Business Context and Reporting Period
Company: Central North Airport Group (Grupo Aeroportuario del Centro Norte, S.A.B. de C.V., or OMA)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Third Quarter 2009 (Ended September 30, 2009)
Release Date: October 21, 2009
Business Overview: OMA operates 13 international airports in nine states of central and northern Mexico, including major hubs in Monterrey, Acapulco, Mazatlán, and Zihuatanejo. The company focuses on aeronautical services and non-aeronautical commercial operations.
Key Financial Metrics
| Metric | 3Q 2009 | 3Q 2008 | Change |
|---|---|---|---|
| Total Revenues | Ps. 487.7 million | Ps. 495.7 million (implied) | -1.6% |
| Operating Income | Ps. 161.5 million | Ps. 170.3 million (implied) | -5.1% |
| Operating Margin | 33.1% | 34.3% (implied) | -1.2 pp |
| Adjusted EBITDA | Ps. 263.3 million | Ps. 256.6 million (implied) | +2.6% |
| Adjusted EBITDA Margin | 54.0% | 51.7% (implied) | +2.3 pp |
| Net Income | Ps. 107.9 million | Ps. 130.1 million (implied) | -17.1% |
| Earnings Per Share (EPS) | Ps. 0.27 | N/A | N/A |
| Earnings Per ADS | US$ 0.16 | N/A | N/A |
| Capital Expenditures (3Q) | Ps. 169 million | N/A | N/A |
| Total Debt (as of 9/30/09) | Ps. 673.0 million | N/A | N/A |
| Cash & Equivalents (as of 9/30/09) | Ps. 225.3 million | N/A | N/A |
Note: All figures in Mexican Pesos (Ps.) unless otherwise noted. Exchange rate used: Ps. 13.5513 per US$.
Material Changes vs. Prior Period
- Traffic Decline: Total passenger traffic decreased 15.4% to 3.0 million passengers. Domestic traffic fell 13.8%, while international traffic dropped 25.0%. The suspension of Aviacsa operations on July 6, 2009, was a primary driver of this decline.
- Revenue Resilience: Despite the traffic drop, total revenues declined only 1.6%. This was achieved through a 16.6% increase in aeronautical revenue per passenger and a 14.6% increase in non-aeronautical revenue per passenger.
- Cost Control: Total operating costs and G&A expenses decreased 7.1% to Ps. 188 million due to strict controls on energy, water, and material consumption.
- Profitability: Adjusted EBITDA increased 2.6% to Ps. 263.3 million, demonstrating margin expansion despite lower volumes. However, Net Income fell 17.1% due to higher financing expenses and tax provisions.
- New Revenue Streams: The NH Mexico City Airport Terminal 2 Hotel (90% owned by OMA) opened on August 24, 2009, contributing Ps. 3.5 million in revenue during its first six weeks of operation.
Outlook, Commentary, and Risks
- Management Commentary: Management highlighted the successful offset of traffic declines through revenue preservation initiatives and cost controls. The opening of the Terminal 2 Hotel marks a strategic step in diversifying non-aeronautical revenue.
- Operational Trends: Signs of a trend change in air traffic were noted, with the rate of decline slowing compared to Q1 and Q2 2009. Six new commercial operations and five new domestic routes were opened during the quarter.
- Subsequent Developments:
- Dividends: The second quarterly installment of the 2008 dividend (Ps. 0.25 per share) was paid on October 15, 2009.
- Tampico Relocation: The State of Tamaulipas declared public utility for land to relocate the Tampico International Airport. OMA expects to continue operating the new airport under the same concession agreement but will not fund the relocation investments.
- Risks: The filing references standard risk factors including economic conditions, airline suspensions (e.g., Aviacsa), and regulatory changes. The company notes that forward-looking statements are subject to uncertainties beyond its control.
Investor Verification Checklist
- Traffic Recovery: Verify if the "slowing rate of decline" in passenger traffic continues into Q4 2009 and 2010, particularly regarding the impact of the Aviacsa suspension.
- Hotel Performance: Monitor the full-year financial contribution of the NH Mexico City Airport Terminal 2 Hotel to assess its long-term revenue potential.
- Debt Servicing: Review the impact of rising financing expenses on future net income, given the total debt level of Ps. 673.0 million.
- Tampico Project: Track the progress of the Tampico airport relocation to ensure no unexpected capital requirements or concession disruptions arise for OMA.
- Exchange Rate Sensitivity: Assess the impact of the Mexican Peso's depreciation on international passenger charges and technical assistance fees.