Business Context and Reporting Period
Company: Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR)
Filing Type: Form 6-K (Current Report)
Reporting Period: Second Quarter (2Q) and Six Months (6M) ended June 30, 2013
Business Overview: ASUR is the first privatized airport group in Mexico, operating nine airports in southeast Mexico (including Cancún) and holding a 50% joint venture stake in Aerostar Airport Holdings, LLC, which operates the Luis Muñoz Marín International Airport in San Juan, Puerto Rico (SJU). ASUR began accounting for its Aerostar stake using the equity method in Q1 2013 following the consummation of the SJU concession transaction.
Key Financial Metrics (2Q13 vs 2Q12)
| Metric | 2Q13 (Ps. Millions) | 2Q12 (Ps. Millions) | % Change |
|---|---|---|---|
| Total Revenues | 1,283.42 | 1,275.51 | 0.62% |
| EBITDA | 804.75 | 740.02 | 8.75% |
| Operating Profit | 701.39 | 640.42 | 9.52% |
| Net Income | 654.50 | 463.23 | 41.29% |
| Earnings Per Share (Ps.) | 2.1817 | 1.5441 | 41.29% |
| EBITDA Margin | 62.70% | 58.02% | +468 bps |
| Operating Margin | 54.65% | 50.21% | +444 bps |
Liquidity and Balance Sheet (as of June 30, 2013):
- Cash and Cash Equivalents: Ps. 1,941.85 million (down 14.28% from year-end 2012).
- Total Bank Debt: Ps. 2,929.9 million (including Ps. 8.6 million accrued interest).
- Shareholders' Equity: Ps. 16,442.17 million.
- Debt Covenants: Leverage ratio maintained below 3.50:1.00; Interest coverage ratio maintained below 3.00:1.00.
Material Changes vs. Prior Period
- Passenger Traffic: Total traffic increased 9.98% year-over-year in 2Q13. International traffic grew 12.94% (driven by a 13.73% increase at Cancún), while domestic traffic rose 6.41%.
- Revenue Composition: Aeronautical revenues rose 7.63% and non-aeronautical (commercial) revenues rose 9.10%. These gains were partially offset by a 49.07% decline in construction services revenues due to lower capital improvements.
- Commercial Revenue per Passenger: Declined 1.29% to Ps. 74.08, despite total commercial revenue growth of 8.37%.
- Cost Structure: Total operating costs declined 8.36%, primarily due to the drop in construction costs. However, costs of services rose 7.80% due to higher maintenance, security, and energy costs.
- Financing Results: Comprehensive financing results swung from a Ps. 33.12 million gain in 2Q12 to a Ps. 65.07 million loss in 2Q13. This was driven by a Ps. 75.64 million foreign exchange loss resulting from the 5.39% depreciation of the Mexican peso against the U.S. dollar and increased interest expenses from new debt.
- Tax Impact: Income taxes declined 95.90% year-over-year due to a reduction in the amortization rate applicable to the concession (retroactively applied) and benefits from a Mexican tax amnesty program.
Outlook, Risks, and Unusual Items
- Joint Venture (Aerostar/SJU): ASUR recognized a net gain of Ps. 26.80 million from its equity in Aerostar for 2Q13. However, from the start of operations (Feb 28, 2013) through June 30, the JV recorded a net loss of Ps. 95.25 million due to Ps. 113.8 million in one-off costs related to the bidding process and privatization setup.
- Debt and FX Risk: In Q1 2013, ASUR incurred US$ 215.0 million in U.S. dollar-denominated debt to fund its Aerostar contribution. The company holds a net liability position in foreign currency, making it sensitive to peso depreciation.
- Regulatory Environment: Regulated revenues (approx. 66% of total income) are subject to maximum rates set by the Mexican Ministry of Communications and Transportation, reviewed annually.
- Capital Expenditures: Investments totaled Ps. 102.29 million in 2Q13 and Ps. 193.27 million for the six-month period, focused on modernizing airports per master development plans.
- Forward-Looking Statements: Management notes that future expectations are subject to risks and actual developments may differ significantly.
Investor Verification Checklist
- FX Sensitivity: Verify the impact of continued peso depreciation on the US$ 215 million debt service and future earnings.
- Construction Revenue Volatility: Confirm the sustainability of EBITDA margins given the significant year-over-year decline in construction services revenue (a non-recurring driver of margin expansion).
- Aerostar Performance: Monitor the operational profitability of the SJU airport joint venture post-startup, as initial results were heavily impacted by one-off setup costs.
- Commercial Yield: Investigate the reasons for the decline in commercial revenue per passenger despite strong traffic growth.
- Covenant Compliance: Ensure continued compliance with leverage (3.50:1) and interest coverage (3.00:1) covenants to maintain dividend eligibility.