Grupo Aeroportuario Del Sureste's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Grupo Aeroportuario del Sureste (ASR)

Q1 2012 Earnings Call

April 25, 2012 10:00 AM ET


Adolfo Castro Rivas – CEO


Stephen Trent – Citigroup

Luis Willard – GBM

Nicolai Sebrell – Morgan Stanley

Neal Dihora – Morningstar



Good day ladies and gentlemen, and welcome to the ASUR's First Quarter 2012 Results Conference Call. My name is Jesenia (ph) and I will be your operator for today. At this time, all participants are in a 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.

Adolfo Castro Rivas

Thank you Jesenia (ph) and good morning everyone. Thank you for joining us today for the conference call for the first quarter 2012 results. Allow me to remind you that certain statements made here in the course of our discussion today may constitute forward looking statements which are based on current management 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.

On today's call, I will provide an update on the operations and traffic performance for the quarter and afterwards a brief review of the results. In terms of our international expansion strategy, as anticipated on March 15 we presented our indicative beep for the privatization of San Juan de Puerto Rico Airport and we are now one of the two participants shortlisted to present the final piece. We do not have technical date for when these have to take place but we believe the final piece would have to be presented sometime in May.

With respect to corporate matters our holders of actual B shares ITA have the right to elect two board members while holder of 10% of ASUR's B shares can elect one member of our Board of Directors. As a result ITA, Grupo ADO and Fernando Chico have nominated the following people to ASUR's Board of Directors. Fernando Chico Pardo and his alternate (inaudible) Jose Antonio Anton and his alternate (inaudible), Luis Chico Pardo and (inaudible). These appointments will be made at tomorrow's annual shareholders meeting.

Turning now to the results this was a very good quarter. Passenger traffic was up by 10.4% year-on-year to a $5.1 million record high. Growth was mainly driven by the 19.8 rise in domestic traffic which reached 1.8 million passengers this quarter, the second highest quarter, following the peak of $1.9 million achieved in 2008.

All airports performed well with domestic traffic particularly strong at Cancun, Merida and (inaudible) airports. In fact domestic traffic at Cancun has fully recovered from the negative impact of the disruption of (inaudible) and the last 12 months passenger traffic now exceeded the peak post in 2008.

The smaller airports however still reflect the impact of lack of domestic airlines seat capacity. International traffic was up by 0.8% to 3.3 million passengers, also a record high this quarter. The share of international passenger traffic however down to 65% of the total traffic from the 67% in the first quarter 2011. Passenger traffic between Mexico, Canada and the United States represented 89% of the total traffic compared with 90% a year ago.

Consolidated revenues were up by 20.9% this quarter driven by revenue growth across the board. Excluding construction total revenue will have increased 19.4%. Commercial revenues for passenger rose to 75.63 pesos, another record high. Operating cost and expenses rose 15.9% year-on-year mainly due to higher construction cost and cost of services.

Excluding construction cost, operating cost will have risen by 11.9%. Remember that including this line item, all the cost associated with the volume of our convenience, those which posted higher sales and then higher cost during the period.

Higher energy cost and expenses in connection with our participation in international bidding processes, also job increasing cost. EBITDA was up by 22.4% this quarter with EBITDA margin up by 66 basis points year-on-year to 64.4%. This quarter we invested 152.35 million pesos and we continue with the terminal expansions in Veracruz, Villahermosa, Mérida and Wahaca Airports.

We also closed the quarter with a strong balance sheet with cash and cash equivalents up 35.3% to 2.1 billion pesos and bank debt of 6.174 (ph) million. Finally our Board of Directors has also proposed a 3.6 pesos per share as dividend for the ordinary shares and B shares. IT will be disclosed at our next shareholders meeting that will take place tomorrow.

Now let me open the floor for questions. Please Jesenia (ph), go ahead.

Question-and-Answer Session


(Operator Instructions). Your first question comes from the line of (inaudible) from Goldman Sachs. Please proceed.

Unidentified Analyst

I have two questions. The first one is referring to commercial revenues. We saw that commercial revenues per passenger grew (inaudible) during the first quarter. We wonder if it's a seasonal or if you see that a strong growth is supposed to continue in the coming quarters. And the second question is regarding the five year investment plan that’s supposed to end next year. What is (inaudible) discussions with the government to the new plan and what are your thoughts on that?

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