ASUR 2Q11 Passenger Traffic Up 2.89% YOY

MEXICO CITY, July 25, 2011 /PRNewswire/ -- Grupo Aeroportuario del Sureste, S.A.B. de C.V. (NYSE:ASR; BMV:ASUR), (ASUR) the first privatized airport group in Mexico and operator of Cancun Airport and eight other airports in southeast Mexico, today announced results for the three and six-month periods ended June 30, 2011.

2Q11 Highlights(1):

• EBITDA(2) increased by 10.00% to Ps.621.29 million
• Total passenger traffic was up 2.89%
• Total revenues increased by 7.07% due to increases of 5.38% in aeronautical revenues, 9.34% in non-aeronautical revenues and 9.39% in construction services revenues
• Commercial revenues per passenger increased by 8.26% to Ps.66.22
• Operating profit rose by 10.69%
• EBITDA margin increased to 56.76% from 55.25% in 2Q10

(1)  Unless otherwise stated, all financial figures discussed in this announcement are unaudited, prepared in accordance with Mexican Financial Reporting Standards (MFRS) and represent comparisons between the three and six-month periods ended June 30, 2011, and the equivalent three and six-month periods ended June 30, 2010. Results are expressed in nominal pesos. Tables state figures in thousands of pesos, unless otherwise noted. Passenger figures exclude transit and general aviation passengers. 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 = Ps. 11.7230.

(2)  EBITDA means net income before: provision for taxes, deferred taxes, profit sharing, non-ordinary items, comprehensive financing cost and depreciation and amortization. EBITDA should not be considered as an alternative to net income, as an indicator of our operating performance or as an alternative to cash flow as an indicator of liquidity. Our management believes that EBITDA provides a useful measure of our performance that is widely used by investors and analysts to evaluate our performance and compare it with other companies. EBITDA is not defined under U.S. GAAP or MFRS and may be calculated differently by different companies.  

Passenger Traffic

For the second quarter of 2011, total passenger traffic increased year-over-year by 2.89%. Domestic passenger traffic rose 5.73% while international passenger traffic increased 0.90%.

The 0.90% increase in international passenger traffic resulted mainly from an increase of 1.18% in international traffic at the Cancun airport.

The 5.73% increase in domestic passenger traffic was due to increases of 8.44%, 13.77%, 20.73% and 12.20% in domestic traffic at Cancun, Villahermosa, Huatulco and Merida, respectively. These increases were partially offset by the 18.44%, 22.51%, 9.78% and 5.91% declines in passenger traffic at Oaxaca, Minatitlan, Tapachula and Veracruz.

Passenger traffic for 1H11 increased 0.69% compared to 1H10, reflecting increases of 1.48% in domestic passenger traffic and 0.23% in international passenger traffic.

Consolidated Results for 2Q11

Total revenues for 2Q11 increased year-over-year by 7.07% to Ps.1,094.61  million. This was mainly due to increases of:

• 5.38% in revenues from aeronautical services, principally as a result of the 2.89% rise in passenger traffic;
• 9.34% in revenues from non-aeronautical services, reflecting the 10.53% increase in commercial revenues detailed below; and
• 9.39% increase in revenues from construction services as a result of improvements to its concessioned assets.

ASUR classifies commercial revenues as those derived from the following activities: duty-free stores, car rentals, retail operations, banking and currency exchange services, advertising, teleservices, non-permanent ground transportation, food and beverage, and parking lot fees.

Commercial revenues increased by 10.53% year-over-year during the quarter, principally due to higher passenger traffic. There were increases in revenues in the following activities:

• 22.31% in retail operations;
• 15.58% in parking lot fees;
• 12.62% in ground transportation;
• 12.09% in duty-free stores;
• 3.59% in other revenues;
• 1.88% in food and beverage;
• 1.54% in advertising; and
• 1.33% in banking and currency exchange services.

These increases were partially offset by revenue declines of:

• 53.34% in teleservices; and
• 2.64% in car rentals.

Construction revenues and expenses. As a result of ASUR's adoption of I-MFRS 17, "Service Concession Contracts", ASUR is required to include in its income statement an income line reflecting the income from construction or improvements to concessioned assets made during the period. During 2Q11, ASUR recognized Ps.134.94 million in "Construction Services" because of improvements to its concessioned assets, a 9.39% year-on-year increase. The same amount is recognized under the expense line "Construction Costs" because ASUR hires third parties to provide construction services.

Because equal amounts of Construction Revenues and Construction Expenses have been included in ASUR's income statement as a result of the application of I-MFRS 17, the increase in Construction Revenues in 2Q11 did not result in a proportionate increase in the EBITDA Margin, which is equal to EBITDA divided by total revenues.

