ASUR 3Q18 Passenger Traffic Increased 6.7% YoY in Mexico, 3.8% in San Juan, Puerto Rico and 7.3% in Colombia

MEXICO CITY, Oct. 22, 2018 /PRNewswire/ -- Grupo Aeroportuario del Sureste, S.A.B. de C.V.  (NYSE: ASR; BMV: ASUR) (ASUR), a leading international airport group with operations in Mexico, the U.S. and Colombia, today announced results for the three-and nine-month periods ended September 30, 2018.

3Q18 Highlights¹

• Passenger traffic in Mexico rose 6.7% YoY, reflecting increases of 10.5% and 2.8% in domestic and international traffic, respectively. Cancun Airport was the main traffic driver.

• Traffic in Puerto Rico (Aerostar) increased 3.8%, as a 5.3% increase in domestic traffic more than offset the 5.9% decline in international traffic. The recovery in total passenger traffic reflects the impact of Hurricane Maria, which hit the island on September 21, 2017.

• Traffic in Colombia (Airplan) increased 7.3% YoY, reflecting increases of 6.4% in domestic traffic and 12.4% in international traffic.

• Consolidated commercial revenues per passenger reached Ps.92.5.

• Consolidated EBITDA rose 18.9% YoY, reaching Ps.2,278.3 million.

• Cash position at the end of the quarter reached Ps.4,569.1 million. Net Debt to LTM EBITDA stood at 1.22x, reflecting the consolidation of Aerostar and Airplan.

Passenger Traffic

ASUR's total passenger traffic in 3Q18 increased 6.3% YoY to 13.3 million passengers, reflecting increases of 6.7% in traffic in Mexico, 3.8% in Puerto Rico and 7.3% in Colombia. 

The 6.7% YoY growth in passenger traffic in Mexico reflects increases of 10.5% and 2.8% in domestic and international traffic, respectively. Cancun was the main driver behind traffic growth, with increases of 10.6% and 2.8% in domestic and international traffic, respectively, with the majority of ASUR's other Mexican airports also contributing to higher traffic.

Traffic in Puerto Rico increased 3.8% YoY, recovering following the impact of Hurricane Maria, which hit the island in September 2017. Domestic traffic increased 5.3% YoY, more than offsetting a decline of 5.9% in international traffic.

Colombia reported a 7.3% YoY increase in total traffic driven by increases of 12.4% and 6.4% in international and domestic traffic, respectively.

Tables with detailed passenger traffic information for each airport can be found on page 19 of this report.

Review of Consolidated Results

In May 2017, ASUR increased its share ownership in Aerostar, operator of LMM Airport in Puerto Rico, to 60% from its prior 50% ownership. Accordingly, until May 31, 2017, ASUR's ownership in Aerostar was accounted for by the equity method, while starting June 1, 2017, ASUR began to fully consolidate Aerostar results on a line by line basis. In addition, on October 19, 2017, ASUR acquired a 92.42% ownership stake in Airplan, which operates six airports in Colombia, and starting on that date, ASUR began to fully consolidate Airplan's operations on a line by line basis. On May 25, 2018, ASUR acquired a 7.58% ownership stake in Airplan, bringing its total share ownership in Airplan to 100.0%.

Consolidated Revenues

Consolidated Revenues for 3Q18 rose 14.0% YoY to Ps.3,682.0 million, mainly as a result of the following increases:

• 29.9% in revenues from aeronautical services to Ps.2,251.1 million. Mexico contributed with Ps.1,495.9 million in revenues from aeronautical services in 3Q18, while Puerto Rico and Colombia contributed with Ps.433.8 million and Ps.321.3 million, respectively; and

• 23.2% in revenues from non-aeronautical services to Ps.1,340.6 million, principally reflecting the 25.2% increase in commercial revenues. Mexico contributed with Ps.997.4 million in commercial revenues, while Puerto Rico and Colombia contributed with Ps.242.8 million and Ps.100.5 million, respectively.

This was partially offset by a 77.9% decline in revenues from construction services in Mexico, Puerto Rico and Colombia as a result of lower capital expenditures and other investments in concessioned assets during the period.

Excluding revenues from construction services, which are deducted as costs under IFRS accounting standards, total revenues would have increased 27.3% YoY to Ps.3,591.7 million. Total revenues in Puerto Rico and Colombia in 3Q17 represented 18.8% and 11.7%, respectively, of ASUR's consolidated revenues excluding revenues from construction services.

Commercial Revenues in 3Q18 increased 25.2% YoY, mainly reflecting the 6.3% increase in total passenger traffic, along with the contribution of Ps.100.5 million in Colombia in 3Q18. Commercial revenues in Mexico rose 14.5%, mainly driven by increases in Duty Free, Food and Beverages, Retail and Car Rentals, among others, mainly reflecting the opening of Terminal 4 at Cancun Airport during 4Q17. Likewise, Puerto Rico reported an YoY increase of 17.0%, or Ps.34.9 million in commercial revenues.

