Grupo Aeroportuario del Sureste (ASUR), the first privatized airport group in Mexico and operator of Cancun Airport and…
Grupo Aeroportuario del Sureste (ASUR), the first privatized airport group in Mexico and operator of Cancun Airport and eight others in the southeast of Mexico, today announced results for the three- and six -month periods ended June 30, 2003.
Passenger Traffic
For the second quarter of 2003, year-over-year total passenger traffic increased by 10.19%; domestic passenger traffic increased by 16.37%; and international passenger traffic increased by 6.09%.
The 16.37% increase in domestic passenger traffic reflects among other elements, the fact that Holy Week — one of the main vacation periods in Mexico — was in April this year, whereas last year Holy Week was in March, and therefore reflected in the first quarter figures for 2002.
The 6.09% growth in international passenger traffic was mainly due to an increase in passenger traffic at the Cancun airport. This was the result of increased flights on the Cancun-Panama route by the airline Mexicana de Aviacion; the June opening by America West of the Phoenix-Cancun route, which is operating at 85% capacity; as well as larger planes flown by Delta Airlines in response to increased demand. In addition, in January 2003 a new route to Houston was opened at the Villahermosa airport, which has increased demand.
Total, domestic and international passenger traffic for the first half of the year increased year-over-year by 9.19%, 10.93% and 8.13%, respectively.
Consolidated Results for 2Q03
Total revenues for 2Q03 reached Ps.357.9 million, representing a year-over-year increase of 13.31%. This was mainly due to:
- An increase of 11.50% in revenues from aeronautical services, principally as a result of the above-mentioned increase in passenger traffic; and,
- An increase of 21.00% in revenues from non-aeronautical services, principally as a result of the 29.51% year-over-year improvement in commercial revenues.
ASUR classifies revenues from the following activities as commercial revenues: duty free, car rental, retail, banking and currency exchange, advertising, teleservices, non-permanent ground transportation, food and beverage and parking lots.
Commercial revenues improved year-over-year by 29.51%, mainly due to:
- A 12.76% increase in duty-free revenues, primarily as a result of the increase in international passenger traffic as well as an increase in the variety of products offered by the duty-free operators.
- An increase of 30.85% in food and beverage revenues, primarily as a result of the opening of restaurants and bars in the Veracruz, Oaxaca, Huatulco, and Merida airports as well as the increase in passenger traffic during the quarter.
- A 65.92% increase in retail revenues, as a result of the opening of new convenience stores at the Veracruz, Huatulco, Tapachula and Villahermosa airports, as well as the increase in passenger traffic during the quarter.
- A 70.16% increase in advertising revenues, resulting from the dedication of additional space for advertising and the distribution of print advertising at the Cancun airport.
- A 92.93% increase in revenue from banking and currency exchange, resulting from American Express being fully operational after the completion of the remodeling of Terminal 2, and increased demand for currency exchange resulting from higher passenger traffic during the quarter.
Total operating costs and expenses for the second quarter increased year-over-year by 5.17%, mainly as a result of:
- A 5.55% rise in costs of services, mainly due to a 40.53% increase in the cost of energy resulting from the rate increase.
- A 0.72% increase in administrative expenses.
- A 16.91% increase in the cost of technical assistance, mainly as a result of the increase in EBITDA for the period (a basis for the calculation of the fee).
- A 13.33% increase in concession fees due to the year-over-year improvement in revenues during the quarter.
- A 3.47% increase in depreciation and amortization, mainly due to the capitalization of investments in fixed assets and improvements made to assets under the concession.
Operating margin for the quarter improved year-over-year to 33.96%, from 28.84%. This was mainly due by the above-mentioned increase in revenues, primarily from aeronautical revenues, as well as cost controls.
Mexican companies are required to pay the greater of either income tax liability or asset tax liability (determined at a rate of 1.8% of the average fiscal value of virtually all of the company`s assets (including, in ASUR`s case, the concessions), less the average fiscal value of certain liabilities (essentially liabilities of companies resident in Mexico, excluding those related to financial institutions and their intermediaries)). ASUR made asset tax payments of Ps.41.1 million for the second quarter. Of these payments, Ps. 24.3 million were recorded as an expense in the results for the quarter. The difference was recorded as an asset, since the Company expects to recover Ps. 16.8 million in income tax payments.
During the quarter, the Company recorded an extraordinary expense of Ps.12.64 million incurred in connection with the termination of certain lease agreements in anticipation of the remodeling of the satellite building at Cancun airport.
Net income for the quarter increased year-over-year by 19.82% to Ps.72.52 million. This was principally due to:
- The above-mentioned increase in revenues for the period.
- The decline in the deferred tax provision derived from the recognition of the decline in the corporate tax rate to 32% from 35%, in line with Generally Accepted Accounting Principles in Mexico and local tax law.
- The decline in the asset tax provision, which in line with the results for the airports of Cozumel, Merida, Oaxaca, Veracruz and Villahermosa, was adjusted to reflect the amount that exceeded the provision for deferred taxes recorded for the corresponding period. This adjustment was made in accordance with Bulletin D-4 of the Generally Accepted Accounting Principles in Mexico.
