Series of toll road investor results: Ferrovial, Atlantia, Transurban, Metro-Pacific

Ferrovial

Construction News reports Spanish infrastructure investor Ferrovial reporting a 312 million euro in net profit in the first half of 2011, contrasting with losses of 164 million euro in the same period of 2010. Notable was how the EBITDA on the Toronto 407 ETR rose by 8% in part due to higher tolls and lower operating costs. The Airports division contributed 62% of EBITDA, Services 14%, Toll Roads 14% and Construction 10%.

Ferrovial owns its toll roads through its subsidiary CINTRA.  Its highway assets (whole and partial) are:

- 407 ETR Toronto, Canada;

- Santiago-Talca Highway, Chile;

- Talca-Chillan Highway, Chile;

- Forest Route Highway, Chile;

- Collipulli-Temuco Highway, Chile;

- Temuco-Rio Bueno Highway, Chile;

- M-203 Madrid (Alcala-O'Donnell), Spain;

- AP36 Madrid-Levante, Spain;

- AP7 Costa del Sol Highway (Malaga-Guadiaro), Spain;

- Autema C16-E9 Highway (San Cugat del Vallés to Manresa), Spain;

- R4 Madrid-Ocana, Spain;

- Chicago Skyway, Illinois, USA;

- Indiana Toll Road, USA;

- LBJ Express Toll Lanes, Dallas, Texas, USA;

- North Tarrant Express toll lanes and road, Dallas-Forth Worth, Texas, USA;

- SH130 Austin-San Antonio, Texas, USA;

- E65 Central Greece Motorway;

- Ionian Roads (Antirio to Ioannina, Athens to Skarfia), Greece;

- M3 (Dublin-north of Kells), Ireland;

- M4 (Kilcock-Kinnegad), Ireland;

- A22 (Portimao - Vila Real de Santo Antonio), Portugal;

- Euroscut Azores Highway, Sao Miguel Island, Portugal; and

- A27-A28 North Coast Highway, Portugal.

Atlantia

Reuters reports that the Italian toll road investor company had a 41% increase in profit for the first six months of 2011 compared to 2010. This reflected sale of a stake in one road and increased toll revenue, despite declining traffic volumes (with a 0.5% decline in volumes on Italian toll roads).

"Excluding the sale of an investment and charges related to impairments, profit rose 12 percent over the period."

Atlantia's highway assets are:

- Autostrade per l'Italia SpA (2854.6 km of network of Italian motorways);

- Società Italiana per Azioni per il Traforo del Monte Bianco (5.8 km), which manages the Italian section of the Mont Blanc Tunnel;

- Raccordo Autostradale Valle d'Aosta SpA (32.3 km), which manages the road linking Aosta and the Mont Blanc Tunnel (Italy);

- Autostrada Torino-Savona SpA (130.9 km), which manages the motorway linking Turin and the Ligurian coast (Italy);

- Società Autostrada Tirrenica SpA, which holds the concession for the entire length of the Livorno-Civitavecchia motorway (240 km) and currently manages the Livorno-Rosignano section (36.6 km) (Italy);

- Tangenziale di Napoli SpA (20.2 km), which manages Naples' orbital motorway (Italy);

- Società Autostrade Meridionali SpA (51.6 km), which manages the Naples-Pompei-Salerno motorway (Italy);

- A4 Krakow-Katowice motorway (Poland);

- Pune Solapur Expressways (50%) in India, which holds the concession (expiring 2030) for 110 km motorway in the state of Maharashtra;

- 135 km toll motorway serving the cities of Rio Bueno and Puerto Monttt in Chile;

- 442 km toll motorway in the state of San Paulo in Brazil;

- 23.5 km southern section of the orbital toll motorway serving the city of Santiago del Chile;

- 79 km toll motorway serving the cities of Algarrobo, Casablanca and Cartagena in Chile;

- 43 km of road network in the city of Santiago in Chile;

- 21.5 km north-eastern bypass in the city of Santiago del Chile; and

- Urban motorway linking the city of Santiago with Arturo Merino Benitez International Airport.

Transurban

The Herald Sun reports that Australian toll road company Transurban has reported a 90% increase in full year profit.  An 8.8 per cent rise in traffic on Melbourne CityLink, which netted A$434.6 million (US$424 million) in revenue, was a key contributor to total toll revenue of A$891 million (US$870 million) - up 10 per cent.  It carries a reported A$5.8 billion of debt behind its assets. 

The Australian reports an interview with Transurban chief Chris Lynch who said "Our roads are very robust ... There's not a lot of discretionary travel on our roads, it's largely people getting to work or the airport."

It was also noted that the Melbourne CityLink, it gained from an additional lane on the western approach to the toll road network allowing for greater use of its capacity.

The Australian also noted that:

"The acid test of an infrastructure company is the ability to pay generous distributions funded by real cash rather than debt. The "wedge of free cash" -- $390 million in all -- enabled Transurban to declare a 27c per security full-year payout, with management promising "at least" a 29c distribution this year."

