Business Context and Reporting Period
Company: Central North Airport Group (Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.), trading as OMA (NASDAQ: OMAB; BMV: OMA).
Reporting Period: Second Quarter 2016 (ended June 30, 2016).
Business Overview: OMA operates 13 international airports in central and northern Mexico, including major hubs in Monterrey, Acapulco, Mazatlán, and Zihuatanejo. The company also manages hotel services (NH Collection Terminal 2, Hilton Garden Inn) and industrial services (OMA VYNMSA Aero Industrial Park).
Key Financial Metrics (2Q16)
| Metric | Value (MXN) | YoY Change |
|---|---|---|
| Total Revenues (incl. construction) | 1,339 million | +21.0% |
| Aeronautical Revenues | 955 million | +27.0% |
| Non-Aeronautical Revenues | 337 million | +24.5% |
| Adjusted EBITDA | 808 million | +36.8% |
| Adjusted EBITDA Margin | 62.5% | +478 bps |
| Operating Income | 660 million | +46.3% |
| Net Income | 446 million | +60.9% |
| Earnings Per Share (ADS) | US$ 0.49 | N/A |
| Total Debt | 4,699 million | N/A |
| Net Debt | 2,782 million | N/A |
| Net Debt / Adjusted EBITDA | 0.98x | N/A |
| Cash and Equivalents (as of June 30) | 1,916 million | N/A |
Material Changes vs. Prior Period
- Traffic Growth: Total terminal passenger traffic increased 8.7% to 4.5 million. Domestic traffic rose 10.4%, while international traffic declined 2.3%.
- Revenue Drivers: Aeronautical revenue growth was driven by passenger volume increases, tariff optimization, and peso depreciation. Non-aeronautical revenue growth stemmed from diversification initiatives and commercial service improvements.
- Cost Control: Total operating costs and expenses increased only 3.6%, significantly lagging revenue growth, which expanded margins.
- Route Expansion: Eleven new routes were opened (nine domestic, two international), with significant growth in Durango (+49.7%) and Ciudad Juárez (+30.6%).
- Dividend Payment: Financing activities showed a significant cash outflow of Ps. 1,526 million, primarily due to an annual dividend payment of Ps. 1,400 million.
Guidance, Outlook, and Risks
Revised 2016 Outlook
OMA has revised its full-year 2016 estimates upward based on strong H1 performance:
- Passenger Traffic Growth: Revised to 8%–10% (previously 6%–8%).
- Aeronautical Revenue Growth: Revised to 24%–26% (previously 22%–24%).
- Non-Aeronautical Revenue Growth: Revised to 17%–19% (previously 13%–15%).
- Adjusted EBITDA Margin: Revised to 61%–63% (previously 60%–62%).
- Investment Expenditures: MDP cash investments remain unchanged at Ps. 1,500–1,700 million; strategic investments remain at Ps. 150–250 million.
Risks and Contingencies
- Forward-Looking Uncertainty: Results depend on airline expansion plans, ticket prices, commercial project evolution, and macroeconomic conditions including oil prices.
- Legal Liability: Potential joint liability with airlines regarding damages from checked baggage screening if willful misconduct is proven.
- Currency Exposure: While 95% of debt is in Mexican pesos, revenue benefits from peso depreciation against the U.S. dollar.
Investor Verification Checklist
- Verify the sustainability of the 8.7% passenger traffic growth, specifically the divergence between domestic (+10.4%) and international (-2.3%) trends.
- Confirm the impact of the revised 2016 guidance on full-year earnings per share projections.
- Review the cash flow statement impact of the Ps. 1,400 million dividend payment on liquidity for the remainder of the year.
- Monitor the execution of the new Acapulco terminal construction (Ps. 547 million investment) and Zihuatanejo expansion.
- Assess the stability of the Adjusted EBITDA margin (62.5%) given the heavy reliance on tariff optimization and commercial diversification.