Business context and reporting period
Central North Airport Group (Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.; Nasdaq: OMAB) filed its Form 20-F annual report for the fiscal year ended December 31, 2023. The filing reports full-year results, not a standalone fourth quarter. Financial statements are prepared under IFRS and presented primarily in Mexican pesos.
The company operates concessions for 13 airports in central and northern Mexico, together with hotel, cargo-logistics and industrial-park businesses. Concessions generally run through 2048, subject to possible extensions. Aeronautical services are subject to maximum-rate regulation.
2023 financial and operating metrics
| Metric | 2023 | Change versus 2022 |
|---|---|---|
| Total revenue | Ps.14,457.1 million | +21.1% |
| Aeronautical revenue | Ps.8,931.7 million | +26.6% |
| Non-aeronautical revenue | Ps.2,627.4 million | +17.8% |
| Construction-service revenue | Ps.2,898.0 million | +9.4% |
| Operating income | Ps.8,066.9 million | +33.0% |
| Operating margin | 55.8% | 47.1% in 2022 |
| Net income | Ps.5,020.4 million | +28.2% |
| Net margin | 34.7% | 32.8% in 2022 |
| Cash flow from operations | Ps.6,334.7 million | +27.1% |
| Capital expenditures | Ps.3,216.8 million | +11.4% |
| Cash and cash equivalents | Ps.2,576.3 million | Down from Ps.3,336.4 million |
| Total debt | Ps.10,676.7 million | Up from Ps.8,984.3 million |
| Terminal passengers | 26.8 million | +15.6% |
Amounts in the table are consolidated and, unless stated otherwise, are Mexican pesos. Construction revenue and the corresponding construction costs generally have no direct cash impact on operating results.
- Aeronautical services represented 61.8% of total revenue and 77.3% of the combined aeronautical and non-aeronautical revenue.
- Non-aeronautical revenue per terminal passenger increased to Ps.97.9 from Ps.96.0. Commercial activities generated Ps.1,371.5 million, diversification activities Ps.857.5 million and complementary activities Ps.398.4 million.
- Operating costs and expenses increased 8.9% to Ps.6,390.2 million. Cost of services rose 14.7%, while depreciation and amortization increased 16.4% and technical-assistance fees rose 33.9% to Ps.237.9 million.
- Net interest expense increased 27.4% to Ps.971.5 million, primarily because of additional debt and higher variable interest rates. The effective tax rate was 28.9%, compared with 26.0% in 2022.
- Cash used in investing activities was Ps.2,791.7 million. Cash used in financing activities was Ps.4,302.4 million, including Ps.3,738.1 million of dividends, Ps.1,500.0 million of debt amortization and Ps.3,200.0 million of new debt issuance.
- At year-end, 31.2% of long-term debt carried variable interest linked to 28-day TIIE. The filing reports no derivative instruments and no covenant defaults.
Material changes versus the prior comparable period
- Passenger growth drove the increase in regulated revenue. Domestic terminal passengers rose 14.9% and international terminal passengers rose 21.2%. Total workload units increased 14.6%, while aeronautical revenue per workload unit increased 10.4% to Ps.317.1.
- Monterrey remained the dominant airport, accounting for 49.6% of terminal passengers and 44.0% of the combined aeronautical and non-aeronautical revenue generated by the airports and OMA Logística. Monterrey operating income increased 12.4% to Ps.1,503.9 million.
- Operating leverage improved at the consolidated level, although higher solidarity fees affected several airport segments. Culiacán, Durango, San Luis Potosí, Tampico, Zacatecas and Zihuatanejo reported lower operating income or limited growth despite higher revenue.
- Capital expenditures rose to Ps.3,216.8 million, while major-maintenance cash expenditures increased to Ps.421.5 million. Total 2023 expenditures under the Master Development Programs and other capital expenditures were Ps.3,643.9 million.
- Debt increased following the March 2023 issuance of Ps.3,200.0 million of sustainability-linked notes. The company used proceeds partly to repay Ps.1,200.0 million of short-term bank debt and Ps.1,500.0 million of maturing notes.
- The Mexican Federal Civil Aviation Agency amended the tariff-base regulation in October 2023. Management stated that the changes were not expected to have a material adverse effect on results, but future regulatory changes could affect maximum tariffs.
Guidance, outlook, commentary, risks and unusual items
- The company does not provide a clear consolidated revenue, earnings or passenger-traffic forecast for 2024 in the filing. It expects to fund current operating needs and planned investments primarily through operating cash flow, with additional debt available if needed.
- Expected Master Development Program investments for 2024–2027 total Ps.7,610.9 million, including Ps.4,087.8 million in 2024. Certain investments originally scheduled for 2024 and 2025 were deferred to 2026 and 2027.
- The concession tax increased from 5% to 9% effective January 1, 2024. Excess payments related to regulated revenues in 2024 and 2025 are expected to be incorporated into the reference value used for the 2026–2030 tariff review.
- Hurricane Otis temporarily closed Acapulco Airport from October 25 through November 12, 2023. The company recorded Ps.92.4 million of recovery-related investment pending insurance recovery or recognition under the Master Development Programs. Acapulco passenger traffic fell sharply in late 2023 and management expects gradual recovery as tourism infrastructure reopens.
- Airport revenue remains exposed to passenger volumes, airline concentration, economic conditions in Mexico and the United States, fuel prices, pandemics, severe weather, crime, geopolitical events and competition from government-operated or newly concessioned airports.
- VivaAerobus, Volaris and Grupo Aeroméxico represented 38.7%, 23.5% and 19.9%, respectively, of aeronautical revenue from airline customers in 2023. The proposed dissolution of the Delta-Aeroméxico antitrust-immunity arrangement by October 2024 could affect certain routes and passenger traffic.
- Management identified regulatory rate-setting risk as material. Aeronautical revenue was approximately 97.5% of the amount the company was entitled to earn under the maximum rates in 2023; exceeding a maximum rate could result in penalties or subsequent rate reductions.
- The company has legal contingencies involving property ownership, property taxes and administrative matters. Management has not recorded provisions for the principal claims because unfavorable outcomes or cash outflows are not considered probable; the filing text does not provide a clear aggregate maximum exposure.
- Internal control over financial reporting was assessed as effective, and the independent auditor issued unqualified opinions on the financial statements and internal controls. The auditor identified improvements to airport concessions and major-maintenance expenditures as a critical audit matter.
Important facts an investor should verify
- Confirm the 2024–2027 capital-investment schedule, execution against the Master Development Programs and the effect of deferred projects on capacity and cash flow.
- Assess the impact of the 9% concession tax and the amended tariff regulation on 2024–2025 cash margins and the 2026–2030 maximum-rate review.
- Monitor Acapulco traffic recovery, insurance reimbursements and the final accounting treatment of the Ps.92.4 million of Otis-related expenditures.
- Reconcile reported debt of Ps.10,676.7 million with maturity schedules, variable-rate exposure and the company’s stated Ps.1,400.0 million of available short-term credit lines.
- Evaluate airline concentration, particularly exposure to VivaAerobus, Volaris and Aeroméxico, and any route changes resulting from airline fleet, engine or regulatory developments.
- Review the pending Ciudad Juárez, Monterrey, Durango, Reynosa and municipal property-tax matters, including any potential impact on concessions, liquidity or dividends.
- Consider the Ps.4,250.0 million dividend approved in April 2024 against planned capital expenditures, debt maturities and post-dividend cash balances.