Commercial Revenues per Passenger declined to Ps.92.5 in 3Q18, from Ps.99.5 in 3Q17. Note that ASUR began to consolidate Aerostar's results (Puerto Rico) starting June 1, 2017 and Airplan (Colombia) beginning October 19, 2017. As a result, this decline in commercial revenues per passenger reflects the comparison of 3Q18 figures against operations in Puerto Rico for 3Q17, while Colombia is only included for 3Q18. Mexico contributed with commercial revenues per passenger of Ps.108.1 in 3Q18, Puerto Rico with Ps.108.0 and Colombia with Ps.35.0. During the period, and on a stand-alone basis, commercial revenues per passenger increased 7.6% in Mexico, 12.7% in Puerto Rico and 20.0% in Colombia.  

Consolidated Operating Costs and Expenses

Consolidated Operating Costs and Expenses, including construction costs, for 3Q18 increased by 28.6% YoY, or Ps.451.0 million, to Ps.2,025.5 million. Excluding construction costs, operating costs and expenses increased 59.2% to Ps.1,854.2 million, mainly impacted by the following increases:

• 15.9% in operating costs and expenses excluding construction costs, or Ps.125.1 million, in Mexico principally reflecting increases in professional fees, higher cost of sales from the opening of stores directly operated by ASUR in Terminal 4 of Cancun Airport, as well as higher security, energy and maintenance expenses in connection of the new terminal space;

• 32.1%, or Ps.120.6 million, in Puerto Rico, principally reflecting higher maintenance and energy costs as well as higher insurance costs in connection with Hurricane Maria. Costs also reflect higher depreciation and amortization from the recognition of the intangible asset resulting from the valuation of Aerostar under IFRS 3, which impacted amortization expenses by Ps.42.7 million; and

• A Ps.443.6 million contribution from Colombia in 3Q18, which was acquired on October 19, 2017. This was mainly due to Ps.139.8 million in cost of services, Ps.1.6 million in technical assistance costs, concession costs of Ps.79.9 million, as well as amortization of the concession of Ps.222.4 million (includes Ps.23.9 million from the recognition of the intangible asset resulting from the valuation of Airplan under IFRS 3, and Ps.133.9 million in initial amortization of complementary works).

Cost of Services increased 36.0%, mainly due to the increase in expenses of Ps.42.5 million in Puerto Rico reflecting higher energy, insurance and maintenance costs. Colombia contributed with Ps.139.8 million in expenses, from the consolidation of operations, mainly composed of energy, professional fees, security and maintenance expenses. Mexico contributed with a Ps.65.7 million increase in cost of services, reflecting higher maintenance expenses resulting from the opening of Terminal 4 in Cancun airport, along with higher cost of sales from convenience stores directly operated by ASUR. Higher energy, security, and maintenance expenses also contributed to the increase in cost of services.

Construction Costs declined 58.2% YoY to Ps.171.3 million, mainly due to lower levels of capital improvements made to the concessioned assets during the period. Mexico contributed with decline in construction costs of 77.5%, or Ps.317.2 million, more than offsetting the inclusion of Ps.63.1 million from Colombia, and a 15.9 million increase in Puerto Rico.

G&A Expenses, which reflect administrative expenses in Mexico, increased 13.3% YoY.

Consolidated Technical Assistance increased 13.5% YoY, mainly reflecting EBITDA growth in Mexico excluding extraordinary items, a factor in the calculation of the fee.

Concession Fees increased 119.6% YoY, principally reflecting higher fees paid to the Mexican government, mainly due to an increase in regulated revenues in Mexico, a factor in the calculation of the fee. Concession fees for 3Q18 also reflect an increase in Puerto Rico and the consolidation of Colombia.

Depreciation and Amortization increased 124.8%, or Ps.300.9 million, principally due to: i) a Ps.48.5 million increase in Puerto Rico derived from the recognition of the concession resulting from the valuation of the investment in Aerostar under IFRS 3 which impacted amortization by Ps.42.7 million, and ii) a Ps.222.4 million in depreciation in Colombia (includes Ps.23.9 million from recognition of the  amortization of the intangible asset resulting from the valuation of the investment in Airplan under IFRS 3, Ps.133.9 million in initial amortization of complementary works undertaken and Ps.64.6 million in amortization of committed works due to the increase in the accumulated amortization rate in the period).

Consolidated Operating Profit and EBITDA

In 3Q18, ASUR reported a Consolidated Operating Profit of Ps.1,656.5 million and Operating Margin of 45.0%. This was mainly the result of increases of 29.9%, or Ps.518.6 million, in aeronautical revenues, and 25.2%, or Ps.249.7 million in commercial revenues. For 3Q18, Puerto Rico reported an operating profit of Ps.180.3 million and Colombia reported an operating loss of Ps.102.8 million.

Adjusted Operating Margin, which excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned assets in Mexico, Colombia, and Puerto Rico, is calculated as operating profit divided by total revenues less construction services revenues; and was 46.1% in 3Q18 compared with 58.7% in 3Q17.

EBITDA increased 18.9%, or Ps.361.7 million, to Ps.2,278.3 million in 3Q18. Puerto Rico reported a decline in EBITDA of 5.7% to Ps.329.7 million, while Colombia contributed with Ps.200.6 million in EBITDA. Mexican operations reported an 11.5% YoY increase in EBITDA. During 3Q18, ASUR recognized Ps.90.3 million in Construction Revenues, a year-on-year decline of 77.9%, due to lower capital expenditures and investments in concessione