Business context and reporting period
Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR; “Southeast Airport Group”) filed this audited Form 20-F for the fiscal year ended December 31, 2021—not a standalone fourth-quarter report. ASUR operates nine airports in southeastern Mexico, six in Colombia and, through a 60%-owned consolidated subsidiary, Luis Muñoz Marín International Airport in Puerto Rico. Financial statements are prepared under IFRS, not U.S. GAAP. The filing was signed April 8, 2022.
Financial and operating performance
Amounts below are in Mexican pesos (Ps.) unless noted.
| Metric | FY 2021 | Comparison |
|---|---|---|
| Consolidated revenue | Ps.18.785 billion | Up 48.8% from 2020 |
| Operating profit / margin | Ps.8.658 billion / 46.1% | Up 164.3% in profit; 26.0% margin in 2020 and 50.4% in 2019 |
| Net income / margin | Ps.6.398 billion / 34.1% | Up 200.8%; Ps.2.127 billion and 16.8% in 2020 |
| Operating cash flow | Ps.10.347 billion | Up from Ps.2.937 billion in 2020 and Ps.8.502 billion in 2019 |
| Investing cash flow | Ps.(3.428) billion | Primarily concession-asset improvements and equipment |
| Financing cash flow | Ps.(3.378) billion | Included debt repayments, new borrowing and Ps.2.463 billion of dividends |
| Cash and cash equivalents at year-end | Ps.8.770 billion | Ps.5.193 billion at year-end 2020 |
| Consolidated debt | Ps.13.780 billion | Down slightly from Ps.13.900 billion in 2020 |
- Revenue mix: Aeronautical services were Ps.9.409 billion, up 73.8%; non-aeronautical services were Ps.6.230 billion, up 75.2%; construction services were Ps.3.146 billion, down 14.0%.
- Construction revenue caveat: Under IFRS concession accounting, ASUR recognizes construction-service revenue and matching expense for outsourced airport improvements. Excluding construction services, revenue was Ps.15.638 billion in 2021, approximately flat against Ps.15.585 billion in 2019; therefore reported total revenue growth is not a like-for-like measure of operating demand.
- Passenger traffic: 49.4 million passengers, up 92.9% from 2020 but still below 2019’s 55.7 million. Mexico was down 14.7% versus 2019, Colombia down 12.6%, while Puerto Rico was 2.5% above 2019.
- Profitability and costs: Operating expenses rose 6.5% to Ps.10.127 billion, while operating margin recovered to 46.1% from 26.0% in 2020, but remained below 2019’s 50.4%. Net margin was 34.1%, versus 33.8% in 2019.
- Liquidity and debt: Year-end current assets were Ps.11.662 billion and current liabilities Ps.3.786 billion (current ratio about 3.1). Reported debt less cash implies net debt of roughly Ps.5.0 billion before considering restricted cash. The filing also reports U.S.$671.7 million of outstanding indebtedness, including U.S.$332.8 million at floating rates. Debt carries financial covenants; Airplan had received covenant waivers through the first quarter of 2022, but reported compliance at year-end 2021.
- Investment and dividends: Cash investment in concession assets and equipment was Ps.3.692 billion. ASUR paid Ps.2.463 billion in dividends in 2021; no dividend was paid in 2020.
Material changes versus prior periods
- The rebound in traffic drove a strong recovery from the 2020 pandemic low. However, passenger volumes had not fully returned to 2019 levels overall.
- Operating profit and net income rebounded sharply from 2020. Operating cash flow also exceeded both 2020 and 2019 levels.
- Commercial and non-aeronautical revenue recovered with passenger activity. Non-aeronautical revenue per terminal passenger was Ps.126.1, down 9.1% from 2020’s unusually high Ps.138.8, but above 2019’s Ps.107.5.
- Debt changed little in aggregate. During 2021, ASUR repaid and refinanced Mexican bank loans, including a new Ps.2.0 billion BBVA loan and Ps.2.65 billion Santander loan.
Outlook, commentary, risks and unusual items
- Outlook: Management provided no specific full-year financial guidance. It expected COVID-19 to continue affecting its markets in 2022 and cautioned that future traffic and financial effects remained uncertain. It reported improved first-quarter 2022 passenger traffic compared with first-quarter 2021.
- COVID-19: Airports remained operational, but travel demand, restrictions and new variants remained risks. ASUR noted that much of its cost base is fixed and cost reductions may not offset material revenue declines. Aerostar received U.S. CARES Act grants totaling U.S.$33.4 million; it also received U.S.$10.6 million under CRRSA, with only part reimbursed by year-end, and had an approved U.S.$35.7 million ARPA grant that had not yet been used.
- Concentration and demand risks: Cancún generated 52.7% of consolidated revenue including construction services and represented 76.6% of Mexican passenger traffic. ASUR is exposed to U.S. travel demand, airline customer concentration, fuel-price effects on airlines, and competition from tourism destinations and potential new airports, including Tulum.
- Regulatory exposure: Mexico’s FAA aviation-safety rating was downgraded to Category 2 in May 2021, restricting Mexican airlines’ ability to add or expand U.S. routes and code-share operations. Mexican airport revenues are subject to maximum-rate rules and concession obligations.
- Legal and tax matters: Cancún’s appeal of a COFECE competition decision and Ps.73 million fine remained pending; the company stated it was not required to pay during the appeal. A separate appeal involving statutory employee profit-sharing could require an additional Ps.116 million if unsuccessful. A Puerto Rico fuel-fee dispute remained in court. The filing also describes unresolved property recovery litigation at Mérida Airport.
- Unusual items: ASUR recorded no goodwill impairment in 2021; it reported Ps.4.719 billion of impairment in 2017 following Hurricane Maria. It received Ps.286.3 million from FONATUR for return of the Huatulco land. Operating profit in 2020 included a Ps.158.9 million insurance recovery related to Hurricane Maria that did not recur in 2021.
- Other risks: The filing highlights possible effects from hurricanes and other disasters, cybersecurity incidents, foreign-exchange and interest-rate movements, Colombian security conditions, Puerto Rico’s fiscal and economic situation, and changes to airport concessions or regulation. ASUR’s auditors issued an unqualified IFRS opinion and concluded internal control over financial reporting was effective; compliance with Mexico’s regulated maximum rates was identified as a critical audit matter.
Important facts for investors to verify
- Reconcile reported revenue and margins to results excluding construction-service revenue and its matching expense.
- Track passenger traffic recovery by country, especially Cancún, and compare it with pre-pandemic 2019 levels.
- Review cash conversion, capital spending commitments, dividend capacity, debt maturities, floating-rate exposure and covenant headroom.
- Monitor the outcome and potential cash impact of the COFECE fine appeal, employee profit-sharing appeal and other legal proceedings.
- Check for developments in COVID-19 travel conditions, Mexico’s Category 2 safety rating, and competing airport projects such as Tulum.