Business Context and Reporting Period
Company: Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (Pacific Airport Group)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Second Quarter ended June 30, 2016 (Announced July 28, 2016)
Operations: The Company operates 12 airports in Mexico's Pacific region and, following the April 2015 acquisition of Desarrollo de Concesiones Aeroportuarias (DCA), consolidates the Montego Bay airport in Jamaica. Financials are prepared under IFRS.
Key Financial Metrics (2Q16 vs. 2Q15)
| Metric | 2Q16 Value (MXN) | Change vs. 2Q15 |
|---|---|---|
| Total Revenues | Ps. 2,716.0 million (implied) | +Ps. 585.5 million (+27.4%) |
| Aeronautical Revenues | Ps. 1,666.3 million (implied) | +Ps. 263.3 million (+18.8%) |
| Non-Aeronautical Revenues | Ps. 556.9 million (implied) | +Ps. 93.4 million (+19.1%) |
| Revenues from Improvements (IFRIC 12) | Ps. 492.8 million (implied) | +Ps. 228.8 million (+91.4%) |
| Operating Income | Ps. 1,213.8 million (implied) | +Ps. 195.8 million (+19.1%) |
| EBITDA | Ps. 1,553.4 million (implied) | +Ps. 232.4 million (+17.6%) |
| Net Income & Comprehensive Income | Ps. 918.2 million (implied) | +Ps. 295.7 million (+47.5%) |
| EBITDA Margin (Excl. IFRIC 12) | 69.1% | -80 bps (from 69.9%) |
| Operating Margin (Excl. IFRIC 12) | 54.3% | +10 bps (from 54.2%) |
Balance Sheet Highlights (as of June 30, 2016):
- Total Assets: Increased by Ps. 2.64 billion vs. June 30, 2015.
- Total Liabilities: Increased by Ps. 2.6 billion vs. June 30, 2015.
- Cash & Equivalents: Increased by Ps. 862.0 million.
Material Changes and Drivers
- Passenger Traffic: Total terminal passengers increased by 1,134.3 thousand (+14.8%). Growth was driven by Guadalajara (+14.1%), Tijuana (+29.0%), and Los Cabos (+12.7%).
- Revenue Composition: Significant revenue growth was driven by "Revenues from improvements to concession assets" (IFRIC 12), which rose 91.4% due to high committed investment under the Master Development Program. This non-cash accounting item impacts reported margins.
- Cost Structure: Total operating costs rose 34.9% (Ps. 389.7 million), largely due to IFRIC 12 costs (Ps. 228.8 million) and higher concession taxes (Ps. 74.5 million). Core "Cost of services" increased only 2.5%.
- Financial Costs: Net financial costs increased significantly from a loss of Ps. 84.1 million in 2Q15 to Ps. 283.5 million in 2Q16. This was primarily due to a Ps. 182.6 million foreign exchange loss on the DCA acquisition loan.
- Comprehensive Income: The 47.5% increase in net income was heavily influenced by a Ps. 285.9 million positive currency translation effect, which offset the foreign exchange loss on debt.
Outlook, Risks, and Management Commentary
- Investment Cycle: 2016 represents the year with the highest committed investment under the Master Development Program (2015-2019), driving the spike in IFRIC 12 revenue recognition.
- Accounting Policy Changes: The Company noted upcoming adoption of IFRS 9, IFRS 15, and IFRS 16 effective January 1, 2018 or 2019.
- Risks: The filing includes standard forward-looking statement disclaimers regarding economic conditions, industry trends, and foreign exchange volatility. The significant foreign exchange loss highlights currency risk associated with the DCA acquisition debt.
- Comparability: Management notes that 2016 figures are not directly comparable to 2015 for the full six-month period due to the timing of the DCA acquisition (April 2015), though pro forma data is provided for context.
Investor Verification Checklist
- IFRIC 12 Impact: Verify the distinction between cash-generating operating results and non-cash IFRIC 12 revenue recognition, as this significantly distorts reported margins and revenue growth.
- Currency Exposure: Assess the sustainability of the currency translation gains that offset the Ps. 182.6 million foreign exchange loss on debt.
- Debt Servicing: Review the total financing interest expenses (Ps. 54.8 million) and the specific terms of the DCA acquisition loan given the recent FX losses.
- Montego Bay Performance: Isolate the performance of the Montego Bay airport, which saw a decrease in operating income (Ps. 31.9 million) and EBITDA (Ps. 17.7 million) in 2Q16 despite consolidation.
- Capital Expenditure: Confirm the alignment of the "highest committed investment" year with actual cash outflows in the Statement of Cash Flows.