Long-term Transurban CEO departs as company posts record revenue and earnings

After almost 11 years at the helm of toll road operator Transurban (ASX: TCL) CEO Scott Charlton will leave on a high, announcing his departure on a high after reporting record toll revenue and earnings.

The CEO, who will step down at the end of 2023, will be replaced in the coming months - leaving big shoes to fill for whomever takes his place in running the company behind critical road infrastructure projects in Australia and North America.

His announcement comes as Melbourne-based Transurban released its first half results for FY23, detailing record proportional toll revenue of $1.66 billion and record proportional earnings of $1.24 billion, supported by all-time-high traffic volumes in November 2022.

Overall revenue grew by 56.3 per cent to $2.03 billion, and the company reported a 152.8 per cent uplift in profit after tax to $55 million in 1H23.

Charlton said the results highlighted the quality of Transurban’s asset portfolio which experienced record traffic for the half and included the completion of ‘significant project milestones’.

“It is pleasing to see traffic for the half setting a new record for the business. Our roads have benefitted from freight volumes which achieved an all-time high, ongoing traffic growth in our core markets, and the continued investment in business capability to improve the experience for our more than 10 million customers,” the outgoing CEO said.

“We have seen record traffic in Brisbane, as well as in Sydney even when excluding NorthConnex and M8/M5 East. This performance was underpinned by the urban nature of our roads, demonstrating that the diversity of everyday journeys across commuting, travel and leisure trips provides resilience throughout economic cycles.”

Charlton added that pursuing and delivering value accretive projects remained a key part of Transurban’s strategy.

“In Sydney, the M4-M8 link was opened in January ahead of schedule and on budget. This milestone represents the final element of the city shaping WestConnex Project to be delivered by the Sydney Transport Partners consortium,” he said.

“The consolidated WestConnex asset is expected to continue to grow over the near-term and play a critical role in connecting more than $10 billion of government road projects over the next six years.”

Encouraged by the half year results, Transurban’s full year distribution to shareholders is expected to be up by 39 per cent on FY22 to 57 cents per share, depending on traffic performance and macroeconomic conditions.

“With positive traffic growth across our key markets, embedded inflation-linked protection on the majority of revenue and the continued progress on key project milestones, we are well-placed to deliver on growth in future cash flow,” Charlton said.

On announcing Charlton’s departure, Transurban chair Craig Drummond described the CEO’s leadership as ‘visionary’ over the past 11 years.

“Under his leadership, the Company has grown to become an ASX 20 listed entity, increasing its market capitalisation by more than five times to over $43 billion and has delivered Total Security Holder Returns of 289 per cent,” Drummond said.

“Scott and his team have initiated, developed and/or acquired some of the most important road infrastructure projects in Australia and North America over the past 10 years, including WestConnex, NorthConnex, Queensland Motorways and I95 Express Lanes and during this time Transurban has grown from six to 22 assets with average concession length of approximately 28 years. These projects have supported economic growth and delivered meaningful travel benefits including safety for road users.

“On behalf of the Board, I would like to sincerely thank Scott for his exceptional contribution and unflagging energy for over a decade in delivering for Transurban, and its security holders.”

Charlton added that he was proud of Transurban’s achievements during his tenure.

“Traffic is now exceeding pre-COVID levels with iconic assets becoming operational, while a strong balance sheet continues to position the company for ongoing growth. I am confident in Transurban’s future.”

Shares in Transurban are steady at $14.03 per share at 12.01pm AEDT.