ASUR 4Q18 Passenger Traffic Increased 7.5% YoY in Mexico, 30.4% in Puerto Rico and 27.8% in Colombia

MEXICO CITY, Feb. 25, 2019 /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 twelve-month periods ended December 31, 2018.

4Q18 Highlights¹

• Passenger traffic in Mexico rose 7.5% YoY, reflecting increases of 12.3% and 3.0% in domestic and international traffic, respectively. Cancun Airport was the main traffic driver.

• Traffic in Puerto Rico (Aerostar) rose 30.4% YoY, driven by increases of 29.9% in domestic traffic and 34.9% 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 27.8% YoY, reflecting growth of 30.7% in domestic traffic and 12.6% in international traffic.

• Consolidated commercial revenues per passenger reached Ps.95.6.

• Consolidated EBITDA rose 26.9% YoY, reaching Ps.2,459.8 million.

• Cash position at year-end was Ps.4,584.5 million. Net Debt to LTM EBITDA stood at 1.1x, reflecting the consolidation of Puerto Rico (Aerostar) and Colombia (Airplan).

4Q18 Earnings Call

Date & Time:

Tuesday, February 26, 2019 at 10:00 AM US ET; 9:00 AM CT

Dial-in: 1-800-239-9838 (US & Canada); 1-323-794-2551 (International & Mexico). Access Code: 7821007.

Replay: Tuesday, February 26, 2018 at 1:00 PM US ET, ending at 11:59 PM US ET on March 5, 2019. Dial-in number: 1-844-512-2921 (US & Canada) 1-412-317-6671 (International & Mexico); Access Code 7821007.

¹ Unless otherwise stated, all financial figures discussed in this announcement are unaudited, prepared in accordance with International Financial Reporting Standards (IFRS), including application of IFRS 9 and 15 that came into force in 2018, and represent comparisons between the three- and twelve-month periods ended December 31, 2018, and the equivalent three- and twelve-month periods ended December 31, 2017.  On May 26, 2017, ASUR increased its share ownership in Aerostar to 60% from its prior 50% ownership. Accordingly, starting June 1, 2017, ASUR began to fully consolidate Aerostar results on a line by line basis, while until then, results were accounted for by the equity method. Furthermore, starting October 19, 2017, ASUR began to consolidate results of Airplan in Colombia. All figures in this report are expressed in Mexican pesos, unless otherwise noted. Tables state figures in thousands of pesos, unless otherwise noted. Passenger figures for Mexico and Colombia exclude transit and general aviation passengers, unless otherwise noted. Commercial revenues include revenues from non-permanent ground transportation and parking lots. All U.S. dollar figures are calculated at the exchange rate of US$1.00 = Mexican Ps. 19.6512 (source: Diario Oficial de la Federacion de Mexico) while Colombian peso figures are calculated at the exchange rate of COL$165.2900 = Ps. 1.00 Mexican pesos (source: Investing). Definitions for EBITDA, Adjusted EBITDA Margin, Majority Net Income can be found on page 17 of this report. 

Passenger Traffic

ASUR's total passenger traffic in 4Q18 rose 14.8% YoY to 13.1 million passengers, reflecting increases of 7.5% in traffic in Mexico, 30.4% in Puerto Rico, and 27.8% in Colombia. 

Passenger traffic growth of 7.5% in Mexico reflects increases of 12.3% and 3.0% in domestic and international traffic, respectively. Cancun was the main driver behind traffic growth, with increases of 14.4% and 3.4% in domestic and international traffic, respectively.  The majority of ASUR's other Mexican airports also contributed to higher traffic.

Traffic in Puerto Rico increased 30.4% YoY, recovering following the impact of Hurricane Maria, which hit the island in September 2017. Domestic traffic increased 29.9% YoY while international traffic rose 34.9%.

