Industrial sector company Atlas Arteria (ASX: ALX) today declared a steep decline in business with statutory net profit coming down to $59.9 million for the year ended 31 December 2018, compared to $519.6 million profit reported in 2017.
On the top line front, there has been approximately 69% decline in the Group’s revenue and other income from operations to $146.0 million, down from $473.0 million in 2017. The movement in results for the year reflects the consolidation of Dulles Greenway’s results for the full year and the company’s share of net profits from its investment in APRR, partially offset by performance fees paid in accordance with and due to the renegotiation of the management agreements. The average cost of debt for the portfolio during 2018 was 3.4% and total finance costs incurred during the year was $108.9 million, significantly up from $53.8 million in 2017.
However, the operator of toll road assets, Atlas, has witnessed a marginal growth of 1.5% in the average portfolio traffic underpinned by the European roads’ traffic growth which was utilised to partially offset the weaker traffic performance at the Dulles Greenway. It included the traffic growth of 2.2% at APRR, 1.2% at ADELAC and 10.5% at Warnow. The drawdown in Dulles Greenway’s traffic was driven by adverse weather conditions and partial federal government shutdowns.
Atlas’ APRR profit was $246.1 million, up on the 2017’s $192.0 million, primarily reflecting the company’s increased share of profits resulting from the acquisition of the additional 4.86% indirect interest on 24 October 2017. It included the loss of $3.9 million relating to relating to Dulles Greenway prior to consolidation. ALX completed the acquisition of the remaining 50% estimated economic interest in Toll Road Investors Partnership II (TRIP II), the concessionaire for Dulles Greenway.
During the period, the Group has added 5.5km of the motorway network in APRR along with formalizing a capital investment plan with the French State. The program reportedly consists of 12 projects including new or improved motorway exchanges, environmental protection developments, as well as customer service improvements.
The Board declared the distribution of 24.0 cents per share for 2018, up 20% from 2017. Moreover, looking forward, the Group expects to deliver a distribution of 30.0 cents per share in 2019, up 25% from 2018. It includes the 1H19 distribution of 15.0 cps expected to be declared in late March 2019 with payment by mid-April 2019.
Also, there has been the good news for frequent users of APRR toll road as the existing toll discounts, up to 30% off headline tolls, were reportedly expanded for frequent users who travel 10 return trips per month on the same designated journey on the network, effective 1 Feb 2019 after discussions with the French State. Atlas further informed that previously legislated corporate tax rate reductions for 2019-2022 are currently under review by the French State.
ALX traded flat on 28 February 2019 with the daily volume change of 2,065,283 shares. The stock last traded at $7.120 with the market capitalisation of $4.86 billion.
Over the past 12 months, the stock has returned a yield of 30.88% to investors with modest 2.74% returns in just three months.
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