UPDATE: Transurban Profit Up As Australia Tollroads Offset US

-- Transurban 1H Ebitda up 7% to A$416.9M; meets expectations

-- Earnings boosted by Australian tollroad revenue

-- 495 Express Lanes in US off to a disappointing start

(Recasts to add U.S. asset performance throughout)

By Ross Kelly

SYDNEY--Transurban Group (TCL.AU) Tuesday booked a 7% rise in first-half earnings as a robust performance from its Australian tollroads offset a disappointing start for new express lanes surrounding the U.S. capital Washington D.C.

Steady population growth in Sydney and Melbourne and low unemployment levels are helping Australia's biggest tollroad company enjoy sustained traffic. The CityLink in Melbourne, which accounts for half of its revenue, saw toll collections rise 5.3% in the July-to-December period.

Transurban has been investing millions of dollars to carve out a footprint in the U.S. to reduce its reliance on Australian assets for revenue and earnings growth.

Investors were hoping its 495 Express Lanes project in Virginia state, which opened in November, would get off to a flying start after the company in mid-June wrote down the value of its nearby Pocahontas tollroad due to poor traffic volumes.

The 495 Express Lanes, also known as hot lanes, operate alongside existing free access highway lanes on the Capital Beltway, a notoriously congested ring road that surrounds Washington D.C.

The hot lanes give users the option of paying a toll in exchange for a faster travel option. Toll prices vary based on real-time traffic conditions, rising and falling to manage the number of paying customers to prevent congestion.

"Initial traffic is below expectations, however the required adjustments to local traffic patterns are expected to take time to occur," Transurban said in a statement.

A more complete picture of the hot lanes' performance will take at least six months, it said.

Transurban, which owns or has stakes in six Australian tollroads in addition to the two U.S. assets, said its earnings before interest, tax, depreciation and amortization for the six months to Dec. 31 increased to 416.9 million Australian dollars (US$435.1 million) from A$390 million a year earlier. That was broadly in line with A$412 million average of five analysts' forecasts compiled by Dow Jones Newswires.

Transurban's first-half net profit of A$80.9 million was lower than A$93.2 million a year before. Analysts say Ebitda is a more relevant measure of financial performance for tollroad operators, as large acquisition or development costs attract high rates of depreciation in early years, while toll revenues ramp up over concessions that often run for several decades.

The company declared a first-half distribution of 15.5 Australian cents per security, up 1 cent on a year earlier. It said an upgrade to the M2 tollroad in Sydney is 84% complete in due for completion in mid-2013.

Write to Ross Kelly at [e-mail]

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