Kelsian on the hunt for UK, European acquisitions

Transport group Kelsian is on the hunt for further acquisitions in the UK and Europe after pulling out of the race for a major British bus and rail operator.

A SeaLink Whitsundays vessel docked at the Shute Harbour Marine Terminal. Picture: Kirra Grimes

Transport and tourism group Kelsian has reaffirmed its commitment to further acquisitions abroad after pulling out of the race to acquire London Stock Exchange-listed bus and rail operator The Go-Ahead Group.

Handing down its annual results on Wednesday, the ASX-listed company said it was actively pursuing growth opportunities internationally, with the UK and Europe identified as the most attractive markets.

Kelsian advised the ASX last month that it had shelved its plans to make a bid for Go-Ahead, whose shareholders last week accepted a £669m ($1.14bn) takeover from a consortium of Australia’s Kinetic and Spain’s Globalvia Inversiones.

Kelsian, which operates public and tourism transport operations across Australia and internationally, blamed weakness in its share price for its decision to abandon its own tilt at the British company.

“Kelsian is actively pursuing growth opportunities internationally including in the UK and Europe, which remain attractive markets, following the repositioning of the London operations, retention of a highly capable management team, and following Kelsian’s withdrawal from The Go-Ahead Group possible acquisition process,” the company said on Wednesday.

“Kelsian’s experienced team continues to actively pursue accretive organic and inorganic growth opportunities in both Australia and targeted international transport markets with similar contract characteristics, high quality contract counterparts, and the potential to deliver predictable, resilient earnings.”

Kelsian, which operates bus networks in Australia, Singapore and London, and ferry services across Australia, including to Kangaroo Island and in Sydney Harbour, posted a net profit after tax of $52.9m, up 40.1 per cent on the previous year.

Underlying EBITDA increased by 9.3 per cent to $183.1m, on revenue of $1.32bn, which was up 12.9 per cent. A fully franked final dividend of 9.5 cents will be paid to shareholders, up from a final dividend of 9 cents in 2020-21.

Kelsian chief executive Clint Feuerherdt said the company’s “highly defensive, recurring nature” of its contracts had helped it weather the Covid-19 storm.

“Kelsian delivers an essential service and in a period where we experienced macro-economic challenges, natural disasters and ongoing Covid-19 impacts – particularly on our labour force, I am very proud of the service we have continued to provide and the professionalism of our people,” he said.

“Kelsian is well placed to continue to grow both domestically and internationally with a continued focus on delivering against our growth initiatives and environmental factors continuing to ease, primarily migration and international mobility.

“Further, domestic tourism is expected to continue the positive trajectory seen since the 2022 Easter period and we anticipate a gradual return of international travel demand.”

However, Mr Feuerherdt warned that labour shortages across the company’s bus, marine and tourism businesses were an ongoing challenge, and would likely persist in the short term.

“The group continues to face labour constraints, particularly in the bus segment, as the labour force continues to be impacted by Covid-19 and net migration-related constraints,” he said.

“Labour constraints will continue to impact the group for the near term, and the group continues to actively manage the situation.

“We anticipate the labour position to improve as migration and tourism limitations ease.”

Mr Feuerherdt said the company was sheltered from inflationary pressures being felt across the global economy, with pricing in more than 80 per cent of its contracts linked to rising fuel, labour and other costs.

Kelsian shares were trading 2.2 per cent lower on Wednesday at $6.36.