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: Three and nine months ended September 30, 2002.
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, 2002.
Key Financial Metrics
Third Quarter 2002 (3Q02)
- Total Revenues: Ps.316.1 million (Up 5.01% YoY).
- EBITDA: Ps.178.3 million (Down 0.37% YoY); Margin 56.42%.
- Operating Profit: Ps.95.7 million (Down 4.42% YoY); Margin 30.28%.
- Net Income: Ps.50.1 million (Down 26.59% YoY).
- Earnings Per Share (EPS): Ps.0.1671 (US$0.1633 per ADS).
- Passenger Traffic: Total up 0.41% YoY (Domestic +3.39%, International -2.05%).
Nine-Month Period 2002 (YTD)
- Total Revenues: Ps.940.1 million (Down 2.54% YoY).
- EBITDA: Ps.544.9 million (Down 9.02% YoY); Margin 57.96%.
- Operating Profit: Ps.297.0 million (Down 18.03% YoY); Margin 31.60%.
- Net Income: Ps.161.5 million (Down 35.31% YoY).
- Earnings Per Share (EPS): Ps.0.5384 (US$0.5263 per ADS).
- Passenger Traffic: Total down 5.46% YoY (Domestic -1.53%, International -7.97%).
Liquidity and Balance Sheet (as of Sept 30, 2002)
- Cash and Marketable Securities: Ps.438.0 million (Down 53.4% from Sept 2001).
- Total Assets: Ps.11.07 billion.
- Shareholders' Equity: Represents 95.02% of total assets.
- Total Liabilities: Represents 4.98% of total assets.
- Capital Expenditures (YTD): Ps.168.2 million invested; expected total for 2002 is Ps.325.5 million.
Material Changes vs. Prior Period
Revenue Drivers
- Non-Aeronautical Growth: Revenues from non-aeronautical services increased 40.12% in 3Q02 and 27.70% YTD. Commercial revenues (duty-free, retail, F&B, banking) surged 87.73% in 3Q02, driven by new stores and restaurants opened in late 2001 and early 2002.
- Aeronautical Decline: Aeronautical revenues decreased 1.02% in 3Q02 and 7.65% YTD, primarily due to reduced flight operations and international passenger traffic following the September 11, 2001 events.
- Cost Increases: Operating costs rose 9.71% in 3Q02. "Cost of services" increased 21.82% due to higher insurance premiums (post-9/11 liability and terrorism coverage), energy rate hikes, and new facility openings.
Taxation Impact
ASUR's three-year tax exemption expired on December 31, 2001. Consequently, the company began paying income or asset taxes in 2002. Tax payments for 3Q02 were Ps.42.3 million, with Ps.15.8 million recorded in results and the remainder deferred as an asset pending recovery.
Passenger Traffic Variance
- Cancun: The only airport with significant growth in 3Q02 (Total +4.37%), driven by domestic traffic (+14.87%).
- Cozumel: Hit hardest by the post-9/11 decline, with total traffic down 16.68% in 3Q02 and 23.16% YTD, largely due to a drop in North American tourists.
Guidance, Outlook, and Risks
Outlook Revision
ASUR revised its full-year 2002 passenger traffic guidance downward. The company now expects a year-over-year decrease of 3% to 1%, compared to an original expectation of flat traffic. This revision reflects a lack of anticipated economic recovery in Q4 and risks associated with potential conflict in the Middle East.
Material Risks and Contingencies
- Airline Payment Disputes: Four major Mexican airlines (AeroMexico, Mexicana, Aerolitoral, Aeromar) have suspended payments for inflation-adjusted tariffs (Ps.8.4 million unpaid) and extended payment terms for Airport Usage Fees (Ps.42.0 million delayed) since June 2001. These matters are currently in the legal system.
- Hurricane Isidor: The hurricane caused significant damage to airports in Yucatan. Merida airport was closed for 27 hours, canceling 100 flights. Estimated damages are US$1.0 million, which the company believes are covered by insurance (deductible approx. US$336,000).
- Labor Costs: A revised collective bargaining agreement signed in October 2002 grants workers an immediate 6.5% wage increase plus 1% in benefits.
- Regulatory Environment: Revenues are subject to maximum rates regulated by the Mexican Ministry of Communications and Transport.
Investor Verification Checklist
- Recovery of Tax Assets: Verify the likelihood of recovering the Ps.79.6 million in deferred income taxes recorded as assets for the nine-month period.
- Airline Receivables: Monitor the legal resolution of the Ps.50.4 million in disputed/late payments from major Mexican airlines and the impact on future cash flow.
- Insurance Claims: Confirm the processing and payout status of the Hurricane Isidor claim for Merida airport damages.
- Q4 Traffic Trends: Assess whether the revised full-year traffic decline (3-1%) holds true given the geopolitical risks cited by management.
- Cost Structure: Evaluate the sustainability of the 21.82% increase in cost of services, particularly regarding insurance premiums and energy costs.