Business context and reporting period
Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (Central North Airport Group, or OMA) filed its Form 20-F for the fiscal year ended December 31, 2021. The company operates, maintains and develops 13 airports in central and northern Mexico, plus hotels, cargo logistics and industrial-park businesses. The financial statements are prepared under IFRS and presented in Mexican pesos unless otherwise noted. The filing is annual rather than a standalone 2021 fourth-quarter report.
Key financial and operating metrics
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Total revenue | Ps.8,720.0 million | Ps.5,367.5 million | 62.5% increase |
| Aeronautical revenue | Ps.5,277.7 million | Ps.2,942.6 million | 79.4% increase |
| Non-aeronautical revenue | Ps.1,653.4 million | Ps.1,171.0 million | 41.2% increase |
| Construction-service revenue | Ps.1,788.9 million | Ps.1,253.9 million | 42.7% increase |
| Operating income | Ps.4,110.4 million | Ps.1,721.5 million | 138.8% increase |
| Consolidated net income | Ps.2,863.6 million | Ps.1,097.9 million | 160.8% increase |
| Operating margin | 47.1% | 32.1% | Up 15.0 percentage points |
| Net margin | 32.8% | 20.5% | Up 12.3 percentage points |
| Terminal passengers | 18.0 million | 11.1 million | 62.9% increase |
| Cash and cash equivalents | Ps.5,987.2 million | Ps.2,958.8 million | Ps.3,028.4 million increase |
| Total indebtedness | Ps.7,696.6 million | Ps.4,510.4 million | Ps.3,186.2 million increase |
Cash flow from operating activities was Ps.4,446.8 million, compared with Ps.1,303.5 million in 2020. Investing cash outflow was Ps.1,794.9 million, primarily for concession improvements. Financing cash flow was Ps.292.3 million, after debt issuance, debt repayment, dividends and share repurchases.
Capital expenditures were Ps.1,910.5 million, including Ps.1,788.9 million related to Master Development Program investments. Major-maintenance cash expenditures were Ps.203.0 million. The company reported Ps.1,788.9 million of construction revenue and an equal construction cost; these items generally do not create a cash operating profit.
Material changes versus comparable periods
- Passenger traffic recovered substantially from the COVID-19 disruption, but remained below 2019 levels: 18.0 million terminal passengers in 2021 versus 23.2 million in 2019.
- Domestic passengers increased 59.2% and international passengers increased 94.2% from 2020. International traffic represented 12.8% of passengers in 2021, and 85.2% of international passengers traveled to or from the United States.
- Aeronautical revenue per workload unit increased 11.7% to Ps.274.1, aided by higher tariffs and traffic recovery. Non-aeronautical revenue per terminal passenger declined 13.3% to Ps.91.7 because passenger growth exceeded the recovery in commercial and diversification revenue.
- Operating costs increased 26.4% to Ps.4,609.6 million. Major-maintenance provision increased 30.6%, administrative expenses increased 13.2%, concession taxes increased 60.6%, technical-assistance fees increased 64.6% and depreciation and amortization increased 11.9%.
- Net interest expense increased 25.5% to Ps.387.2 million. The company reported a net foreign-exchange gain of Ps.112.6 million.
- Monterrey remained the dominant airport, contributing 43.9% of total revenue and 42.2% of aeronautical plus non-aeronautical revenue. VivaAerobus, Volaris and Grupo Aeroméxico represented 36.0%, 24.5% and 18.7%, respectively, of aeronautical revenue from airline customers.
- The company issued Ps.3,500.0 million of long-term notes in April 2021, including Ps.1,000.0 million of green variable-rate notes and Ps.2,500.0 million of fixed-rate notes. It repaid Ps.3,000.0 million of prior debt.
- Fintech affiliates completed a tender offer in July 2021 for 60.2 million Series B shares at Ps.137 per share. Following the transaction, Fintech affiliates owned approximately 30.4% of the company’s capital and retained significant Series BB governance rights.
Guidance, outlook, risks and unusual items
The filing does not provide formal consolidated revenue, earnings or EBITDA guidance. Management expects passenger recovery to continue and states that operating cash flow, cash balances and access to financing should support operations, debt service and required investments. The company expects to invest Ps.12,519.3 million under its Master Development Programs during 2022–2025, including Ps.4,024.7 million in 2022.
- COVID-19, new variants, travel restrictions, testing requirements and changes in passenger demand remain material risks. First-quarter 2022 passenger traffic was still 10.0% below first-quarter 2019.
- The business is highly exposed to Mexican and U.S. economic conditions, fuel prices, exchange rates, airline financial health and geopolitical events, including the Russia-Ukraine conflict.
- Revenue concentration is significant: seven airports and OMA Logística generated approximately 80.5% of aeronautical plus non-aeronautical revenue in 2021, while Monterrey alone generated 42.2%.
- Aeronautical pricing is regulated. Maximum rates decline by a 0.70% annual efficiency factor through 2025, and exceeding a maximum rate can lead to penalties and reductions in future rates.
- The company’s concessions generally run through 2048 and may be revoked for specified breaches, including failure to meet investment, safety, maintenance or rate requirements. Loss of one concession could affect the others.
- Cybersecurity is an unusual item: ransomware compromised several servers in the third quarter of 2021. Most systems were restored within 48 hours, airport operating systems were not materially disrupted, and management reported no material financial impact.
- Material contingencies include land-ownership proceedings involving Ciudad Juárez, Monterrey, Durango and Reynosa airports; municipal property-tax claims; and a Ps.14.6 million Profeco fine against Acapulco Airport, which the company is challenging. No provisions were recorded for these matters because management considered an adverse cash outflow not probable.
- The company maintained effective disclosure controls and internal control over financial reporting, and the independent auditor issued unqualified opinions. The auditor included an emphasis of matter regarding COVID-19 and identified concession improvements and major-maintenance accounting as a critical audit matter.
Most important facts for investors to verify
- Whether passenger volumes and non-aeronautical revenue per passenger continue recovering toward 2019 levels.
- The detailed maturity, interest-rate exposure and covenant terms of Ps.7,696.6 million of indebtedness, including refinancing needs for the Ps.1,500.0 million note due in March 2023.
- Progress and funding of the Ps.12,519.3 million of remaining 2022–2025 Master Development Program investments.
- The effect of airline concentration, Aeroméxico’s completed restructuring and any future airline route reductions or payment delays.
- The status and potential financial impact of the disclosed land, property-tax, tax-refund and Profeco proceedings.
- The continuing economic and governance influence of Fintech affiliates and SETA’s Series BB veto and appointment rights.
- Whether COVID-19, fuel-price volatility, peso movements, cybersecurity events or regulatory changes affect liquidity, maximum-rate compliance or concession economics.