Business Context and Reporting Period
Company: Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR)
Reporting Period: Second Quarter (2Q) and First Half (1H) ended June 30, 2012
Filing Date: July 23, 2012
Business Overview: ASUR is the first privatized airport group in Mexico, operating nine airports in the southeast region, including the major hub at Cancún. Financial results are presented in Mexican Pesos (Ps.) under International Financial Reporting Standards (IFRS).
Key Financial Metrics
Second Quarter 2012 (2Q12)
- Total Revenues: Ps. 1,275.51 million (up 16.53% YoY)
- EBITDA: Ps. 740.02 million (up 18.97% YoY)
- EBITDA Margin: 58.02% (up from 56.82% in 2Q11)
- Operating Profit: Ps. 640.42 million (up 21.52% YoY)
- Operating Margin: 50.21% (up from 48.14% in 2Q11)
- Net Income: Ps. 463.23 million (up 19.99% YoY)
- Earnings Per Share (EPS): Ps. 1.5441
- Earnings Per ADS (US$): $1.1516
- Passenger Traffic: 4.732 million total (up 7.36% YoY)
- Commercial Revenue per Passenger: Ps. 75.05 (up 13.33% YoY)
First Half 2012 (1H12)
- Total Revenues: Ps. 2,561.49 million (up 18.72% YoY)
- EBITDA: Ps. 1,568.48 million (up 20.77% YoY)
- EBITDA Margin: 61.23% (up from 60.20% in 1H11)
- Net Income: Ps. 1,001.20 million (up 24.61% YoY)
- Earnings Per ADS (US$): $2.4890
Liquidity and Balance Sheet (as of June 30, 2012)
- Cash and Cash Equivalents: Ps. 1,569.09 million
- Total Bank Debt: Ps. 511.2 million (including Ps. 1.5 million accrued interest)
- Shareholders' Equity: Ps. 15,393.78 million
- Total Liabilities: Ps. 3,338.74 million
Material Changes vs. Prior Period
Revenue Growth Drivers: Total revenue growth was driven by a 7.36% increase in passenger traffic and higher commercial yields.
- Aeronautical Revenues: Increased 13.19% (2Q12) and 14.85% (1H12), primarily due to traffic volume.
- Non-Aeronautical Revenues: Increased 19.38% (2Q12) and 22.27% (1H12). Commercial revenues rose 21.49% (2Q12) and 24.02% (1H12), with significant gains in advertising (43.20% in 2Q12), teleservices (39.29% in 2Q12), and duty-free stores (24.90% in 2Q12).
- Construction Services: Revenues increased 24.64% (2Q12) and 31.40% (1H12) due to capital investments in concessioned assets. Note: Under IFRIC 12, equal amounts are recognized as construction expenses, neutralizing the impact on EBITDA margin.
Expense Trends: Total operating costs increased 11.89% in 2Q12 and 13.70% in 1H12.
- Construction Costs: Rose 24.64% (2Q12) and 31.40% (1H12), mirroring revenue recognition.
- Concession Fees: Increased 14.49% (2Q12) and 16.19% (1H12) due to higher regulated revenues.
- Technical Assistance Fees: Increased 19.10% (2Q12) and 20.81% (1H12), linked to EBITDA growth.
- Cost of Services: Increased 5.38% (2Q12) and 8.32% (1H12), driven by higher energy costs and maintenance.
Financing Results: Comprehensive financing cost increased to Ps. 33.13 million in 2Q12 from Ps. 7.10 million in 2Q11. This was primarily due to a Ps. 14.33 million foreign exchange gain resulting from the 14.38% depreciation of the Mexican peso against the U.S. dollar. Interest expense declined by Ps. 6.48 million due to principal debt repayments of Ps. 368.0 million in 2Q12.
Outlook, Risks, and Recent Events
Recent Strategic Development: On July 19, 2012, the ASUR-Highstar Consortium (Aerostar Airport Holdings) was named the winner of the bidding process to operate Luis Muñoz Marín International Airport (LMM) in San Juan, Puerto Rico.
- Investment: Requires an upfront payment of approximately $615 million.
- Structure: 50-50 joint venture between ASUR and Highstar Capital IV.
- Conditions: Closing is subject to conditions precedent, including FAA certification.
Accounting Changes: ASUR adopted IFRS effective January 1, 2012. Significant adjustments included the elimination of inflation accounting for capital stock and legal reserves, recognition of vacation reserves, and reclassification of labor liabilities. The filing notes that prior year figures have been restated to reflect IFRS.
Risks and Contingencies:
- Tariff Regulation: The Mexican Ministry of Communications and Transportation sets maximum rates for regulated revenues, which accounted for 63.17% of total income in 1H12.
- Foreign Exchange: Results are sensitive to the peso-dollar exchange rate; the company reported significant FX gains in 2Q12 due to peso depreciation.
- Debt Hedging: An interest rate hedge on Ps. 920 million in credit agreements terminated in May 2012; no new hedges were entered into as of the filing date.
Investor Verification Checklist
- Verify the sustainability of the 13.33% increase in commercial revenue per passenger, particularly in advertising and teleservices.
- Confirm the status of the $615 million upfront payment for the Puerto Rico (LMM) airport concession and the associated financing structure.
- Monitor the impact of the terminated interest rate hedge on future financing costs given the floating rate nature of remaining debt.
- Review the restated 2011 comparative figures to ensure accurate year-over-year trend analysis under the new IFRS framework.
- Assess the exposure to Mexican peso volatility, as a significant portion of debt and financing costs are influenced by the TIIE rate and FX fluctuations.