Total operating costs and expenses for 2Q11 increased 3.93% year-over-year. This was primarily due to the following increases:

• 2.85% in concession fees paid to the Mexican government, mainly due to the decrease in regulated revenues (a factor in the calculation of the fee);
• 2.31% in administrative expenses, principally in security and travel expenses;
• 10.00% in the technical assistance fee paid to ITA, reflecting the increase in EBITDA for the quarter (a factor in the calculation of the fee);
• 6.37% in depreciation and amortization resulting mainly from higher investments made since 2Q11; and
• 9.39% in construction costs due to improvements made to the concessioned assets during the period.

These increases were partially offset by the 0.43% decline in cost of services.

Operating margin for the quarter increased to 48.08% from 46.51% in 2Q10. This was mainly due to the 7.07% increase in revenues, which more than offset the 3.93% increase in expenses during the period.

Comprehensive Financing Cost for 2Q11 declined year-over-year by Ps.11.34 million from Ps.3.5 million in 2Q10. During 2Q11, the Company reported net interest income of Ps.4.4 million, resulting from interest income of Ps.20.0 million and accrued interest expenses of Ps.15.6 million. During the quarter ASUR posted a Ps.0.5 million mark-to-market gain in its interest rate swap and an exchange rate loss of Ps.2.2 million.

During 2Q10, ASUR reported net interest income of Ps.4.4 million resulting from interest income of Ps.13.0 million and accrued interest expenses of Ps.8.6 million. This was partially offset by a Ps.0.9 million mark-to-market loss on the Company's interest rate swap and a Ps.14.9 million exchange rate loss.

Income Taxes. Following the changes in Mexican tax law that took effect January 1, 2008, which established a new flat rate business tax ("Impuesto Empresarial a Tasa Unica", or "IETU") and eliminated the asset tax, the Company evaluates and reviews its deferred assets and liabilities position under Mexican Financial Reporting Standards.

Income taxes for 2Q11 declined by 0.46%, or Ps.0.69 million year-over-year, principally due to the following factors:

• Provisional IETU payments of Ps.0.8 million caused by some of ASUR's subsidiaries;
• A Ps.5.5 million increase in the provision for income taxes, because Cancun Airport has paid income taxes instead of IETU since 2010, but in 2010 it still amortized fiscal losses;
• A Ps.9.4 million decline in deferred income taxes resulting from the recognition of the changes in fiscal depreciation rates beginning in 4Q10;
• A Ps.3.9 million increase in deferred IETU because of the expiry of tax credits; and
• A Ps.3.1 million increase in the provision for asset taxes because they cannot be credited against other taxes.

Net income for 2Q11 increased 12.04% to Ps.386.18 million from Ps.344.68 million in 2Q10. Earnings per common share for the quarter were Ps.1.2873, or earnings per ADS (EPADS) of US$1.0981 (one ADS represents ten series B common shares). This compares with earnings per share of Ps.1.1489, or EPADS of US$0.0981, for the same period last year.

Consolidated Results for 1H11

Total revenues for 1H11 increased year-over-year by 3.37% to Ps.2,157.5 million, mainly due to the following increases:

• 3.64% in revenues from aeronautical services as a result of the 0.69% increase in passenger traffic during the period; and
• 7.25% in revenues from non-aeronautical services, principally as a result of the 8.12% rise in commercial revenues detailed below.

These increases were partially offset by a 9.54% decline in revenues from construction services.

Commercial revenues for 1H11 rose by 8.12% year-over-year, principally as a result of revenue increases in the following areas:

• 15.50% in retail operations;
• 10.39% in parking lot fees;
• 10.62% in duty-free stores;
• 2.77% in ground transportation services;
• 7.11% in advertising.
• 1.66% in other income; and
• 2.33% in food and beverage.

These increases were partially offset by revenue declines in the following areas:

• 47.67% in teleservices;
• 1.94% in car rentals; and
• 0.52% in banking and currency exchange services.  

Total operating costs and expenses for 1H11 rose 1.29%, mainly due to the following increases:

• 2.15% in administrative expenses, principally telephone service, security, and travel expenses;
• 4.27% in cost of services, mainly reflecting the higher energy, security, maintenance and cleaning costs. Costs in connection with the opening of convenience stores directly operated by the Company at its airports beginning in November 2010 also contributed to the increase.
• 5.50% in technical assistance costs, reflecting the corresponding increase in EBITDA during the period;
• 1.06% in concession fees, mainly due to the increase in regulated revenues (a factor in the calculation of the fee); and
• 5.96% in depreciation and amortization mainly due to changes in the depreciation and amortization rates.

Construction costs, in turn, declined by 9.54% year-on-year.

Operating margin increased to 51.42% for 1H11, from 50.42% in 1H10.  This was mainly the result of the 3.37% increase in revenues which more than offset the 1.29% increase in administrative expenses for the period.

Net income for 1H11 increased by 4.03% to Ps.806.39 million. Earnings per common share for the period were Ps.2.6880, or earnings per ADS (EPADS) of US$2.2929 (one ADS represents ten series B common shares). This compares with Ps.2.5838, or EPADS of US$2.2040, for the same period last year.