Colombia reported a 27.8% YoY increase in total traffic driven by growth of 30.7% and 12.6% in domestic and international 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 4Q18 declined 0.6% YoY, or Ps.23.4 million to Ps.3,924.2million, mainly driven by a 63.9%, or Ps.574.9 million, decline in revenues from construction services. This was mainly due to a decrease in construction revenues in Colombia, as well as lower construction revenues in Mexico and Puerto Rico as a result of lower capital expenditures and other investments in concessioned assets during the period.

This more than offset the following increases:

• 17.5% in revenues from aeronautical services to Ps.2,227.8 million. Mexico contributed with Ps.1,482.4 million in revenues from aeronautical services in 4Q18, while Puerto Rico and Colombia contributed with Ps.403.1 million and Ps.342.3 million, respectively; and

• 19.1% in revenues from non-aeronautical services to Ps.1,371.3 million, principally reflecting the 19.6% increase in commercial revenues. Mexico contributed with Ps.1,016.1 million in revenues from non-aeronautical services, while Puerto Rico and Colombia contributed with Ps.248.2 million and Ps.106.9 million, respectively.

Excluding revenues from construction services, which are deducted as costs under IFRS accounting standards, total revenues would have increased 18.1% YoY to Ps.3,599.0 million. Total revenues excluding revenues from construction services in Puerto Rico and Colombia in 4Q18 represented 18.1% and 12.5%, respectively, of ASUR's consolidated revenues excluding revenues from construction services.

Commercial Revenues in 4Q18 increased 19.6% YoY to Ps.1,259.1 million, mainly reflecting the 14.8% increase in total passenger traffic. Commercial revenues in Mexico rose 15.6% to Ps.906.5 million, mainly driven by increases in Duty Free, Food and Beverages, Retail, and Car Rentals, among others, principally reflecting the opening of Terminal 4 at Cancun Airport during 4Q17. Likewise, Puerto Rico reported an YoY increase of 22.6% to Ps.245.7 million in commercial revenues, and Colombia an increase of 56.7% to Ps.106.9 million.  

Commercial Revenues per Passenger were relatively stable at Ps.95.6 in 4Q18. Mexico contributed with commercial revenues per passenger of Ps.111.6 in 4Q18, Puerto Rico with Ps.122.2, and Colombia with Ps.35.2. During the period, commercial revenues per passenger increased 7.6% in Mexico and declined 6.0% in Puerto Rico and 0.3% in Colombia.  

Consolidated Operating Costs and Expenses

Consolidated Operating Costs and Expenses, including construction costs, for 4Q18 declined by 73.8% YoY, or Ps.5,440.9 million, to Ps.1,931.2 million. Excluding an impairment in fixed-assets in Puerto Rico in 4Q17 of Ps.4,719.1 million (equivalent to US$240.0 million) as a result of Hurricane Maria, costs and expenses declined by 27.2% or Ps.721.9 million. Excluding construction costs, operating costs and expenses declined by 11.5% or Ps.195.4 million.

In Puerto Rico, operating costs and expenses excluding construction costs declined 44.4%, or Ps.313.1 million, mainly as a result of: i) a Ps.198.7 million (US$10.4 million) loss in fixed assets reflecting the damages arising from Hurricane Maria, ii) a Ps.98.9 million reduction in the maintenance provision as per IFRIC12 in 4Q18, and iii) the recognition of Ps.98.8 million in amortization of the intangible asset resulting from the valuation of the investment in Aerostar in 4Q17, compared to Ps.44.8 million in 4Q18.

Mexico reported an 11.0%, or Ps.82.7 million, increase in operating costs and expenses excluding construction costs, principally as a result of increases in maintenance, energy, and security expenses. Higher cost of sales from the opening of stores directly operated by ASUR in Terminal 4 of Cancun Airport and professional fees in connection with diverse projects also contributed to the increase in costs.

