Grupo Aeroportuario del Sureste Q2 Earnings Call Highlights

Grupo Aeroportuario del Sureste Q2 Earnings Call Highlights

Key Points Passenger traffic fell 2.7% in Q2 to about 17 million, as weakness in Mexico and Puerto Rico outweighed growth in Colombia. Cancun remained under pressure, with management blaming lower U.S. demand, airline capacity issues, higher fares and sargassum. Revenue and profitability held up thanks to stronger commercial business and U.S. airport operations. Excluding construction items, revenue was roughly flat at MXN 7.4 billion, while EBITDA rose nearly 9% to MXN 4.6 billion and net majority income increased 7%. ASUR is pushing ahead with growth projects and shareholder returns, including Cancun terminal expansions, the Motiva airport portfolio acquisition, and a proposal to internalize technical-assistance services. The board also proposed two extraordinary cash dividends, supported by strong cash flow and a solid balance sheet.

Grupo Aeroportuario del Sureste NYSE: ASR said second-quarter passenger traffic declined as softer demand in Mexico and Puerto Rico offset continued growth in Colombia, while the airport operator advanced expansion projects, its proposed acquisition of Motiva’s airport portfolio and a plan to internalize technical-assistance services. Total passenger traffic fell 2.7% year over year to approximately 17 million passengers. Mexico traffic declined 5%, led by continued weakness at Cancun, while Puerto Rico traffic decreased 3.5%. Colombia traffic rose 3.6%, supported by demand and improved connectivity.

Chief Executive Officer Adolfo Castro said Cancun’s international traffic remained under pressure, particularly among U.S. travelers. He cited airline capacity constraints, Spirit Airlines’ bankruptcy, higher airfares associated in part with elevated jet fuel prices, and heavy sargassum conditions as factors affecting demand. Passenger volumes to and from the U.S., Europe, South America and Mexico declined 11.7%, 11.8%, 6.5% and 1.9%, respectively, while Canadian traffic increased 10.5%.

“The summer is lost,” Castro said in response to an analyst question on Cancun traffic, adding that the company expects conditions to improve following the summer season. Based on airline-published seat data, ASUR sees increased offered seats for November and December compared with the prior year.

Revenue Stable as Commercial Business Expands Excluding construction revenue and costs, quarterly revenue was broadly stable at MXN 7.4 billion. Non-aeronautical revenue increased nearly 10%, aided by MXN 444 million from ASUR’s U.S. airport commercial operations and 30% growth in Colombia. Aeronautical revenue declined by a mid-single-digit percentage, reflecting softer traffic in Mexico and Puerto Rico as well as the impact of a stronger Mexican peso on international operations and local operations with a U.S. dollar component. Commercial revenue per passenger increased nearly 13% to MXN 153. In Mexico, commercial revenue per passenger declined by a single-digit percentage to MXN 145.7, while Puerto Rico and Colombia posted low- and high-single-digit increases, respectively. The company added 40 commercial spaces over the past 12 months, including 29 in Colombia, eight in Puerto Rico and three in Mexico. During the quarter, ASUR completed a $125 million commercial transformation of JFK Terminal 8, opening more than 60 dining, retail, duty-free and experiential concepts.

Consolidated EBITDA rose nearly 9% to MXN 4.6 billion. EBITDA declined 9% in Mexico and 17% in Puerto Rico, while it increased 1% in Colombia. ASUR’s U.S. airports contributed MXN 20 million in EBITDA, which management said does not yet reflect the platform’s earnings potential. The adjusted EBITDA margin declined 560 basis points to 62%, due to lower revenue in Mexico and Puerto Rico and the consolidation of the low...