Business Context and Reporting Period
Company: Central North Airport Group (Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2015
Accounting Standards: International Financial Reporting Standards (IFRS)
Primary Currency: Mexican Pesos (Ps.)
The Company operates 13 airports in Mexico's central and northern regions, including the major metropolitan hub of Monterrey, tourist destinations (Acapulco, Mazatlán, Zihuatanejo), and regional/border cities. Operations are conducted under 50-year concessions granted by the Mexican government. The Company also engages in diversification activities, including hotel operations (Terminal 2 NH Hotel and Hilton Garden Inn) and industrial park development.
Key Financial Metrics (2015)
| Metric | 2015 (Ps. in thousands) | 2015 (USD in thousands) |
|---|---|---|
| Total Revenues | 4,492,659 | 259,095 |
| Operating Income | 2,036,555 | 117,450 |
| Net Income | 1,236,637 | 71,318 |
| Operating Margin | 45.3% | N/A |
| Net Margin | 27.5% | N/A |
| Operating Cash Flow | 2,069,331 | 119,340 |
| Capital Expenditures | 548,346 | 31,624 |
| Total Assets | 12,510,336 | 721,481 |
| Total Liabilities | 6,559,809 | 378,309 |
| Cash and Equivalents | 2,605,196 | 150,244 |
Note: USD amounts translated at Ps. 17.3398 per USD 1.00 (Dec 31, 2015 rate).
Material Changes vs. Prior Period (2014)
- Revenue Growth: Total revenues increased 20.5% to Ps. 4.49 billion. Aeronautical revenues rose 19.8% driven by a 15.2% increase in passenger traffic (16.9 million passengers). Non-aeronautical revenues surged 24.9%, fueled by growth in parking, OMA Carga logistics, and hotel services.
- Profitability: Operating income increased 38.6% to Ps. 2.04 billion. Net income rose 20.4% to Ps. 1.24 billion. The operating margin expanded from 39.4% in 2014 to 45.3% in 2015.
- Cost Structure: Operating costs increased 8.6%, significantly lower than revenue growth. Concession taxes (5% of gross revenue) rose 22.2%. Technical assistance fees increased 18.6% due to revenue growth and peso depreciation.
- Cash Flow: Operating cash flow increased 28.5% to Ps. 2.07 billion. However, financing activities resulted in a net cash outflow of Ps. 1.78 billion, primarily due to debt repayments and dividend distributions.
- Exchange Rate Impact: The Mexican peso depreciated 16.6% against the U.S. dollar in 2015. This resulted in a net exchange loss of Ps. 33.8 million but positively impacted peso-denominated revenues from international passengers.
Guidance, Outlook, and Risks
Outlook and Management Commentary
- Master Development Programs: New 5-year master development programs (2016-2020) were approved in December 2015, committing Ps. 4.64 billion in investments.
- Strategic Initiatives: Management continues to focus on maximizing aeronautical revenues through route optimization and increasing non-aeronautical revenues via commercial diversification (hotels, logistics, retail).
- Dividends: The Company declared a dividend of Ps. 3.00 per share for 2015.
Risks and Contingencies
- Regulatory Risk: Aeronautical revenues are subject to price regulation (maximum rates) set by the Ministry of Communications and Transportation. Exceeding these rates can result in fines or concession revocation.
- Concession Termination: Concessions can be revoked for non-compliance, failure to pay taxes, or exceeding maximum rates. Revocation of one concession can trigger the revocation of all others.
- Security and Crime: High crime rates and drug trafficking in certain regions (e.g., Guerrero, Tamaulipas) pose risks to passenger traffic and operations. U.S. travel warnings affect specific states.
- Competition: Potential competition from new government-granted concessions (e.g., Bocoyna airport) and existing airports (e.g., Aeropuerto del Norte near Monterrey).
- Legal Proceedings: Pending administrative proceedings regarding property tax claims by various municipalities. Recent reforms to the Mexican Federal Labor Law may increase labor costs.
Key Facts for Investor Verification
- Revenue Concentration: Approximately 81.7% of aeronautical and non-aeronautical revenues are generated by seven airports and the Terminal 2 NH Hotel. Monterrey alone contributed 46.5% of this sum.
- Customer Concentration: Four airlines (Aeroméxico, Interjet, VivaAerobus, Volaris) accounted for approximately 74.2% of aeronautical revenues in 2015.
- Shareholder Structure: SETA (via CONOISA) holds special rights (Series BB shares) allowing it to appoint half of the executive officers and three board members, provided it maintains at least 7.65% ownership in Series BB shares.
- Debt Obligations: As of Dec 31, 2015, the Company held approximately USD 14.2 million in U.S. dollar-denominated liabilities (5.2% of total debt), exposing it to exchange rate volatility.
- Capital Expenditures: Significant investments are required to comply with Master Development Programs. Failure to meet these investment obligations can lead to reduced maximum rates and penalties.