Business context and reporting period
Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR) filed its Form 20-F for the fiscal year ended December 31, 2018—not a standalone 2018 fourth-quarter report. The company operates nine airports in southeast Mexico, six in Colombia and Luis Muñoz Marín International Airport in Puerto Rico. Financial statements are prepared under IFRS and presented in Mexican pesos. Unless stated otherwise, amounts below are Ps. millions.
Comparability is limited: ASUR began consolidating Aerostar in June 2017 and Airplan in October 2017, while it owned 100% of Airplan by May 2018. Thus, 2018 includes a full year of both businesses, versus partial-year results in 2017.
Financial and operating performance
| Metric | 2018 | 2017 | Change / context |
|---|---|---|---|
| Total revenue | 15,410.2 | 12,589.8 | +22.4%; mainly reflects full-year consolidation of Puerto Rico and Colombia. |
| Aeronautical revenue | 8,942.9 | 6,484.2 | +37.9%. |
| Non-aeronautical revenue | 5,531.6 | 4,261.4 | +29.8%; commercial revenue increased 31.5%. |
| Construction services revenue | 935.8 | 1,844.2 | -49.3%; construction revenue and related costs are generally recognized together and are not directly tied to passenger traffic. |
| Operating profit | 7,779.0 | 1,476.8 | Reported operating margin was 50.5%, versus 11.7%; 2017 included a Ps.4,719.1 impairment following Hurricane Maria. |
| Net income | 5,119.8 | 6,750.2 | -24.2%; 2017 included a Ps.7,029.2 business-combination gain. |
| Interest expense / net financing result | 1,230.7 / (862.3) | 618.8 / (231.8) | Higher interest expense largely reflects debt associated with consolidated operations. |
| Operating cash flow | 7,696.3 | 6,031.1 | +27.6%. |
| Investing cash flow | (1,312.0) | (4,961.2) | 2017 included Airplan acquisition spending. |
| Financing cash flow | (6,476.7) | 81.5 | 2018 included loan repayments, interest and dividends. |
Passenger traffic across the group was 52.3 million, versus 37.5 million in 2017, with the increase substantially affected by the expanded consolidation perimeter. Mexican airports served 33.2 million passengers, up about 7.1%; Colombia served 10.6 million and Puerto Rico 8.4 million. The filing reports Puerto Rico traffic down 0.4% from 2017.
Non-aeronautical revenue per terminal passenger declined 6.5% to Ps.105.9, while Mexican aeronautical revenue per workload unit rose 4.8% to Ps.175.8. Commercial revenue growth was led by duty-free shops, parking and car rental, though the filing also reports a sharp decline in retail-store revenue in its commercial activity breakdown.
Balance sheet, liquidity and capital allocation
- Cash and cash equivalents were Ps.4,584.5 at year-end, down from Ps.4,677.5. Current assets were Ps.6,000.9 and current liabilities Ps.2,408.2.
- Total assets were Ps.56,181.8; total liabilities Ps.19,500.4; and total equity Ps.36,681.4.
- Consolidated debt was approximately Ps.14,500.4, comprising Ps.7,218.1 of bank loans and Ps.7,282.3 of long-term debt. The contractual-obligations schedule shows substantial debt payments concentrated in the 3–5-year period. Management reported covenant compliance; certain facilities impose leverage and interest-coverage tests and can restrict dividends if breached.
- 2018 dividends totaled Ps.2,034.0, or Ps.6.78 per share. Management said it intends to continue annual dividends in the absence of attractive investment opportunities and does not currently intend to repurchase shares.
- Capital expenditures reported for 2018 were Ps.1,099.6. Mexico’s approved 2019–2023 master development plans require Ps.12,966.4 of investment in constant 2018 pesos; Cancún accounts for Ps.7,007.0 of that commitment.
Material changes, outlook, risks and contingencies
- Earnings comparability and unusual items: 2017 included the Ps.7,029.2 gain on business combinations and Ps.4,719.1 Hurricane Maria-related impairment. In 2018, ASUR recorded Ps.134.6 of insurance recovery related to Maria damage. These items materially affect year-over-year profit comparisons.
- Management outlook: The filing provides no specific consolidated revenue, profit or cash-flow guidance. Management expects commercial revenue growth to continue to exceed aeronautical revenue growth. Mexican maximum rates are set through 2023 and reflect a 0.70% annual efficiency adjustment.
- Concentration and demand: Cancún generated 54.9% of consolidated revenue, including construction services, and 81.4% of Mexican revenue. Traffic depends on tourism, U.S. and Mexican economic conditions, airline capacity, fuel prices, safety perceptions and competing destinations. The three largest named Mexican airline customers represented 9.9%, 9.3% and 10.4% of revenue, respectively.
- Weather and insurance: Hurricanes can disrupt airport operations and reduce tourism. ASUR insures physical facilities but reports that it does not carry business-interruption insurance. Puerto Rico passenger traffic remained below pre-Maria levels.
- Regulation and concessions: Mexican regulated revenues are subject to airport-level maximum rates; exceeding a cap may trigger fines, rate reductions and, after repeated violations, concession termination. Mexican concessions also entail binding investment and operating requirements. Colombian concessions carry a 19% fee on regulated and non-regulated revenue and can be subject to penalties or termination.
- Debt, currency and interest exposure: Debt and revenues span currencies and jurisdictions; exchange-rate movements can affect reported results and debt service. The filing reports no interest-rate or foreign-currency swap contracts at year-end. Debt covenants, rates and maturities warrant monitoring.
- Legal and environmental matters: An appeal concerning statutory employee profit-sharing distributions remained pending; ASUR estimated a possible additional payment of Ps.116.0 if unsuccessful. Labor claims totaled about Ps.20.0, with no provision recorded. A Mérida cargo-facility dispute and Puerto Rico airport fuel-contamination remediation are also described; the Ports Authority retains responsibility for contamination predating Aerostar’s 2013 operation.
- Governance and related parties: ITA’s Series BB shares carry special board, executive appointment and veto rights while its holding meets the stated threshold. The technical-assistance fee paid to ITA was Ps.386.2 in 2018.
- Audit and controls: PwC issued an unqualified opinion on the IFRS financial statements and concluded internal control over financial reporting was effective as of December 31, 2018.
Important facts for investors to verify
- Separate organic growth at existing airports from the effect of consolidating Aerostar and Airplan for a full year; verify traffic and revenue trends by geography.
- Reconcile reported earnings to underlying performance, including the 2017 business-combination gain and impairment, and the 2018 insurance recovery.
- Review debt currencies, interest rates, repayment schedule, covenant headroom and funding needs alongside the Ps.12,966.4 Mexican investment commitment through 2023.
- Track Cancún concentration, airline customer exposure, Mexican maximum-rate compliance and the commercial revenue mix, including the reported retail-store movement.
- Follow Puerto Rico’s traffic and recovery, insurance proceeds and environmental remediation, and the status of the Mexican tax appeal and other legal matters.