Transurban takes hit from US toll road

The Australian toll road operator has unveiled a more than 50% yearly decline in net profits due to a major impairment on its investment in the Pocahontas Parkway in the US state of Virginia. The firm’s Australian assets, meanwhile, have performed strongly.

Australian toll road operator Transurban Group (Transurban) has reported net profits of A$58.6 million for the year to 30 June 2012 – a 50.4 percent decrease on the prior year.

Transurban said the result was “directly impacted” by an equity accounting charge of A$138.1 million associated with an impairment to the Pocahontas Parkway (State Route 895) toll road in the US state of Virginia.

A 99-year concession of Pocahontas Parkway was acquired by Transurban in 2006 for $611 million and is held within its US investment vehicle, DRIVe. However, the Parkway was built in the expectation of new housing developments that did not materialise due to the global financial crisis. Traffic levels post-crisis have been lower than pre-crisis though Transurban noted that toll revenues to 30 June 2012 increased 5.7 percent to almost $15 million.

Various media sources have reported that Transurban is mulling a disposal of its holding in Pocahontas.

Excluding Pocahontas, the picture looks rosier for Transurban’s portfolio of mainly Australian assets. Underlying proportional EBITDA stood at A$784.0 million, up 9.1 percent on the prior year, while proportional toll revenue climbed 5.9 percent to A$943.9 million. The firm’s largest asset – the CityLink toll road in Melbourne – led the way with an 8.5 percent jump in revenue.

“In a challenging economic environment Transurban has again grown revenue, managed costs and delivered excellent growth,” said Transurban’s chief executive Scott Charlton in a statement. Charlton took over as CEO from Chris Lynch last month.