Pacific Airport Group (GAP) - 2Q24 Financial Summary
Business Context and Reporting Period
This Form 6-K filing covers the unaudited consolidated results for the second quarter ended June 30, 2024 (2Q24), and the six months ended June 30, 2024 (6M24). Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (GAP) operates 12 airports in Mexico's Pacific region and two airports in Jamaica (Montego Bay and Kingston). The results are prepared in accordance with International Financial Reporting Standards (IFRS).
Key Financial Metrics (2Q24)
- Total Revenues: Ps. 7,259.0 million (Decrease of 13.2% vs. 2Q23).
- EBITDA: Ps. 4,198.1 million (Decrease of 8.3% vs. 2Q23).
- EBITDA Margin (excl. IFRIC-12): 66.8% (Down from 70.4% in 2Q23).
- Net Income: Ps. 2,252.7 million (Decrease of 9.5% vs. 2Q23).
- Comprehensive Income: Ps. 2,893.9 million (Increase of 41.0% vs. 2Q23, driven by currency translation gains).
- Cash and Cash Equivalents: Ps. 12,584.9 million as of June 30, 2024.
- Passenger Traffic: 15.25 million total passengers (Decrease of 3.9% vs. 2Q23).
Material Changes vs. Prior Period
Revenue Drivers: Total revenue declined primarily due to a 47.6% drop in revenues from improvements to concession assets (IFRIC-12), which are non-cash accounting entries related to infrastructure investments. Aeronautical services revenue fell 7.7% due to a 3.9% decline in passenger traffic, attributed to preventive reviews of Pratt & Whitney A320neo/A321neo engines. Conversely, non-aeronautical revenue grew 10.6%, driven by new commercial spaces and contract renegotiations.
Cost Structure: Total operating costs decreased 14.9%, largely due to the reduction in IFRIC-12 costs. However, excluding IFRIC-12, operating costs increased 9.1%. Cost of services rose 17.3%, driven by higher employee costs (hiring and labor law adjustments), safety/security expenses, and other operating expenses.
Financial Results: While net income decreased, comprehensive income surged 41.0% due to a Ps. 1,040.9 million gain from foreign currency translation effects resulting from the appreciation of the Mexican peso against the U.S. dollar. Interest expenses increased 32.0% due to higher debt levels and interest rates.
Guidance, Outlook, and Recent Events
Revised 2024 Guidance: Management updated its full-year 2024 outlook as follows:
- Passenger Traffic: (5%) to (3%) decline.
- Aeronautical Revenues: (4%) to (2%) decline.
- Non-Aeronautical Revenues: 20% to 22% growth.
- Total Revenue: 2% to 4% growth.
- EBITDA: (1%) to 1% growth.
- EBITDA Margin: 67% (+/- 1%).
- CAPEX: Ps. 9.0 billion.
Recent Events: On June 11, 2024, GAP acquired 51.5% of Guadalajara World Trade Center (GWTC) for Ps. 875.5 million to expand cargo handling services. The acquisition was funded by a credit line drawdown with BBVA México. GWTC will be consolidated starting July 1, 2024.
Risks: The filing highlights risks related to engine maintenance issues affecting traffic, foreign exchange rate fluctuations, and the impact of labor law changes on operating costs.
Investor Verification Checklist
- Verify the impact of the Pratt & Whitney engine reviews on passenger traffic recovery timelines.
- Confirm the sustainability of the 10.6% non-aeronautical revenue growth amidst declining passenger volumes.
- Assess the cash flow implications of the Ps. 875.5 million GWTC acquisition and increased interest expenses.
- Monitor the volatility of comprehensive income due to foreign currency translation effects versus core operating performance.
- Review the specific performance of the "Others" airport category, which saw a 113.1% drop in operating income in 2Q24.