This morning, Transurban (TCL), the Australian and North American toll road operator, delivered record first-half 2025 results with strong revenue growth, traffic levels and profits. The HNW Portfolios has a 5.7% weight to TCL.

Key Points:

  • Record Profits: Transurban reported profit growth of +9% to $1.4 billion for the full year, driven by a 6% increase in toll revenue and a -3% decrease in costs, possibly the only company in the season reporting falling costs! The toll revenue increase was driven by a 2% increase in average daily traffic (See Below) alongside inflation-linked toll escalations.
  • NSW Toll Review: Transurban is currently in talks with the NSW government about a toll reform on NSW toll roads which will likely result in the first half of this year. Transurban and its partners have invested $36 billion in NSW toll roads under strict concession contracts that the NSW government has recognised that they will need to honour. Any changes to these agreements are likely to be NPV value-neutral and come in the form of concession extensions.
  • Record Distribution: Transurban delivered a record half-year distribution of $0.32, reflecting a +7% increase from last year.
  • Robust Balance Sheet: Transurban continues to have a strong balance sheet with long-dated debt, with average debt to maturity being 6.6 years, and 98% of the debt book being interest rate hedged at an average cost of 4.4%.
  • Guidance: TCL has reaffirmed a full-year distribution of $0.65 per share next year, representing a 5% increase of the FY24 distribution.

Portfolio Strategy: Transurban is the world’s largest toll road concession operator. We are attracted to Transurban due to its high quality, long life, and monopolistic infrastructure assets. The company has demonstrated an ability to grow distributions ahead of inflation by both raising tolls and developing existing assets by adding extra lanes to accommodate the additional traffic. TCL’s revenues are generally linked to the greater of +4% or CPI and trades on an attractive dividend yield of 5%.

TCL finished up 1% to $12.32, a pleasing outcome in a day when the ASX200 was sold off -1.1%.