects the 31c payout will be slashed to just 11c with only underlying cashflow to be paid.

The company may be forced to inject capital or seek debt covenant waivers for its private activity bonds as US road traffic tumbles amid the COVID-19 shutdown, Macquarie said this week.

Transurban shares fell 4.1 per cent to $12.35.