Business Context and Reporting Period
Company: Southeast Airport Group (Grupo Aeroportuario del Sureste, S.A. de C.V.)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Third Quarter and Nine Months ended September 30, 2004
Business Overview: ASUR operates nine airports in southeastern Mexico, including the major hub at Cancun. The company is the first privatized airport group in Mexico.
Key Financial Metrics (3Q04)
| Metric | 3Q04 Value | YoY Change |
|---|---|---|
| Total Revenues | Ps. 511.04 million | +31.54% |
| EBITDA | Ps. 319.48 million | +40.16% |
| EBITDA Margin | 62.52% | +3.85 pts |
| Operating Income | Ps. 219.98 million | +62.37% |
| Operating Margin | 43.04% | +8.17 pts |
| Net Income | Ps. 135.86 million | +77.01% |
| Earnings per ADS (USD) | $0.3977 | +77.01% |
| Cash and Marketable Securities | Ps. 1,109.95 million | N/A |
| Total Liabilities | Ps. 712.78 million | N/A |
Note: Figures are in constant Mexican pesos as of September 30, 2004. Exchange rate used: US$1 = Ps. 11.3884.
Material Changes vs. Prior Period
- Passenger Traffic: Total traffic increased 12.99% year-over-year (YoY). International traffic grew 19.16% (driven by Cozumel +31.44% and Cancun +18.18%), while domestic traffic rose 5.56% (driven by Veracruz +19.14% and Villahermosa +16.21%).
- Revenue Composition: Aeronautical revenues rose 21.99%. Non-aeronautical revenues surged 67.34%, primarily due to a 93.92% jump in commercial revenues.
- Commercial Revenue Drivers: Significant growth in duty-free (+78.50%), food and beverage (+112.42%), and retail (+246.81%). This was largely attributed to ASUR taking direct operation of one restaurant, one snack bar, and three convenience stores in May 2004.
- Cost Structure: Total operating costs increased 15.03%. Costs of services rose 25.38% due to maintenance and direct commercial operations. However, administrative expenses declined 15.90% due to the reallocation of functions from corporate headquarters to airport levels.
- Nine-Month Performance: For the first nine months, total revenues increased 28.20% to Ps. 1,483.75 million, and net income rose 61.92% to Ps. 401.19 million.
Outlook, Risks, and Unusual Items
- Strategic Investments: The Board authorized the immediate start of construction for a second runway at Cancun Airport, ahead of the original 2012 schedule, to meet demand. Estimated cost is US$40–60 million, to be incurred between 2005 and 2007.
- Future Events: Cancun was selected to host a Formula One Grand Prix in October 2006. A new airport in the Mayan Riviera was announced by local officials, though details and impact remain uncertain.
- Legal Contingency: ASUR is in advanced arbitration with Dufry Mexico S.A. de C.V. regarding rent payments for duty-free units at Cancun Airport. A final decision is expected in January 2005.
- Labor Relations: A mutually satisfactory wage revision agreement was reached with the Mexican National Union of Airport Workers in October 2004.
- Regulatory Environment: Revenues are subject to maximum rates regulated by the Mexican Ministry of Communications and Transportation. Regulated revenues accounted for 76.06% of total income for the nine-month period.
Investor Verification Checklist
- Verify the sustainability of the 93.92% commercial revenue growth following the transition to direct operations of food and retail outlets.
- Monitor the outcome of the arbitration with Dufry Mexico regarding duty-free rent, expected in January 2005.
- Assess the capital expenditure impact of the accelerated second runway construction at Cancun (US$40–60 million).
- Review the impact of the new Formula One event and potential new Mayan Riviera airport on future traffic projections.
- Confirm the stability of the exchange rate (Ps. 11.3884) used for USD reporting against future fluctuations.