Business Context and Reporting Period
Company: Grupo Aeroportuario del Sureste, S.A. de C.V. (ASUR)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Third quarter and nine months ended September 30, 2003
Business Overview: ASUR is the first privatized airport group in Mexico, operating nine airports in the southeast region, including the major Cancun International Airport. Financial figures are presented in constant Mexican pesos (Ps.) as of September 30, 2003.
Key Financial Metrics
Third Quarter 2003 (3Q03)
- Total Revenues: Ps. 369.96 million (up 12.24% YoY).
- Operating Profit: Ps. 129.01 million (up 29.26% YoY).
- EBITDA: Ps. 217.06 million (up 16.73% YoY).
- Net Income: Ps. 73.09 million (up 39.86% YoY).
- Earnings Per Share (EPS): Ps. 0.2436 (up 39.86% YoY).
- Operating Margin: 34.87% (improved from 30.28% in 3Q02).
- EBITDA Margin: 58.67% (improved from 56.42% in 3Q02).
- Cash and Cash Equivalents: Ps. 702.79 million (as of Sept 30, 2003).
- Capital Expenditures (Capex): Ps. 68.9 million for the quarter.
Nine-Month Period 2003 (9M03)
- Total Revenues: Ps. 1,102.11 million (up 12.43% YoY).
- Operating Profit: Ps. 402.37 million (up 29.91% YoY).
- EBITDA: Ps. 666.50 million (up 17.31% YoY).
- Net Income: Ps. 235.94 million (up 40.09% YoY).
- Operating Margin: 36.51% (improved from 31.60% in 9M02).
Operational Metrics
- Total Passenger Traffic (3Q03): 3.14 million (up 10.45% YoY).
- International Traffic Growth (3Q03): 12.98% YoY.
- Commercial Revenue per Passenger (3Q03): Ps. 17.38 (up 24.24% YoY).
Material Changes vs. Prior Period
Revenue Growth Drivers: Total revenue growth was driven by a 10.16% increase in aeronautical services and a 20.82% increase in non-aeronautical services. Commercial revenues rose 24.24%, fueled by a 28.48% jump in duty-free sales, a 40.61% increase in food and beverage, and a 51.69% surge in advertising revenues.
Cost Management: Total operating costs increased only 4.85% YoY, significantly lower than revenue growth. This was achieved despite a 7.57% rise in administrative expenses (due to wage increases) and a 16.86% increase in technical assistance fees (linked to EBITDA). Maintenance costs rose 3.83% due to delayed work from the first half of the year.
Profitability Expansion: Operating margin expanded to 34.87% in 3Q03 from 30.28% in 3Q02. Net income growth (39.86%) outpaced revenue growth, aided by a reduction in the corporate tax rate from 35% to 32% and adjustments to asset tax provisions.
Balance Sheet Strength: Shareholders' equity represented 94.90% of total assets, while total liabilities were only 5.10%. Cash and marketable securities increased to Ps. 702.79 million.
Guidance, Outlook, and Risks
Management Commentary and Outlook
- Capex Plan: Management estimates an additional Ps. 152 million will be invested for the remainder of 2003 to modernize airports.
- Tariff Review: The company is currently undergoing a maximum tariff review with the Mexican Ministry of Communications and Transportation for the 2004-2008 period.
- Labor Relations: A mutually satisfactory wage revision agreement was reached with the Mexican National Union of Airport Workers in October 2003.
- Commercial Expansion: New concessions were awarded, including a 20-year gas station and convenience store contract to PERC Group at Cancun Airport.
Risks and Contingencies
- Airline Payment Disputes: Five major Mexican airlines (Aeromexico, Mexicana, Aerolitoral, Aeromar, Aerovias Caribe) suspended rate adjustment payments in June 2001. As of September 30, 2003, Ps. 13.4 million in incremental sums remain unpaid. Additionally, Ps. 97.1 million in passenger charges were overdue based on the original 60-day payment term due to an extended 115-day payment schedule requested by the airlines.
- Regulatory Risk: Revenues are subject to maximum rates regulated by the Mexican government, reviewed annually.
- Operational Variance: Operating profit at Merida airport declined 47.47% in 3Q03 due to increased maintenance costs.
Investor Verification Checklist
- Airline Receivables: Verify the status of the Ps. 97.1 million overdue from five major airlines and the resolution of the Ps. 13.4 million rate adjustment dispute.
- Tariff Approval: Monitor the outcome of the 2004-2008 maximum tariff review with the Ministry of Communications and Transportation.
- Merida Performance: Investigate the cause and duration of the 47.47% operating profit decline at Merida airport.
- Capex Execution: Track the deployment of the estimated Ps. 152 million remaining Capex for 2003.
- Commercial Mix: Assess the sustainability of the 24.24% growth in commercial revenue per passenger.