Smooth sailing for SeaLink operator in record year
The Adelaide-based Kelsian Group, which operates SeaLink, has achieved record profits amid a $25 million cost increase for its Kangaroo Island investment.
Kelsian reported a 42.2 per cent revenue increase to $2 billion in the 2024 financial year, with a 129.2 per cent rise in earnings before interest and tax (EBIT) for a record $121.7 million.
The company, which operates in Australia, the United States, United Kingdom and Singapore, recorded $58 million of profits after tax, a 176.2 per cent rise from FY23.
The company reported an estimated capital expenditure (capex) of $185 million for FY25 in a nearly $40 million increase from FY23. Kelsian attributed the increase to new costs for its Kangaroo Island Ferry Infrastructure project.
SeaLink has been constructing two new vessels for Kangaroo Island since December 2022, which it says will allow for a 20 per cent increase in annual passenger capacity. The ferries are expected to become operational in FY26.
The company has now reported a $25 million increase in costs to the works being done to support its 25-year exclusive transport contract.
“Kelsian has been in discussions with the South Australian Government regarding the scope and scale of these works for several months,” Kelsian said.
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The company said “significant changes to scope for new landing facilities, essential for the new higher capacity vessels”, combined with delays, increased construction costs and the finalisation of infrastructure requirements had led to the increase.
“Kelsian will seek to recover this additional investment over the 25-year contract term.”
The initial announcement of the expected rise in capex on Monday saw shares drop to a low of $3.68, from $5.01 at the close of the market on the previous trading day.
The share price has since risen to $4.16 at the time of writing, a 4.91 per cent increase today.
Kelsian managing director and CEO Clint Feuerherdt said the “board and management recognise the solid foundation for growth and are investing accordingly”.
“The growth momentum across all areas of our business, in particular in the Australian bus and AAAHI (All Aboard America! Holdings Inc) businesses, supports this investment to underpin multiple years of growth in the medium and longer term.”
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The company said domestic tourism demand softened in the second half of FY24, attributing the decrease to cost of living pressures, though demand for Kangaroo Island, Rottnest Island and Magnetic Island had been strong.
Marine and tourism brought in $346.8 million of revenue in FY24, a 5.3 per cent increase from FY23.
Kelsian said “fare increases and dynamic pricing” played a part in achieving the increase.
“The business also has the ability to pass on persistent or structural cost base increases via fare increases in most parts of its Marine & Tourism division,” it said.
Kelsian attributed an estimated 65 per cent of its external revenue in FY24 to government sales.
During the financial year, Kelsian commenced two seven-plus year metropolitan bus contracts in NSW, making Transit Systems Sydney’s largest urban public bus operator.
The integration of AAAHI, acquisition of Red Cat Adventures in Airlie Beach, and securing several contracts, including rail replacement projects in Perth and Sydney, all contributed to the company’s positive results.
“Kelsian delivered strong growth and illustrated cost base resilience in another challenging year,” the company said.
“The solid underlying financial result was driven by the highly defensive nature of our contracted transport portfolio, the addition of new contracts in Sydney, the full-year contribution of AAHI and further expansion and diversification of the essential transport portfolio.”
Kelsian reported $927,373,000 of net assets as at June 30.
