MIG turns US tollroads to gold

PROFITS were expected to keep rolling in for international tollroad operator Macquarie Infrastructure Group, as it capitalised on exposure to the growing US market.
The group today announced a half year net profit of $1.44 billion, up 76 per cent on the previous first half, while also predicting double digit earnings growth over the next twelve months.

This would be largely driven by the US tollroad sector, said chief executive Stephen Allen.

"We have been very clear that we see much of the growth in the tollroad sector coming from the United States,'' Mr Allen said.

"Private investment represents a practical response for US legislators to the significant issues generated by the combination of growing congestion and under-investment in road infrastructure, in an environment where there is increasing competition for the available public funding sources.''

MIG will look to co-invest in more US assets with fellow Macquarie Bank spin-off, Macquarie Infrastructure Partners.

One such project MIG has bid for is the SH 121, a new 22 kilometre tollroad to be built near Dallas, Texas.

MIG expected to learn whether its bid had been successful by the end of the month.

US assets were very solid performers for the company in the first half.

Earnings before interest, tax, depreciation and amortisation (EBITDA) on MIG's Indiana toll road increased 57.7 per cent during the period, while the Dulles Greenway tollroad in northern Virginia increased 45.7 per cent.

The Skyway in Chicago was less impressive, posting EBITDA growth of 2.3 per cent, which the company attributed to roadworks. Non-US assets generally performed less impressively.

EBITDA for the 407 ETR in Toronto was 9.7 per cent higher, while the M6 in England rose by 27.5 per cent.

MIG also spun off Australian assets including the Eastern Distributor, M4 and M5 during the period into the Sydney Roads Group, which is now the subject of a Transurban takeover bid.

Mr Allen said the move represented an important evolution of the business.

"The purpose of the demerger was to enhance value for MIG security holders and we believe this has been realised: MIG achieved a 27 per cent internal rate of return for the divested Sydney toll roads.''

The company was happy, too, with its on-market buy back, with $303 million of $1 billion acquired since October, representing 11.1 per cent by volume of the securities traded since the buy back began.

The company maintained previous distribution guidance of 20 cents per stapled security for 2006/07 and gave preliminary guidance of 20 cents for 2007/08.

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