Transurban taps Jablko for top job amid record profit

Toll road operator Transurban has appointed Michelle Jablko as only its fourth-ever CEO, resulting in more than a quarter of Australia’s top 20 companies being run by women.

Transurban has appointed chief financial officer Michelle Jablko as the toll road operator’s fourth chief executive in its history, resulting in more than a quarter of Australia’s top 20 companies being run by women.

Ms Jablko has been at Transurban for less than three years as the CFO, having done the same role previously at ANZ, and beat out three longer-serving executives as well as a pool of global candidates for the top job.

The Melbourne-based former-banker said she is taking the reins of a company with a strong pipeline for growth, based off Sydney’s forecast population increase of 20 per cent, with Melbourne and Brisbane growing at one and half to two times that.

“If you look at the cities we’re in and the needs of those cities, the population growth over the next 20 years is enormous,” Ms Jablko said. “Just the opportunity we see in the next few years is at least $10bn.”

Transurban on Wednesday announced record underlying earnings of $2.44bn, topping its previous record of $2bn in 2019 as it expanded its road network and was buffered from inflation by consumer price index-linked tolls.

Outgoing CEO Scott Charlton said the company had expected to pay a record distribution in the current financial year, up 7 per cent to 62c a share, but the figure came in below expectations.

Milford portfolio manager Dan Simmonds said he hoped the figure was “a floor rather than a ceiling for the dividend” and also called out Sydney traffic numbers, which were up 21.9 per cent on the pre-Covid-19 figure for 2019, but below market predictions.

“It was a slight miss versus expectations,” said Mr Simmonds, but “Michelle Jablko is a safe pair of hands. Scott Charlton’s legacy is very strong, having compiled a fantastic group of assets that are well run, and with good relationships with government and stakeholders, with Sydney as the jewel in the crown.”

Perhaps because Transurban is considered a low-risk option for investors compared with other industrials and has consumer-price linked toll escalations for about 70 per cent of its revenue, it does not take much of a miss to disappoint the market.

Transurban shares fell 0.7 per cent to $13.86 in a lower market on Wednesday.

Revenue rose 22.1 per cent to $4.16bn for the year ended June 30, above the $3.93bn consensus, and free cash flow rose 12.8 per cent to $1.73bn, just below expectations of $1.77bn.

Transurban’s toll-road in Melbourne. Picture: Simon Anders

Implied free cash flow growth of 6 per cent in the current year looked “disappointing”, according to UBS analyst Andre Fromyhr, who said in a note he hoped the company was being conservative.

“Investors might remember the same situation a year ago when full year 2023 guidance of 53 cents per share implied a 10 per cent downgrade to consensus, but then Transurban ultimately delivered a result of 58 cents per share.”

Mr Charlton pushed aside Transurban’s reputation of being staid and instead described it as a “sexy” company with a number of significant projects in the works.

“We think it’s very sexy,” said Mr Charlton, adding that toll roads are “a long-term business.”

“Over the next three years, you have things coming online, like West Gate Tunnel, the M7 and 12, the Rozelle interchange and WestConnex,” said Mr Charlton. “There’s a bunch of assets coming online, but nothing, nothing moves quickly in infrastructure.”

While it’s noteworthy that Ms Jablko joins a growing list of female CEOs in top 20 companies, including Fiona Hick at Fortescue Metals, Vicki Brady at Telstra, and Leah Weckert at Coles, there is a specific trend towards former investment bankers at Transurban.

Ms Jablko worked at UBS and Greenhill before joining and ANZ, while chairman Craig Drummond previously chaired Goldman Sachs in Australia and Mr Charlton was an investment banker at Deutsche Bank.

During Mr Charlton’s 11 years at the reins of Transurban he turned it into the world’s biggest pure-play toll road company, knocking no less than Macquarie Bank-managed operators out of its way in the process.

Transurban now owns all the toll roads in Queensland, is the majority owner-operator in New South Wales, and owns two of the three in Victoria, with the state government in the process of building one more, and also has toll roads in North America.

Its shares have almost tripled in the time he’s been boss, on top of a steady stream of dividends.