Infrastructure company Transurban Group [ASX:TCL] dropped 1.67% this morning to $11.93 per share.
Why did the share price drop after a rise in profit?
This morning, Transurban released their full-year results for FY17. The group generated revenues of $2.7 billion, 22.7% higher than FY16. Operating profits of $209 million was a huge lift from last year’s $22 million profit.
Thanks to the hike in earnings, dividends paid also improved from $689 million to $801 million. Transurban CEO Scott Charlton said the company is continuing to invest in the efficiency of its road network.
All projects under Transurban’s $9 billion development pipeline are on time and budget according to the company. Transurban also expects to team up with equity partners to bid for Sydney’s $16.8 billion WestConnex motorway.
What now for Transurban?
Transurban remains a reliable dividend payer. From 2012–17, Transurban improved their annual dividend from 30 cent to 51 cents per share. Over that same time, the stock has appreciated 112.7%.
However, the company isn’t without its problems. Their current liability and obligations payable within 12 months far exceed their current assets. The group also more than doubled its short-term debt in FY17. This will increase interest payments and could potentially decrease profitability in the near future.
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Junior Analyst, Money Morning