Traffic congestion slows profit growth at NTR to €19.1m

Traffic congestion at its two Dublin toll bridges means that National Toll Roads is unlikely to grow its profits in the current year, chairman Mr Richard Hooper has warned.

The growing congestion at the two Dublin bridges - but particularly the West Link bridge on the M50 - meant that profit growth was slower last year, with pre-tax profits up from €17.7 million to €19.1 million. And even this 1999 figure included a once-off €700,000 from the settlement of a dispute over municipal rates at the East Link.

NTR assistant managing director Mr Jim Barry had little comfort for motorists, now accustomed to peak-time delays at the M50 tollbooths. "West Link has a capacity of 6,000 vehicles an hour, but has to cope with over 7,000 at peak hours," he said, adding that congestion at the M50 is unlikely to be eased before completion of the second tollbridge in early 2003.

Motorists have the consolation, however, that there are no plans to increase West Link tolls until the new bridge is completed in three years' time, when the current 80p toll will rise to £1.

Last year, traffic volume across the West Link increased by just more than 11 per cent to 23.3 million vehicles with a similar rise in toll revenue to €29.7 million. As a result of the higher volumes, the licence fee paid to the State was up almost 26 per cent to €7.3 million.

At the downriver East Link, traffic volumes rose 2.6 per cent to 7.5 million vehicles, with NTR receiving 58 per cent of the net revenues of €5.2 million. The balance of the net revenues are shared between Dublin Corporation and Dublin Port and Docks Board.

Mr Barry said that NTR will be pitching for the three road projects that are likely to be tolled under public/private partnerships (PPPs). These are thought to be the Waterford bypass/new Suir bridge, the southern bypass of Limerick/new Shannon bridge and the Kilcock/ Kinnegad motorway. The first of these projects - likely to be the Waterford bypass - is expected to go to the pre-qualification stage later this year.

"There's major competition for these tenders when they come up and a lot of interest from overseas," said Mr Barry, who added that for major projects like these, NTR might become involved in a joint venture bid with a contractor.

As a result of the slowdown in the existing tollbridge business, NTR has expanded in the past year into waste disposal and wind energy projects, projects that Mr Barry said are "fundamental parts of our core business". "Last year, we reviewed our strategy and saw opportunities in non-road infrastructural projects. We were approached to invest in Celtic Waste and saw huge merit in their proposal," he said.

NTR paid €6.3 million for a 50 per cent stake in Celtic Waste, which has recently opened a landfill site at Kilcullen and is looking to invest in other waste disposal projects elsewhere in the country. Celtic Waste will make a positive profits contribution to NTR this year, Mr Barry said.

NTR also paid €3.9 million for a 51 per cent stake in Future Wind Holdings, which is developing wind energy projects in Donegal and Cavan and which expects to begin generation in the third quarter. Future Wind is already selling electricity bought in on a contract basis from a wind farm owner in Donegal.

With its toll roads business churning out large amounts of free cash - more than €18 million last year - NTR is unlikely to look for a stock market listing in the short term, despite institutions owning in excess of 50 per cent of the business. An internal market in NTR shares is operated by Davy Stockbrokers and the most recent transaction at €9.85 valued NTR at around €230 million.

"We don't need additional funding, we have very little debt and have solid cashflow to raise debt if we need to," said Mr Barry. He added that major projects like the proposed PPP roads projects would be carried out through special purpose vehicles and that debt funding would be non-recourse to NTR. "In the short term, there are no equity funding requirements, but we are looking to build scale, and at some stage a listing and equity funding might be appropriate," said Mr Barry.

NTR's strong cashflow and minimal funding requirements have always meant that a large chunk of after-tax profits are paid in dividends. Last year, NTR increased dividends to €11.8 million - this means that the Roche family, which owns 38 per cent of NTR, received a payout of €4.5 million (£3.5 million).