Adelaide Now reports that Melbourne Citylink grew faster than the average 10% "with an increase of 12.8 per cent to contribute $434.6 million. Transurban said the completion of the upgrade on its southern link, adding lanes on CityLink between both tunnels and Toorak Rd, had been important in boosting traffic."

Transurban said traffic growth on the Lane Cove Tunnel, purchased nearly a year ago, had initially risen 6 per cent but had declined to 2.8 per cent this calender year due works on the M2.

Transurban's highway assets are:

- Melbourne Citylink (Australia);

- Hills M2 motorway, Sydney. Australia;

- Lane Cove Tunnel, Sydney, Australia;

- Eastern Distributor, Sydney, Australia;

- Westlink M7, Sydney, Australia;

- M5, Sydney, Australia;

- Pocahontas 895, Virginia, USA; and

- Capital Beltway HOT lanes, Virginia, USA

Metro Pacific Tollways Corporation (Philippines)

The Filipino toll operator was reported by the Business Inquirer as saying:

earnings slipped 4 percent in the first half of the year to P725 million (US$17 million) due to lower-than-expected traffic growth and higher tax payments during the period. “Though traffic demand could be lower given sharp increases in fuel prices and the expiration of MNTC’s (Manila North Tollways Corp.) income tax holiday, MPTC still expects a strong financial performance this year with the increase in toll rates and modest traffic volume growth,” MPTC president Ramoncito Fernandez said in a statement.

The company's latest road is the Subic-Clark-Tarlac Expressway. Its portfolio also includes the North Luzon Expressway.

Greek toll road boycott threatens future concessions

As has been reported in TollRoadsNews, the economic crisis in Greece has had one unfortunate impact on toll road concessionaires in the country - they have become the target of protests against privately owned toll roads. The protests appear inspired by the relatively strong communist political movement in Greece (it is notable that the third largest political party elected to the Greek Parliament is the Communist Party with just over 8% of the vote in 2009). 

Greece’s economy is particularly hard hit by recession, primarily because Greece has had decades of budget deficits that resulted in the country facing a sovereign debt crisis. The Greek government response has been to significantly cut public spending, which is having a major short term effect on the pay and employment of many people. Some are taking it out on the country’s toll roads by simply refusing to pay.  The situation has been exacerbated by some toll increases.

Three major concessionaires agreed in 2007 to engage in a major construction programme to expand the country’s motorway network, but in recent months more and more motorists are simply refusing to pay, making the road concessionaires engage in debt collection and court action.

The percentage of drivers refusing to pay tolls has jumped from 3 to 14 percent of total users in less than a year, an official with one of the operators told Reuters. 

Protests started in late 2010, as there were initially pickets at toll booths, followed by protestors taking over toll booths and raising barriers to let motorists pass free according to the Greek Reporter.

This was followed by the Mayor of Stylida, Apostolos Gletsos who used a bulldozer to destroy a barrier to open an access road parallel to the Athens-Lamia national highway at the Pelasgia toll booths. He wanted his residents to be able to use the road free of charge, after a discount card that allowed 1000 residents to use the road for only 0.50 euro expired in January.   The issue being that a relatively short trip within his district requires use of the toll road, a point that a concessionaire should be able to have flexibility over (but should be a commercial decision). 

Some protestors don't simply want to pay less, but want renationalisation of the roads, partly motivated by the steep recent increases in fuel taxes (which motorists reasonably think might go on paying for roads, when it is general revenue used to reduce the budget deficit).  The call to renationalise the roads is based on the idea that the roads were already "paid for" (because the capital is not expended and never needs replenishing), which for most of these roads is simply not true.   It parallels a campaign to boycott paying public transport fares after fares were increased by up to 180% as subsidies were drastically slashed as part of the austerity measures.

One report indicated up to a third of drivers had regularly refused to pay tolls.

The Greek government response has been to play the populist card, calling on concessionaires to half toll prices.  The concessionaires have said in response "extend our concession periods then".  Discussions are continuing, but the government has also keenly been enforcing violators.  The concern being that widespread evasion could spread to taxes - then government starts to worry (although tax evasion has widely been seen as a national sport in Greece).

Sadly, with far left activists, attention is being misdirected to toll road concessionaires which are delivering value to motorists, when the real problem should be with excessive other road taxes, and such taxes not being used on roads.  These activists are ideologically opposed to private enterprise owning and operating roads, so are opposing tolls because of ideology, not economics.  Note they are also boycotting utility charges and hospital fees.   

I sympathise with Greeks who are undergoing massive economic upheaval because governments have been overspending for decades, spending beyond tax revenue and deluding a generation or two that a borrowed lifestyle can be sustained.   However, private investors and concessionaires have helped Greece build significantly improved motorway infrastructure, and should not be chased away by radical leftwing activists who, if they had their way, might have had Greece go the way of its northern neighbours who have tried Marxism and moved on!

Greece needs more new highways in coming years, the last thing it needs is for future concessionaires (and existing financiers and owners) to see the country's toll road sector as being risky for revenue because of people who don't believe in property rights.