Kelsian’s record year points to a leaner transport future
Kelsian Group delivered record FY26 earnings and lifted its fully franked dividend, while preparing to become a more focused bus, coach and ferry operator. The next test is execution: completing the conditional tourism sale, mobilising new contracts and delivering against FY27 EBITDA guidance.
- Revenue increased 9% to A$2.403 billion
- Underlying EBITDA rose 11% to A$315.8 million
- Full-year dividend lifted to 18.0 cents per share
- Tourism divestment revised to exclude SeaLink Rottnest
- FY27 underlying EBITDA guidance set at A$320 million to A$335 million
Record earnings meet a sharper portfolio strategy
Kelsian Group Limited (ASX:KLS) has paired its strongest annual earnings result with a significant reshaping of the business. Revenue rose 9% to A$2.403 billion in FY26, underlying EBITDA climbed 11% to A$315.8 million and statutory net profit after tax increased 17% to A$63.5 million.
Operating cash flow reached A$220.1 million, up from A$205.2 million, while leverage moved into Kelsian’s target range of 2.0 to 2.5 times underlying EBITDA. The board declared a fully franked final dividend of 10.0 cents per share, taking the full-year distribution to 18.0 cents, compared with 17.5 cents in FY25.
The result was not confined to one division. Australian Bus revenue increased to A$1.202 billion, International Bus revenue reached A$809.7 million and Marine and Tourism revenue rose to A$391.4 million. More than 90% of group revenue was described as contracted or non-discretionary, although the company also reported that higher fuel prices, ageing diesel vehicles and operational complexity continued to create pressure in parts of the portfolio.
Tourism sale leaves a smaller marine business
Kelsian’s strategic pivot is centred on the proposed sale of most of its Tourism Portfolio to Journey Beyond. The transaction was originally announced at an enterprise value of A$161.0 million, but SeaLink Rottnest was subsequently removed from the deal. The remaining transaction has total consideration of A$145.8 million and is expected to complete in the first half of FY27, subject to regulatory approvals, contract consents and other conditions.
SeaLink Rottnest will remain with Kelsian as a standalone commuter ferry operation, alongside retained marine assets including the Transperth commuter ferry service. Management and the board say the post-transaction group should have lower earnings volatility, reduced capital intensity and greater exposure to government and corporate-backed contracts. That outcome remains contingent on the transaction completing and on the retained operations delivering the promised focus.
Contracts build the FY27 earnings bridge
Kelsian enters FY27 with guidance for underlying EBITDA of A$320 million to A$335 million, assuming no significant deterioration in operating conditions and no material change to the current business structure. The guidance includes the Tourism Portfolio for the full year, meaning the eventual timing of the sale could complicate comparisons between reported performance and the underlying post-divestment business.
The company has several operational milestones ahead. Its Liverpool City Region bus franchise contracts are scheduled to begin in January 2027, while the Auckland Western Package ferry contracts are due to start in July 2027 with six vessels and an initial seven-year term. Kelsian has also committed to procure five new vessels for the Auckland network at an estimated cost of about A$31 million.
Other growth platforms include the first competitively tendered Queensland bus contract, covering Ipswich and Logan, further industrial workforce transport expansion in the United States and new UK regional capacity following the acquisition of South Wales Transport. The group also extended its Sydney Region 6 bus services contract for two years, although the annual report notes that depot electrification delays forced some Sydney operations to continue using older diesel vehicles at higher maintenance cost.
Safety review remains an unresolved remuneration issue
The annual report records a 24% improvement in the Lost Time Injury Frequency Rate and a 23% improvement in the Total Recordable Injury Frequency Rate. It also discloses that a passenger died in an incident involving Australian bus operations during the reporting period. An independent external review remains underway, and the board has therefore treated the safety component of executive short-term incentives as conditional pending its conclusion.
The Group CEO’s assessed FY26 STI outcome was 136.85% of target, or 91.24% of maximum, with 50% of the growth and transformation component also conditional on completion of the main tourism transaction. The safety review and the divestment therefore sit beyond the headline earnings numbers as two specific events capable of changing the final remuneration outcome.
Bottom Line?
Kelsian has supplied the earnings momentum and balance-sheet capacity; FY27 will show whether portfolio simplification and new contract mobilisation convert that promise into a cleaner, more durable result.
Questions in the middle?
- When will the remaining tourism transaction complete, and what leverage reduction will it deliver?
- Can Kelsian meet its A$320 million to A$335 million FY27 EBITDA guidance through the portfolio transition?
- What will the independent safety review conclude, and how will it affect executive incentive payments?
