Why Did Transurban’s Profit Plunge 59% Despite Toll Revenue Growth?

Financial Performance Highlights

Transurban Group has released its audited financial results for the year ended 30 June 2025, showcasing a mixed performance amid ongoing operational and strategic developments. The Group’s proportional toll revenue rose by 5.6% to $3.732 billion, reflecting increased traffic volumes across all markets, including Sydney, Melbourne, Brisbane, and North America.

Proportional operating EBITDA, a key measure of operational profitability excluding non-recurring items, grew by 7.4% to $2.848 billion. However, statutory revenue declined by 8.5% to $3.77 billion, and profit after tax attributable to security holders dropped sharply by 59.1% to $133 million. This profit contraction was primarily driven by non-recurring expenses, including a $143 million litigation liability related to the ConnectEast case and $29 million in restructuring costs following a significant workforce reduction.

Operational Efficiency and Organizational Changes

In May 2025, Transurban announced organizational changes aimed at streamlining operations and improving efficiency, resulting in approximately 300 job reductions and expected annualized cost savings exceeding $50 million. These savings are being reinvested into customer-facing technologies and operational improvements, including enhancements to the Linkt app and customer rewards program.

The Group maintained flat operating costs at $947 million despite inflationary pressures, underscoring disciplined cost management. Free cash flow increased by 7.6% to $2.008 billion, supporting a full-year distribution of 65 cents per stapled security, up 4.8% from the prior year and nearly fully covered by free cash.

Major Projects and Growth Outlook

Transurban’s growth pipeline remains robust with major projects nearing completion. The West Gate Tunnel Project in Melbourne is approximately 95% complete, with key infrastructure elements like tunnels, ramps, and shared user paths in advanced stages. Similarly, the 495 Express Lanes Northern Extension in Northern Virginia is 82% complete and expected to open later in 2025, promising significant travel time savings.

Construction on the M7-M12 Integration Project in Sydney is progressing well, with an expected opening in mid-2026 to support the new Western Sydney Airport and regional growth. The Group is also advancing community consultations on the Logan West Upgrade Project in Queensland, targeting completion before the 2032 Brisbane Olympic and Paralympic Games.

Sustainability, Road Safety, and Stakeholder Engagement

Transurban continues to embed sustainability and safety into its operations. The Group achieved a 24% year-on-year reduction in scope 1 and 2 greenhouse gas emissions and sourced 91% renewable electricity. Road safety remains a priority, with the Monash University Accident Research Centre confirming Transurban roads are on average twice as safe as comparable roads.

Customer experience enhancements include the rollout of a personalized travel-time savings feature in the Linkt app and expansion of the Linkt Rewards program, which grew membership by 55% to nearly 1.6 million. The Group also supports vulnerable customers through hardship programs and educates the community on cybersecurity and fraud prevention.

Governance and Risk Management

The Board and management maintain strong oversight of strategic risks, including climate-related risks and litigation matters. The Group’s gearing ratio stands at a conservative 37.8%, supported by investment-grade credit ratings. Transurban is actively engaged with the NSW Government on toll reform, aiming for a balanced outcome that protects investor value while improving customer outcomes.

Looking ahead, Transurban expects FY26 distributions to grow by 6.2% to 69 cents per stapled security, underpinned by the opening of key projects and ongoing operational efficiencies. The Group remains focused on delivering long-term value for security holders amid a complex macroeconomic environment.