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 and nine months ended September 30, 2011
Business Overview: ASUR is the first privatized airport group in Mexico, operating concessions for nine airports in southeast Mexico, including the major hub at Cancún. Financial results are presented in Mexican Pesos (Ps.) under Mexican Financial Reporting Standards (MFRS).
Key Financial Metrics (3Q11)
- Total Revenues: Ps. 1,048.98 million (up 9.78% YoY).
- EBITDA: Ps. 588.21 million (up 44.95% YoY); Margin improved to 56.07% from 42.47%.
- Operating Profit: Ps. 491.48 million (up 64.71% YoY); Margin improved to 46.85% from 31.23%.
- Net Income: Ps. 363.69 million (up 63.94% YoY).
- Earnings Per Share (EPS): Ps. 1.2123 (US$ 0.8785 per ADS).
- Passenger Traffic: Total traffic increased 8.15% to 4.33 million passengers (Domestic +12.07%, International +4.65%).
- Commercial Revenue per Passenger: Ps. 64.39 (up 7.11% YoY).
- Liquidity: Cash and cash equivalents totaled Ps. 1,741.07 million as of September 30, 2011.
- Debt: Total bank debt was Ps. 788.5 million (including Ps. 1.5 million accrued interest).
Material Changes vs. Prior Period
Revenue Drivers:
- Aeronautical Revenues: Increased 12.75% driven by an 8.15% rise in passenger traffic.
- Non-Aeronautical Revenues: Increased 13.34%, led by a 15.15% jump in commercial revenues (ground transportation +48.30%, retail +22.62%).
- Construction Services: Declined 11.85% due to reduced capital expenditures and asset improvements.
Expense Dynamics:
- Total Operating Costs: Decreased 15.16% YoY.
- Cost of Services: Dropped 27.44%, primarily due to the absence of a one-time reserve for doubtful accounts related to Grupo Mexicana de Aviación's bankruptcy in 3Q10.
- Technical Assistance Fees: Increased 44.95% due to higher EBITDA.
- Income Taxes: Increased 77.92% due to higher operating profits and changes in deferred tax provisions.
Balance Sheet: Shareholders' equity represented 80.01% of total assets. Deferred liabilities accounted for 59.84% of total liabilities.
Outlook, Risks, and Management Commentary
- Tariff Regulation: The Mexican Ministry of Communications and Transportation regulates maximum rates per traffic unit. Regulated revenues accounted for 61.43% of total income in 9M11.
- Capital Expenditures: ASUR invested Ps. 144.56 million in 3Q11 for airport modernization under master development plans.
- Debt Management: The company maintains interest rate hedges covering 22% of its exposure on specific credit agreements. New credit agreements were entered into for Veracruz Airport in September 2011.
- Forward-Looking Statements: Management notes that future expectations are subject to risks, including regulatory changes and economic factors. Actual results may differ significantly from projections.
- Accounting Standards: Results reflect the adoption of I-MFRS 17 regarding service concession contracts, which impacts the recognition of construction revenues and expenses.
Investor Verification Checklist
- Verify the sustainability of the 27.44% decline in "Cost of Services" given it was driven by a one-time non-recurring item in the prior year.
- Monitor the impact of the 11.85% decline in construction services revenue on future capital improvement plans and asset quality.
- Assess the sensitivity of EBITDA to the technical assistance fee paid to ITA, which rose 44.95% in line with EBITDA growth.
- Review the composition of the Ps. 788.5 million bank debt, specifically the floating interest rate exposure (TIIE + spread) and the effectiveness of the 22% hedge.
- Confirm the regulatory environment regarding the 61.43% of revenues subject to government-set maximum tariffs.