Business Context and Reporting Period
Company: Grupo Aeroportuario del Sureste, S.A. de C.V. (ASUR)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: First Quarter ended March 31, 2006
Business Overview: ASUR is the first privatized airport group in Mexico, operating nine airports in the southeast region, including the major hub at Cancun. The company is listed on the NYSE (ASR) and the Mexican Bolsa (ASUR).
Key Financial Metrics
All figures are in thousands of constant Mexican pesos (Ps.) unless otherwise noted.
| Metric | 1Q 2006 | 1Q 2005 | Change (%) |
|---|---|---|---|
| Total Revenues | 504,062 | 610,516 | (17.44) |
| EBITDA | 302,398 | 400,123 | (24.42) |
| Operating Profit | 186,130 | 292,780 | (36.43) |
| Net Income | 129,577 | 223,298 | (41.97) |
| Operating Margin | 36.93% | 47.96% | -11.03 pts |
| EBITDA Margin | 59.99% | 65.54% | -5.55 pts |
| Cash & Equivalents | 1,431,853 | 1,402,535 | 2.09 |
| Total Liabilities | 936,715 | 801,602 | 16.86 |
| Shareholder Equity | 13,268,201 | 13,070,799 | 1.51 |
Per Share Data: Net income per share was Ps. 0.4319 (1Q06) vs. Ps. 0.7443 (1Q05). Earnings per ADS (US$) were $0.3965 vs. $0.6833.
Material Changes vs. Prior Period
- Passenger Traffic: Total traffic declined 17.10% to 3.32 million passengers. International traffic fell 26.37%, while domestic traffic grew 4.01%.
- Revenue Drivers: Aeronautical revenues dropped 19.85% due to lower traffic. Non-aeronautical revenues fell 10.74%, driven by a 10.94% decline in commercial revenues (retail, food, car rental).
- Cost Structure: Total operating costs remained flat (+0.06%) in absolute terms but rose as a percentage of revenue. Depreciation and amortization increased 8.31% due to asset capitalization. Costs of services rose 5.12% due to new security screening processes.
- Profitability: Operating profit and Net Income declined significantly (36.43% and 41.97% respectively) due to the revenue contraction.
- Commercial Efficiency: Despite lower total commercial revenue, commercial revenue per passenger increased 7.45% to Ps. 34.75.
Outlook, Risks, and Management Commentary
- Hurricane Wilma Impact: Management attributes the decline in traffic and revenue primarily to the lingering effects of Hurricane Wilma (Oct 2005). Hotel infrastructure in Cancun was only 63.6% operational as of March 31, 2006, and Cozumel at 91.9%.
- Specific Airport Performance: Cancun traffic fell 22.37% and Cozumel fell 60.65%. Conversely, domestic airports like Veracruz and Minatitlan saw growth due to new airline services.
- Regulatory Environment: Regulated revenues accounted for 76.28% of total income. The Ministry of Communications and Transportation reviews maximum rates annually.
- Capital Expenditures: ASUR invested Ps. 151.28 million in the quarter for airport modernization.
- Corporate Actions: A shareholders' meeting was scheduled for April 27, 2006, to approve a net ordinary cash dividend of Ps. 0.682 per share and amend bylaws to comply with new Mexican Securities Market Law.
- Risks: Forward-looking statements are subject to risks regarding tourism recovery, regulatory changes, and economic conditions.
Investor Verification Checklist
- Traffic Recovery: Verify the timeline for full hotel infrastructure recovery in Cancun and Cozumel to assess the duration of the revenue drag.
- Cost Rigidity: Confirm if the increase in security costs (Hold Baggage Screening) is a one-time step-up or a permanent increase in the cost base.
- Dividend Sustainability: Assess the ability to maintain the proposed Ps. 0.682 dividend given the 42% drop in net income.
- Regulatory Tariffs: Monitor the annual review by the Ministry of Communications and Transportation for potential adjustments to the Ps. 100.00 average tariff per workload unit.
- Domestic Growth: Validate the sustainability of the 4.01% domestic traffic growth at secondary airports (Veracruz, Minatitlan) as a hedge against international volatility.