Grupo Aeroportuario Del Sureste Management Discusses Q1 2011 Results - Earnings Call Transcript

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

Q1 2011 Earnings Call

April 27, 2011 10:00 am ET


Adolfo Castro Rivas – Chief Financial and Strategic Planning Officer


Vanesa Quiroga – Credit Suisse

Mauricio Alfonso Santos Mayorga – GBM

Neal Dihora – Morningstar

Claudia Medina – Itaú Asset Management



Good day, ladies and gentlemen, and welcome to ASUR’s First Quarter 2011 Results Conference Call. My name is Veronica and 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. (Operator Instructions).

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

Adolfo Castro Rivas

Thank you, Veronica, and good morning, everybody. Thank you for joining us today for the conference call of our first 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 risks 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 afterwards I will discuss passenger traffic performance and the results of the quarter.

Moving on to Tulúm (inaudible) construction, management, operation and exploitation of the public airport to be built in the town of Tulúm in the state of Quintana Roo. At ASUR, we are still awaiting (inaudible).

As we have mentioned before, on January COFECO, the Antitrust Agency in Mexico released its petition not allowing ASUR to bid in the bidding process. We disagree with this decision and the views expressed by the Commission, as they are eliminating participants in the competition to offer the lowest rate at the airport.

Remember that the criteria established in the beginning of the process, but be clear that the winner will be the one who offers the lowest rate. Because of this, we have initiated legal proceedings in accordance with Mexican legislation to defend our social rights. However, we cannot provide any assurance that any legal proceedings to challenge the COFECO decision would be successful, or that COFECO will be able to participate in the bidding process as a result of such proceedings. (inaudible) would allow us to participate in the process.

At the same time, if the airport were to be granted, the granting authority has agreed to adjust Cancún’s MDP and maximum rate as a result of the negative effect that this airport will have intense impact on this front. The agreement is to make the adjustments within 90 days after the concession is granted.

Moving to the results, as expected passenger traffic during the first quarter declined by 1.3% year-over-year, principally driven by the (inaudible) traffic reflecting capacity constraints following the discontinuation of operations at Mexicana. Traffic was flat in January, fell 1.5% in February, and 2.3% in March. Remember that during 2010, (inaudible) 2011 they fell in April.

As a result of this, international passenger traffic continues to increase its shares of total traffic, up to 57.4% from the 53.7% year ago. Passenger traffic between Mexico, Canada and the United States represented 90.3% of the total traffic compared with 91.6% posted in the first quarter 2010.

(inaudible) air traffic is expected to (inaudible) Tulúm Airport next week. However, even if Mexicana (inaudible) re-initiate operations this year, we continue to see capacity constraints on domestic markets and expected this situation be normalized by the end of the year 2012.

Consolidated revenues declined 40% this quarter, following (inaudible) 24% decline in consolidated revenues. Excluding construction revenues, total revenue would have increased 3.1%, reflecting higher traffic (inaudible) more than offset the 1.3% decline in the total traffic. Commercial revenues per passenger remained strong, up 8% year-on-year to Ps. 63 and above the record high of Ps. 61.33, achieved in the fourth quarter 2009. The increase in commerical revenues per passenger also reflects the direct operation (inaudible) first quarter 2011 compared to those of the year ago. During the quarter, (inaudible) from a concessioner that was in Chapter 11.

Operating costs and expenses rose 1.7% year-on-year, mainly as a result of the improvement (inaudible) Excluding the Service Construction Contracts, total operating costs would have increased 2.1%, reflecting the higher (inaudible) addition of a direct store who are operating directly. (inaudible) As a result of all of these, EBITDA rose 1.9% this quarter with EBITDA margin up 63.7% from the 62.6% in the first quarter 2010.

During the quarter, we made capital investments of Ps. 51 million as we continue with the terminal expansions in Veracruz, Villahermosa and Oaxaca airports depending on first quarter of 2010 and the passengers operations at Cancún airport.

In terms of our balance sheet, cash and cash equivalents at the end of the quarter increased 50% to Ps. 1.85 billion. Bank debt at year end totaled Ps. 815 million.

Now, let me open the floor for questions. Please, Veronica, go ahead. Operator?

Question-and-Answer Session


(Operator Instructions) Your first question comes from the line of Vanesa Quiroga from Credit Suisse. Please proceed.

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