Business Context and Reporting Period
Company: Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Third quarter and nine months ended September 30, 2006.
Business Overview: ASUR is the first privatized airport group in Mexico, operating concessions for nine airports in the southeast region, including the major hub at Cancun. Financial figures are presented in constant Mexican pesos (Ps.) as of September 30, 2006.
Key Financial Metrics (3Q06)
- Total Revenues: Ps.554.5 million (down 0.96% YoY).
- EBITDA: Ps.307.1 million (down 11.09% YoY); Margin: 55.38% (vs. 61.68% in 3Q05).
- Operating Profit: Ps.185.6 million (down 20.63% YoY); Margin: 33.48% (vs. 41.78% in 3Q05).
- Net Income: Ps.82.8 million (down 52.74% YoY).
- Earnings Per Share (EPS): Ps.0.2760 (vs. Ps.0.5841 in 3Q05).
- Commercial Revenue per Passenger: Ps.34.80 (down 24.23% YoY).
- Balance Sheet (as of Sept 30, 2006):
- Cash and Marketable Securities: Ps.1,322.99 million.
- Total Liabilities: Ps.1,082.40 million (7.45% of total assets).
- Shareholders' Equity: Ps.12,147.43 million (90.34% of total assets).
- Capital Expenditures (Capex): Ps.280.41 million for the quarter; Ps.705.12 million for the nine-month period.
Material Changes vs. Prior Period
Passenger Traffic: Total traffic increased 2.29% in 3Q06, driven by a 2.17% rise at Cancun. However, Oaxaca traffic plummeted 16.68% due to public demonstrations and flight cancellations. For the nine-month period, total traffic declined 6.81%.
Revenue Composition:
- Aeronautical Revenues: Increased 8.25% due to higher passenger volumes.
- Non-Aeronautical Revenues: Declined 19.44%, dragging down total revenue. Commercial revenues fell 23.12%.
- Key Declines: Duty-free revenues dropped 57.36% (excluding a one-time Ps.32.5M arbitration payment received in 2005, the decline would have been 5.23%); Banking/Currency exchange fell 21.28% due to contract expiration with Banamex; Food & Beverage fell 27.05% after ceasing direct operations.
Cost Structure: Total operating costs rose 13.15%, primarily due to a 23.58% increase in service costs (new baggage screening procedures, higher insurance) and an 8.94% increase in depreciation/amortization.
Outlook, Risks, and Management Commentary
- Oaxaca Unrest: Ongoing protests in Oaxaca have led to flight cancellations and a US State Department travel advisory. Management states it is unable to predict the resolution or future operational impact.
- Security Measures: New TSA security measures implemented in August 2006 adversely impacted duty-free sales. While some measures were relaxed, the negative effect persists with uncertain duration.
- Hurricane Impact: The filing notes that lower traffic at Cancun and Cozumel in the nine-month period was influenced by Hurricane Wilma (Oct 2005) and Hurricane Emily (July 2005).
- Regulatory Environment: Regulated revenues accounted for 67.96% of total income. The Ministry of Communications and Transportation reviews maximum rates annually.
- Forward-Looking Statements: Management cautions that actual developments may differ significantly from expectations due to various risks, including the aforementioned political and security issues.
Investor Verification Checklist
- Verify the duration and potential resolution of the Oaxaca protests and their specific impact on flight schedules and regional tourism.
- Monitor the recovery of duty-free sales following the implementation and subsequent relaxation of TSA security measures.
- Assess the long-term impact of the Banamex contract expiration on banking and currency exchange revenue streams.
- Review the company's ability to maintain EBITDA margins given the rising cost of services and insurance premiums.
- Confirm the status of Terminal 1 at Cancun airport (charter terminal) regarding repairs from Hurricane Wilma damage and its impact on teleservices revenue.