Earnings per common share for the quarter were Ps.0.2417, or earnings per ADS (EPADS) (one ADS represents ten series B common shares) of US$0.2316, compared with earnings per common share of Ps.0.2017, or EPADS of US$0.1933 for the same period last year.
Consolidated Results for Six-Month Period
Total revenues for the six-month period were Ps.722.7 million, reflecting a year-over-year increase of 12.53%. This was mainly due to:
- An increase of 9.99% in revenues from aeronautical services, resulting from the increase in domestic and international passengers during the period; and,
- An increase of 23.65% in revenues from non-aeronautical services, principally as a result of the 34.30% year-over-year improvement in commercial revenues.
The Mexican airlines Aeromexico, Mexicana de Aviacion, Aerolitoral, Aeromar and Aerovias Caribe oppose the adjustment in ASUR`s rates implemented in June 2001 following approval by Mexico`s Ministry of Communications and Transportation. The five airlines suspended this payment in June of 2001 and initiated a lawsuit against the Ministry of Communications and Transportation to challenge the rate adjustment. To date, the incremental sum that the five airlines have not paid is Ps.12.1 million. Legal proceedings regarding this matter are currently on-going.
Similarly, the same airlines informed ASUR in May of 2002 of their desire to extend the payment deadline for passenger charges to 115 days, from the current term of 60 days. As a result, starting in June 1, 2002 the five airlines did not make payments that should have been made according to the original 60-day payment schedule. As of June 30, 2003 Ps.65.8 million was overdue from these airlines, as calculated on the original 60-day term.
Commercial revenues for the six-month period increased year-over-year by 34.30%, mainly due to:
- An 11.52% rise in duty-free revenues, principally due to the increase in international passengers at the Cancun and Cozumel airports.
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- A 44.13% increase in food and beverage revenues due to the opening of restaurants and bars in Cancun, Merida and Cozumel airports during the first half of the year.
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- A 57.45% increase in retail revenues, reflecting the opening of new convenience stores at the Huatulco, Tapachula, Villahermosa and Veracruz airports, the increase in average spending per passenger at the stores at the check-in areas, particularly at the Cancun airport, and the increase in international passenger traffic during the period.
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- A 104.34% increase in banking and currency exchange revenues.
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- A 139.64% increase in advertising revenues.
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Operating costs and expenses for the six-month period increased year-over-year by 4.59%.
The cost of services for the six months rose by 2.80% from the same period of last year, due to increases in the costs of energy and maintenance.
Administrative expenses increased by 4.24%, mainly as a result of a wage increase granted to non-unionized staff employees during the second quarter of 2002.
Technical assistance costs for the period increased by 16.66%, due to the corresponding increase in EBITDA during the period.
The 12.55% increase in concession fees was due to the year-to-date increase in overall revenues.
Depreciation and amortization for the period rose by 3.47%, mainly due to the above-mentioned capitalization of investments in fixed assets and improvements made to concession assets.
Operating margin for the six-month period increased to 37.02% from 32.24% for the equivalent period last year, primarily due to the increase in revenue and cost controls.
Net income for the six-month period increased year-over-year by 38.87% to Ps.160.12 million. Earnings per common share for the period were Ps.0.5338, or EPADS of US$0.5114, compared with earnings per common share of Ps.0.3843, or EPADS of US$ 0.3683 for the same period last year.
Tariff Regulation
The Mexican Ministry of Communications and Transport regulates the majority of ASUR`s activities through maximum rates, which represent the rates for the maximum possible revenues allowed per traffic unit at each airport.
ASUR`s regulated revenues for the six-month period were Ps.615.00 million, resulting in a year-to-date average tariff per traffic unit of Ps.95.78.
The Mexican Ministry of Communications and Transportation reviews compliance with the maximum rates on an annual basis at the close of each year.
Balance Sheet
On June 30, 2003, Airport Facility Usage Rights and Airport Concessions represented 84.92% of the Company`s total assets, with current assets representing 6.87% and other assets representing 8.21%.
On June 30, 2003, cash and marketable securities were Ps.585.22 million. On the same date, shareholders` equity represented 95.10% and total liabilities represented 4.90% of ASUR`s total assets. Total deferred liabilities represented 76.57% of the Company`s total liabilities.
On May 27, 2003, ASUR paid Ps.150.00 million in dividends. On June 17, 2003, ASUR paid Ps.77.27 million in taxes on those dividends.
Capex
During the first quarter of 2003 ASUR made investments of Ps.41.7 million as part of the Company`s ongoing plan to modernize the airports of the group.
Grupo Aeroportuario del Sureste, S.A. de C.V. (ASUR) is a Mexican airport operator with concessions to operate, maintain and develop the airports of Cancun, Merida, Cozumel, Villahermosa, Oaxaca, Veracruz, Huatulco, Tapachula and Minatitlan in the southeast of Mexico. The Company is listed both on the NYSE in the U.S., where it trades under the symbol ASR, and on the Mexican Bolsa, where it trades under the symbol ASUR. One ADS represents ten (10) series B shares.
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