Business Context and Reporting Period
Company: Southeast Airport Group (Grupo Aeroportuario del Sureste, S.A.B. de C.V.)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Third Quarter (3Q) and Nine Months (9M) ended September 30, 2019.
Operations: ASUR operates 16 airports across Mexico, Puerto Rico (San Juan), and Colombia. The company is a leading international airport group with significant exposure to tourism and business travel in the Americas.
Key Financial Metrics (3Q 2019)
| Metric | 3Q 2019 | 3Q 2018 | YoY Change |
|---|---|---|---|
| Total Revenue | Ps. 4,106.3 million | Ps. 3,682.0 million | +11.5% |
| EBITDA | Ps. 2,475.6 million | Ps. 2,278.3 million | +8.7% |
| Net Income | Ps. 1,340.4 million | Ps. 1,006.6 million | +33.2% |
| Majority Net Income | Ps. 1,314.6 million | Ps. 988.1 million | +33.1% |
| Earnings Per Share (EPS) | Ps. 4.38 | Ps. 3.29 | +33.1% |
| Operating Margin | 49.4% | 45.0% | +440 bps |
| EBITDA Margin | 60.3% | 61.9% | -160 bps |
| Cash & Equivalents | Ps. 6,196.8 million | Ps. 4,569.1 million | +35.6% |
| Net Debt | Ps. 7,777.7 million | Ps. 11,006.7 million | -29.3% |
| Net Debt / LTM EBITDA | 0.8x | 1.2x | -38.3% |
| Capital Expenditures (Capex) | Ps. 445.8 million | Ps. 363.4 million | +22.7% |
Material Changes vs. Prior Period
- Revenue Growth: Consolidated revenue rose 11.5% YoY, driven by a 5.8% increase in aeronautical services and an 11.0% increase in non-aeronautical services. Construction revenues surged 162.7% due to capital projects in Mexico and Puerto Rico and a one-time valuation adjustment reversal in Colombia.
- Profitability: Net income increased 33.2% YoY. This was supported by a 22.3% increase in operating profit and a significant reduction in comprehensive financing costs (loss narrowed from Ps. 280.3 million to Ps. 135.8 million) due to lower interest expenses and a foreign exchange gain of Ps. 70.4 million.
- Operational Traffic: Total passenger traffic increased 4.1% YoY to 13.9 million.
- Mexico: Flat growth (+0.4%) as domestic traffic (+2.9%) offset international declines (-2.5%).
- Puerto Rico: Strong recovery (+5.7%) post-Hurricane Maria, driven by domestic traffic (+7.2%).
- Colombia: Robust growth (+14.0%) driven by both domestic (+12.8%) and international (+21.0%) traffic.
- Balance Sheet: Net debt decreased significantly by 29.3% to Ps. 7.8 billion, improving the leverage ratio to 0.8x. Cash position strengthened by 35.6%.
Guidance, Outlook, and Risks
- Management Commentary: Management highlighted the successful recovery in Puerto Rico and strong growth in Colombia. In Mexico, growth was driven by domestic traffic at secondary airports (Merida, Oaxaca) despite a slight decline at Cancun. Commercial revenues per passenger increased across all regions.
- Capital Allocation: Capex increased to Ps. 445.8 million in 3Q19, primarily focused on modernizing Mexican airports under the Master Development Plan and investments in Puerto Rico.
- Risks and Contingencies:
- Regulatory: Operations are subject to tariff regulations by the Mexican Ministry of Communications and Transportation and the Puerto Rico Ports Authority.
- Accounting Standards: Results are impacted by IFRIC 12 (construction revenues/costs) and IFRS 3 (business combinations), particularly regarding the valuation of concessions in Mexico, Puerto Rico, and Colombia.
- Foreign Exchange: The company has significant debt denominated in U.S. Dollars (56.8% of total debt) and Colombian Pesos, exposing it to currency fluctuations.
Investor Verification Checklist
- Construction Revenue Impact: Verify the sustainability of the 162.7% revenue growth, noting that a significant portion is attributable to construction revenues which are offset by construction costs under IFRIC 12.
- Colombia Amortization Change: Confirm the long-term impact of the change in amortization methodology in Colombia (from percentage of completion to straight-line), which reduced depreciation expenses by 52.3% in 3Q19.
- Debt Maturity Profile: Review the debt profile, noting that 56.8% of debt is in U.S. Dollars (Aerostar) and 14.7% in Colombian Pesos, assessing exposure to currency devaluation.
- Commercial Revenue Per Passenger: Monitor the trend of commercial revenue per passenger (Ps. 99.2), which grew 7.3% YoY, as a key indicator of non-aeronautical monetization efficiency.
- Forward-Looking Statements: Note that the filing contains forward-looking statements regarding future expectations which are subject to risks and uncertainties.