Transurban Group (ASX:TCL) reported first-half FY2026 results that management said reflect deliberate work over the past two years to strengthen the business for its next phase of growth, while adapting to higher interest rates and cost-of-living pressures.
In a briefing led by CEO Michelle Jablko and CFO Henry Byrne, the company highlighted revenue growth of 6%, traffic growth in all markets and an increased distribution. Management emphasized a focus on generating stronger returns from recent capital investment, improving efficiency, and continuing to invest in customer experience across both physical road networks and digital tools.
Traffic growth across all markets; major projects opened
In Australia, Brisbane delivered “strong growth across both weekdays and weekends,” while Sydney produced underlying growth despite heavy rain in the first quarter, which management said had roughly a 1% impact overall. In Melbourne, traffic grew 3%, supported by airport passenger volumes and port movements. The West Gate Tunnel, which opened in December, recorded more than 1 million trips since opening; management said 20% of tunnel trips to date have been heavy vehicles.
Transurban described West Gate Tunnel, the 495 Northern Extension, and the Sydney M7/M12 integration as three major projects expected to open in FY2026. The M7/M12 integration project was described as nearing completion and on track to start opening to traffic “from next month.” Management said the projects collectively add 144 kilometers of new lane capacity.
NSW toll reform: permanent cap proposal and enforcement changes
Jablko said Transurban is “firmly focused” on final outcomes of New South Wales toll reform, describing the process as collaborative and constructive. She said the company is building on solutions proposed by the NSW Government in December that are intended to provide benefits for motorists while protecting the AUD 36 billion Transurban and partners have invested in Sydney’s road network.
- Management said a key reform would make the AUD 60-a-week toll cap permanent from 1 July.
- Transurban indicated it is willing to remove administration fees for toll notices in NSW by mid-2026 as part of an overhaul of the enforcement process, aimed at simplifying payments and improving compliance.
Management said the process is expected to be finalized by the middle of the year, while also stressing that the value of existing contracts is being respected. In Q&A, Jablko said the company is considering both value (NPV) and the timing of cash flows as part of its work on reform, and declined to comment on potential claims while the process remains confidential.
Financial performance: toll revenue and EBITDA growth; distribution guidance maintained
Byrne presented proportional results, stating proportional toll revenue increased 6.4% to almost AUD 2 billion, supported by underlying traffic and new capacity coming online. Proportional operating costs increased to AUD 474 million, up 4.6% versus the first half of FY2025, which Byrne attributed to a low comparison base last year due to timing of maintenance costs. He also emphasized that when compared with the first half of FY2024, costs were only 1.5% higher.
Proportional operating EBITDA grew 6.4%, with a 30-basis-point margin improvement. Free cash increased 2.4% for the half, which Byrne said reflected financing costs brought forward from the second half into the first half as part of refinancing activities. He said this timing impact is expected to normalize in the second half and supports the company’s distribution guidance.
Transurban reported first-half distributions per security growth of 6.3%, with management stating distributions were 102% covered by free cash. The company maintained guidance for FY2026 distribution growth of 6.2% and said it expects a full-year distribution of AUD 0.69, within its cash coverage range of 95% to 105%.
Byrne also noted the company continues to present proportional operating EBITDA excluding a favorable AUD 47 million third-party settlement related to finalizing certain construction projects in Queensland. In Q&A, Byrne said details of the settlement are confidential and described it as a positive receipt, but said it was not considered appropriate to include in operating EBITDA. He also said it was not part of free cash in the period, describing it as “money today for some amounts we’ll spend in the future.”
Balance sheet, funding, and cost outlook
On funding, Byrne said Transurban’s weighted average cost of Australian dollar debt rose 9 basis points to 4.6%, while the weighted average maturity profile extended marginally to 6.9 years. As of December 2025, the debt book was 88.6% hedged, down from 92.5% at June 2025, reflecting a modest increase in floating rate exposure that the company intends to hedge progressively.
Byrne said corporate liquidity stood at AUD 3 billion after committed project spend and distributions, with a further AUD 2.5 billion of balance sheet capacity. He said the company completed its FY2026 funding task and progressed funding work for FY2027, FY2028, and FY2030 through a liability management exercise in December.
Management reiterated an expectation that FY2026 cost growth will remain below inflation excluding new assets, while noting maintenance costs are expected to escalate over coming years as several assets enter major maintenance cycles, including WestConnex. In response to a question on new assets, Byrne said the company previously indicated new assets could add an incremental 3% to 4% to the cost base, taking headline cost growth to “mid-single digit,” with West Gate Tunnel the main driver.
In discussion of West Gate Tunnel, management reiterated guidance that free cash impact is expected to be neutral this year, while acknowledging that capitalized interest is moving into the profit and loss statement and that the profile will not be a straight-line switch. When asked about potential cost claims at the end of the project, Jablko said claims may arise at the end of a project, but “claims don’t necessarily mean liability,” and the company would assess any claims in the ordinary course.
North America: step-change in top line and disciplined growth focus
Management repeatedly highlighted North America’s contribution, with Jablko describing an “outsized positive impact” and saying the region contributed around the same amount of free cash in the half as it did for all of FY2023. She pointed to investments including the Fredericksburg Extension, Oakwood Boulevard Ramp, and the 495 Northern Extension, and said customer demand reflects the value of time savings and reliability, supporting traffic growth outside peak periods.
In Q&A, Jablko and Byrne said the company has taken an active approach to pricing in Virginia, describing it as aligned with the value customers receive and noting that strong time savings (including an example of up to an hour on a daily commute using the Fredericksburg Extension) have supported demand. When asked about longer-run price growth assumptions for U.S. managed lanes, Jablko said “normal growth rates” are the way to think about it long term, while also indicating there may be “a bit more” opportunity to optimize pricing, based on elasticity and performance.
Transurban also discussed evaluating growth options in new strategic markets, naming Atlanta and Nashville, and said it is engaging in market sounding processes with the New Zealand government. Management said it is assessing opportunities with discipline and will provide more information later in the year on certain processes underway with Ferrovial.
In closing remarks, Jablko said the company is entering its thirtieth year “in a strong position,” citing simplified operations, reset relationships, delivery of major projects, value creation from existing assets, and an enhanced customer experience.
About Transurban Group (ASX:TCL)
Transurban Group engages in the development, operation, management, and maintenance of toll road networks. It operates 22 toll roads in Melbourne, Sydney, and Brisbane in Australia; the Greater Washington, United States; and Montreal, Canada. The company is headquartered in Docklands, Australia.
