Grupo Aeroportuario del Sureste, S.A.B. de C.V. (



Q2 2011 Earnings Call

July 26, 2011 10:00 AM ET


Adolfo Castro Rivas – CEO


Vanessa Quiroga – Credit Suisse

Tomás Lajous – UBS

Angela Lieh – Citigroup

Roberto Ramos (ph) – Credit Suisse

Luis Wilit (ph) – GBM

Francisco Suarez Savin – HSBC

Augusto Ensiki – Morgan Stanley



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Good day, ladies and gentlemen, and welcome to ASUR’s Second Quarter 2011 Results Conference Call. I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference.

For opening remarks and introductions, I would like to turn the call over to Mr. Adolfo Castro, Chief Executive Officer. Please proceed, sir.

Adolfo Castro Rivas

Good morning, everybody. Thank you for joining us today for the conference call of our second quarter 2011 results.

I wanted to remind you that certain statements made during the course of our discussion today may constitute forward-looking statements, which are based on management’s current expectations and beliefs, and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including those that may be beyond our company’s control. For an explanation of these risks, please refer to ASUR’s filings with the Securities and Exchange Commission and the Mexican Stock Exchange.

Today, I will provide an update on Tulúm Airport and corporate manners and afterwards I will discuss passenger traffic performance and the results of the quarter.

With respect to Tulúm Airport, the public bidding process for the construction, operation and management for an international airport in the town of Tulúm was declared void in May because none of the technical bids presented by the participants complied with the requirements established in the bidding document. As a result the economic proposals were not opened and were returned to the bidding participants.

In terms of corporate matters, on April 27 ASUR shareholders approved an ordinary cash dividend for mature related with (inaudible) of Ps.3 per share that was paid on May 17. Last May, I was named Chief Executive Officer by the Board of Directors, effective June 1, 2011. Mr. Fernando Chico Pardo remains Chairman of the company and President of the nominations and compensations and operations and acquisitions and contract committee.

Our Board of Directors expect to name a new financial and strategic planning officer in (inaudible) and in the interim, I am overseeing the financial and strategic planning areas of the company. I feel really honored to have been chosen to become ASUR’s CEO. The opportunities for future growth and advancing our position in Mexican and Latin American export markets are very attractive. I look forward to continue to capitalize on our core strengths and as we move ahead on our strategy.

Moving to the results, as expected during the quarter passenger traffic increased 2.9% year-over-year, principally driven by the stronger passenger traffic at Cancún particularly in terms of the domestic traffic. Traffic volume was up 4.9% in April, 3% in May, 0.6% in June. Remember that this year, Monday and Wednesday of holy week fell in April. For the last year, they fell in March. Traffic, however, continues to be negatively affected by the disruption of Mexicana operations in August of last year and the suspension of operations at Aviacsa in April last year.

In summary, this is the lack of domestic airline seat capacity. This quarter, international passenger traffic declined share of total traffic down to 57.6% from 58.8% a year ago. Passenger traffic between Mexico, Canada and the United States represented 89.2% of the total traffic compared with the 89.7% posted in the same year – in the same year ago.

Looking forward, even if Mexicana and Aviacsa reinitiate operations this year, we continue to see capacity constraints on domestic market and expect this situation to be normalized by the end of the year 2012. Of course, domestic traffic comparisons are going to be easier during the second half of this year.

On international front, we see no growth from the U.S. market, some growth from Europe and a strong growth from Canada. Consolidated revenues increased 7.1% this quarter driven by the result – by the revenue increases across the board. Including construction revenues, total revenue would have increased 5.8%.

Commercial revenues per passenger reached a record high this quarter, up 8.3% year-on-year to Ps.66.2 per passenger. Increase in commercial revenues per passenger also reflects the direct operation of 25 convenience stores this quarter compared with the 14 stores directly operated a year ago. During the quarter, we opened the last additional store of the 14th week to cover last year from the concessionaire that was in Chapter 11.

Operating costs and expenses rose 3.9% year-on-year mainly as a result of increase in construction cost. Excluding construction cost services, total operating cost would have increased by only 2.3% reflecting higher depreciation and amortization resulting mainly from the investments made since the first quarter of 2010. And expenses related to the Mérida (ph). As a result of all these EBITDA rose % this quarter with EBITDA margin up to 56.8% from the 55.3% achieved in the first quarter of 2010.

During the quarter, we made capital investments of Ps.109 million, as we continue with tender expansions in Vera Cruz, Villahermorsa, Mérida and Oaxaca airports return in the first quarter of 2010. Working passenger flow operations at Cancún Airport has been completed and now thus improving the quality of our service and operations for our domestic passengers.

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