Business Context and Reporting Period
Company: Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Fourth Quarter (4Q) and Full Year (FY) ended December 31, 2013.
Business Overview: ASUR operates nine airports in southeast Mexico (including Cancún) and holds a 50% joint venture interest in Aerostar Airport Holdings, LLC, which operates the Luis Muñoz Marín International Airport in San Juan, Puerto Rico (SJU).
Key Financial Metrics
Fourth Quarter 2013 (vs. 4Q12)
- Total Revenues: Ps. 1,478.32 million (Increase of 10.62%)
- EBITDA: Ps. 761.79 million (Increase of 13.50%); Margin rose to 51.53%
- Operating Profit: Ps. 655.59 million (Increase of 15.17%); Margin rose to 44.35%
- Net Income: Ps. 644.89 million (Decrease of 3.03%)
- Earnings Per Share (EPS): Ps. 2.1496 (Decrease of 3.03%)
- Passenger Traffic: 5.06 million total (Increase of 8.99% YoY)
- Commercial Revenue per Passenger: Ps. 75.38 (Increase of 2.67%)
Full Year 2013 (vs. FY12)
- Total Revenues: Ps. 5,446.09 million (Increase of 6.37%)
- EBITDA: Ps. 3,289.38 million (Increase of 12.21%); Margin rose to 60.40%
- Operating Profit: Ps. 2,871.11 million (Increase of 13.49%); Margin rose to 52.72%
- Net Income: Ps. 2,296.87 million (Increase of 10.68%)
- Earnings Per Share (EPS): Ps. 7.6562 (Increase of 10.68%)
- Passenger Traffic: 21.08 million total (Increase of 9.53% YoY)
Liquidity and Debt
- Cash and Cash Equivalents (Dec 31, 2013): Ps. 1,259.56 million (Decrease of 44.40% from Dec 31, 2012)
- Total Bank Debt (Dec 31, 2013): Ps. 2,840.86 million
- Shareholders' Equity (Dec 31, 2013): Ps. 16,284.22 million
- Capital Expenditures (FY13): Ps. 615.85 million
Material Changes vs. Prior Period
- Revenue Growth Drivers: 4Q13 revenue growth was driven by an 8.99% increase in passenger traffic, leading to 8.36% growth in aeronautical revenues and 11.68% growth in non-aeronautical revenues. Construction services revenue increased 14.98% due to higher capital improvements.
- Net Income Decline in 4Q13: Despite revenue and operating profit growth, Net Income declined 3.03% in 4Q13. This was primarily due to a Ps. 48.54 million loss from ASUR's equity interest in the Aerostar joint venture (SJU Airport).
- Cost Structure: Total operating costs increased 7.25% in 4Q13, driven by higher construction costs (14.98%) and technical assistance fees (13.71%). Administrative expenses declined 1.50%.
- Tax Impact: Income taxes increased 95.01% in 4Q13 due to the repeal of the IETU tax in Mexico on January 1, 2014, which required the recognition of deferred income taxes and adjustments to asset residual values.
- Joint Venture Performance: The SJU airport (Aerostar) reported a net loss of Ps. 143.45 million for the period from Feb 28, 2013, to Dec 31, 2013, largely due to one-off costs associated with the privatization process and initial operations.
Guidance, Outlook, and Risks
Regulatory and Tariff Updates
On January 3, 2014, ASUR received approval from the Mexican Ministry of Communications and Transportation for Master Development Programs for its Mexican concessions covering 2014–2028. Maximum tariffs per workload unit were set for 2014–2018, including a 0.70% annual efficiency factor reduction.
Capital Commitments
ASUR has committed investments for the 2014–2018 period, with significant allocations to Cancún Airport (Ps. 5,565.6 million total for the period). As of Dec 31, 2013, Ps. 698.2 million had already been invested toward these commitments.
Risks and Contingencies
- Debt Covenants: ASUR maintains a US$215.00 million credit facility with BBVA Bancomer and Merrill Lynch. Covenants require a consolidated leverage ratio of 3.50:1.00 or less and an interest coverage ratio of 3.00:1.00 or less. Failure to comply could restrict dividends and accelerate debt repayment. ASUR was in compliance as of the report date.
- Foreign Exchange: ASUR holds US dollar-denominated debt. Fluctuations in the peso/dollar exchange rate impact financing costs and translation of joint venture results.
- Joint Venture Volatility: The Aerostar JV is in a start-up phase with significant one-time costs, impacting consolidated net income.
Investor Verification Checklist
- Verify Debt Covenants: Confirm continued compliance with the 3.50:1 leverage and 3.00:1 interest coverage ratios required by the US$215M facility.
- Monitor SJU Performance: Track the trajectory of the Aerostar joint venture to determine when it transitions from start-up losses to profitability.
- Assess Tax Implications: Review the long-term impact of the IETU repeal and the new 30% corporate tax rate on deferred tax liabilities and future cash flows.
- Capital Expenditure Execution: Verify progress on the Ps. 5.5 billion+ committed investment plan for 2014–2018, particularly at Cancún.
- Currency Exposure: Evaluate the sensitivity of net income to further depreciation of the Mexican peso against the US dollar, given the significant USD debt load.