Colombia reported an increase of 73.2%, or Ps.175.5 million, operating costs and expenses excluding construction costs composed of: i) Ps.159.3 million in cost of services, resulting from a Ps.199.7 million increase in the maintenance provision for the future replacement of fixed assets as of December 31, 2018 as per IFRIC12, partially offset by a Ps.45 million decline in the provision for uncollectible accounts, ii)  Ps.0.8 million in technical assistance costs, iii) concession costs of Ps.24.2 million, partially offset be a decline of Ps.149.2 million in amortization of the concession (includes Ps.28.6 million from the recognition of the intangible asset resulting from the valuation of Airplan under IFRS 3 and Ps.122.2 million in initial amortization of complementary works, offset by the decline in the accumulated amortization for committed works).

Cost of Services rose by 9.0%, or Ps.72.1 million. In Mexico, cost of services increased 3.9% YoY, or Ps.14.9 million, reflecting higher maintenance expenses from the opening of Terminal 4 in Cancun airport, along with higher cost of sales from convenience stores directly operated by ASUR. Increased energy, security, and maintenance expenses also contributed to the increase in cost of services. Cost of services in Colombia rose 124.4%, or Ps.159.3 milllion, reflecting a Ps.199.7 million increase in the maintenance provision for future replacement of assets in line with IFRIC 12, as well as higher energy costs, security and maintenance expenses. This was partially offset by a Ps.45.0 million decline in the provision for uncollectible accounts and lower professional fees. By contrast, in Puerto Rico, cost of services decreased by 34.8% YoY, or Ps.102.1 million, reflecting a Ps.98.9 million decline in the maintenance provision under IFRIC 12 and from the recognition in 4Q17 of Ps.21.6 million in extraordinary expenses resulting from Hurricane Maria.

Construction Costs declined by 55.2% YoY, or Ps.526.5 million. Mexico contributed with a decline in construction costs of 78.3%, or Ps.498.6 million and Colombia with a reduction of 65.8%, or Ps.159.0 million. This was partially offset by an increase of 172.8%, or Ps.131.2 million in Puerto Rico.

G&A Expenses, which reflect administrative expenses in Mexico, increased 34.1% YoY mainly reflecting higher travel expenses, professional fees and salaries.

Consolidated Technical Assistance increased 17.6% YoY, mainly reflecting EBITDA growth in Mexico excluding extraordinary items, a factor in the calculation of the fee.

Concession Fees increased 43.7% 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 4Q18 also reflect an increase in Puerto Rico and Colombia. 

Depreciation and Amortization declined 59.9%, or Ps.366.1 million, principally due to: i) a Ps.198.7 million (US$10.4 million) loss in fixed assets in Puerto Rico reflecting the damages arising from Hurricane Maria in 4Q17, ii) the recognition in 4Q17 of Ps.98.8 million in amortization of the intangible asset in Puerto Rico resulting from the valuation of the investment in Aerostar under IFRS 3, compared with Ps.44.8 million in 4Q18, and iii) in Colombia, a negative depreciation of Ps.1777.9 million resulting from the decline in the accumulated amortization rate of the concession, mainly in committed works where the accumulated amortization rate declined to 82.93% from 85.15%. This was partially offset by the recognition in 4Q18 of Ps.28.7 million from the amortization of the concesion resulting from the valuation of ASUR's investment in Airplan.

Consolidated Operating Profit and EBITDA

In 4Q18, ASUR reported a Consolidated Operating Profit of Ps.2,127.7 million and Operating Margin of 54.2%. This was mainly the result of increases of 17.5%, or Ps.331.3 million, in aeronautical revenues, and 19.1%, or Ps.220.2 million in non-aeronautical revenues. For 4Q18, Mexico reported an operating profit of 1,622.4 million, Puerto Rico of Ps.393.5 million, and Colombia Ps.71.8 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 59.1% in 4Q18 compared with negative 112.4% in 4Q17.

EBITDA increased 26.9%, or Ps.522.0 million, to Ps.2,459.8 million in 4Q18. EBITDA increased 16.3%, or Ps.257.2 milllion in Mexico, 78.1%, or Ps.240.2 million, in Puerto Rico, and 44.0%, or Ps.24.5 million in Colombia. 4Q18 EBITDA Margin was 62.7% compared to 49.1% in 4Q17.

Adjusted EBITDA Margin, which excludes the effect of IFRIC 12 with