Saturday, April 18, 2009

Macquarie: "We basically view [Indiana and San Diego] as worthless."

Easing traffic is bad news for toll road operator

April 18, 2009

Vanda Carson
Sydney Morning Herald (Australia)
Copyright 2009

MACQUARIE Infrastructure Group suffered another fall in traffic on its European and US roads in the past three months as the global economy continued to slow.
The worst performers were the Indiana Toll Road in the United States, followed by Britain's M6, the South Bay Expressway in San Diego and the Dulles Greenway in Virginia. The Indiana road suffered both the largest decline in traffic of any of the toll roads owned by the group and one of its worst quarters on record.

The average number of cars and trucks using it each day in the three months to March fell by 12 per cent compared with the same period a year ago, to 80,277. The group blamed the slowing American economy and harsh winter conditions in January for the falling traffic numbers in Indiana.

The second worst performer was the M6 toll road, on which average daily traffic usage fell 11 per cent compared with the same three months last year, to 33,990.

The Austock infrastructure analyst Andrew Chambers said that while offshore traffic volumes continued to fall, the company was able to ensure average revenues were flat or positive by "ratcheting up" tolls across the board.
While Indiana and San Diego had performed poorly, this had been expected.

Mr Chambers said he was most disappointed with the performance of the toll road in the Canadian city of Toronto, which is MIG's largest investment and represents more than half the group's value.
"While traffic volumes were in line with our expectations, we were surprised that revenue didn't grow due to the rise in the toll," he said.

The road produced $US119.7 million ($166 million) in revenue, flat on last year.

Lower revenue than expected was due to a fall in the number of trucks and commercial traffic in the past three months and a rise in the amount of off-peak traffic.

In Indiana the increasing rate of the deterioration of revenue was a concern, but Mr Chambers was hopeful the slide had been halted.

"We may have seen the worst of the rate of decline," he said, referring to monthly revenue figures that showed that January income had been "terrible" but had improved by March.
He said there was no longer much value left in the Indiana and San Diego roads. MIG has invested more than $200 million in Indiana alone.
"We basically view [Indiana and San Diego] as worthless," the analyst said.

In San Diego, daily toll-road traffic was down 9 per cent to 23,997 vehicles in the three months to March, but revenue was up by 8 per cent, owing to a rise in the toll introduced at the end of January.

In Virginia a toll rise from the start of the year saw revenue on the Dulles Greenway rise 11.5 per cent in the three months to March, compared with a year ago, but traffic was down 8 per cent to an average of 47,490 cars and trucks a day.

Mr Chambers said the Dulles road and Sydney's M7 had "performed better than we thought". He said the M6 in Britain "didn't do too bad" considering the extremely low expectations for the toll road amid the worsening British economic downturn.

Shares in the company closed down 9c, or 6 per cent, at $1.35.

© 2009 Sydney Morning Herald:

Higher tolls cushion Macquarie Infrastructure

April 18, 2009

Australian Associated Press
Copyright 2009

MACQUARIE Infrastructure Group says traffic on many of its toll roads has fallen in the March quarter as a result of the global economic slowdown.

Higher tolls, however, have lifted revenue for the quarter on some roads, and most show an increase in revenue for the year to date.

"Revenue increases across a number of roads within the portfolio reflect the positive impact of toll increases," MIG said.

"Traffic continued to demonstrate weakness as the global slowdown in economic activity negatively impacted goods and services traffic and employment rates." Traffic for the quarter fell on MIG's roads in Canada, the US, Britain and Europe (no statistics were released for the Autoroutes Paris-Rhine-Rhone in France due to listing requirements in France).

Traffic on Sydney's Westlink M7, in which MIG has a 25 per cent stake, was up 4.9 per cent for the March quarter and up 5.7 per cent for the year to date.

Average daily revenue for the quarter on Westlink M7 increased 9.7 per cent to $503,201 and was up 10.4 per cent for the year to date.

In Canada, where it has 30 per cent equity in 407 International Inc, owner of the concession for the 407 ETR toll road in Toronto, MIG said vehicle kilometres travelled fell 4.6 per cent for the quarter, and quarterly revenue was down 0.3 per cent to $C119.7 million ($137 million).

In the US, MIG has stakes in Virginia's Dulles Greenway, Chicago's Skyway, the Indiana Toll Road and the South Bay Expressway in San Diego.

On the Dulles Greenway, average daily traffic fell 7.7 per cent for the quarter, but average daily revenue was up 11.5 per cent at $US167,453 ($232,400).

Chicago Skyway average daily traffic for the quarter was down 2 per cent, and average daily revenue for the quarter fell 2.8 per cent to $US147,871.

Within the quarter, March was the first month of growth in traffic since August 2007, with the daily average up 1.6 per cent.

On the Indiana Toll Road, average daily revenue for the March quarter was down 2.1 per cent to $US332,884.

Average daily traffic for the March quarter declined for both the ticket and barrier system as a result of toll increases in April 2008, the economic slowdown and harsh winter conditions in January.

For the South Bay Expressway, average daily revenue rose 8.1 per cent to $US59,042 in the March quarter.

Average daily traffic was down 9.2 per cent as a result of toll increases, the weak regional housing market and a decline in Mexican border crossings.

In Britain, where MIG has the concession for the M6 Toll in Birmingham, average daily revenue fell 5.3 per cent in the March quarter to pound stg. 141,443 ($291,000), because of the weak British economy.

Average daily traffic was 10.7 per cent lower as a result of toll increases, adverse weather conditions in February, and Easter occurring in late March last year.

On the Warnow Tunnel in Germany, average daily revenue for the quarter rose 1.2 per cent to E16,076 ($29,000), and average daily traffic dropped 3.1 per cent.

© 2009 AAP:

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