Company Interview / Kelsian puts tourism in the rear-view mirror

Key points:

Record FY26 result and margin expansion attributed to resilient contracted transport business Planned $161m sale of tourism portfolio to Journey Beyond, with Sealink Rottnest retained and approvals pendingStrong US contract growth and UK re‑regulation seen as major multi‑year expansion opportunities

CEO of Kelsian (ASX:KLS) Graeme Legh states that full-year FY26 marks a record result for the group, supported by the resilience of its contracted bus, ferry and motorcoach operations across Australia, the US, UK and Singapore (ASX:KLS). Legh highlights improved margins despite higher fuel and inflation, viewing this as evidence that Kelsian’s contract structures largely offset cost pressures. He argues the balance sheet is now stronger, with leverage at 2.46x underlying EBITDA, back within the company’s stated target range.

Legh outlines the sale of most of Kelsian’s tourism portfolio to Journey Beyond for $161 million, with completion targeted in the first half of FY27, subject to ACCC and FIRB approvals. He notes the Sealink Rottnest Island service will be retained after that part of the deal is terminated due to competition concerns, which he sees as strengthening the case for regulatory approval on the remainder. Guidance of $320–$335 million still assumes full-year contribution from tourism, as timing uncertainty and the cyclical nature of those earnings prevent post-sale guidance.

Legh points to strong organic growth in the US motorcoach and shuttle division and a major opportunity in the UK as regional authorities re-regulate bus services, potentially opening up around 10,000 buses to tender over 3–5 years. He views the business as evolving into a predominantly infrastructure-like, pure-play contracted transport operator, with tourism divestment intended to simplify the portfolio and reduce earnings volatility while preserving capacity for growth and disciplined leverage.