Tariff Regulation

The Mexican Ministry of Communications and Transportation regulates the majority of ASUR's activities by setting maximum rates, which represent the maximum possible revenues allowed per traffic unit at each airport.

ASUR's regulated revenues for 1H11 were Ps.1,338.11 million, resulting in an annual average tariff per workload unit of Ps.143.70. ASUR's regulated revenues accounted for approximately 62.02% of total income for the period.

The Mexican Ministry of Communications and Transportation reviews compliance with the maximum rates on an annual basis at the close of each year.

Balance Sheet

On June 30, 2011, Airport Concessions represented 81.26% of the Company's total assets, with current assets representing 15.68% and other assets representing 3.06%.

Cash and cash equivalents on June 30, 2011 were Ps.1,366.44 million, 131.33% above the Ps.590.69 million in cash and cash equivalents recorded on June 30, 2010.

Shareholders' equity at the close of 2Q11 was Ps.14,701.85 million and total liabilities were Ps.3,644.58 million, representing 80.13% and 19.87% of total assets, respectively. Total deferred liabilities represented 62.09% of the Company's total liabilities.  

Total bank debt at June 30, 2011 was Ps.831.5 million, including Ps.1.0 million in accrued interest. During August and September of 2010, Cancun Airport entered into two three-year credit agreements of Ps.350 million and Ps.570 million with two banks. The terms of the agreement include a floating interest rate based on the Tasa de Interes Interbancaria de Equilibrio (TIIE) plus 1.5% and quarterly principal payments.

During the quarter, ASUR made principal payments of Ps.29.2 million in connection with the Ps.350 and 570 million three-year credit agreements .

During August 2010 ASUR purchased a hedge against the risk of a significant increase in TIIE. The Company is hedged for 32% of the interest rate exposure under its Ps.350 and 570 million credit agreements. The interest rate was fixed for three years at 6.37%, 6.33% and 6.21%(1). The interest rate hedge during the quarter resulted in a Ps.0.5 million gain.

Capital Expenditures

During 2Q11, ASUR made investments of Ps.109.45 million as part of ASUR's ongoing plan to modernize its airports pursuant to its master development plans.

Recent Events

Adolfo Castro Assumes CEO Position at ASUR; Fernando Chico Pardo Remains Chairman

On May 26, 2011, ASUR announced that Mr. Adolfo Castro was named Chief Executive Officer effective June 1, 2011 and that Mr. Fernando Chico Pardo, the Chairman and CEO, will remain Chairman of the Company and President of the Nominations and Compensation, Operations, and Acquisitions and Contracts Committees.

The Company's Board of Directors received and accepted Mr. Fernando Chico Pardo's resignation as Chief Executive Officer and approved the proposal presented by its Nominations and Compensations Committee to name Adolfo Castro to the position of Chief Executive Officer. ASUR's Board of Directors expects to name a new Chief Financial and Strategic Planning Officer shortly. In the interim, Mr. Castro will continue to oversee the financial and strategic planning areas of the Company.

2Q11 Earnings Conference Call

Day:  Tuesday, July 26, 2011

Time:   10:00 AM US EDT; 9:00 AM Mexico City time

Dial-in number:  888.713.4211 (US & Canada) and 617.213.4864 (International & Mexico)

Access Code:   18955383

Pre-registration:   If you would like to pre-register for the conference call use the following link:

https://www.theconferencingservice.com/prereg/key.process?key=PBEBKARFX

Pre-registering is not mandatory but is recommended as it will provide you immediate entry into the call and will facilitate the timely start of the conference. You will receive a code that allows you to enter the call directly.  Pre-registration only takes a few moments, and you may do so at any time, including up to and after call start time. To pre-register, please click the link above. Alternatively, if you would rather be placed into the call by an operator, please call at least 10 minutes prior to call start time.

Replay:  Starting Tuesday, July 26, 2011 at 12:00 PM US ET, ending at midnight US ET on Tuesday, August 2, 2011. Dial-in number: 888-286-8010 (US & Canada); 617-801-6888 (International & Mexico). Access Code: 58205801.

About ASUR:

Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR) is a Mexican airport operator with concessions to operate, maintain and develop the airports of Cancun, Merida, Cozumel, Villahermosa, Oaxaca, Veracruz, Huatulco, Tapachula and Minatitlan in the southeast of Mexico. The Company is listed both on the NYSE in the U.S., where it trades under the symbol ASR, and on the Mexican Bolsa, where it trades under the symbol ASUR. One ADS represents ten (10) series B shares.

Some of the statements contained in this press release discuss future expectations or state other forward-looking information. Those statements are subject to risks identified in this press release and in ASUR's filings with the SEC. Actual developments could differ significantly from those contemplated in these forward-looking statements. The forward-looking information is based on various factors and was derived using numerous assumptions. Our forward-looking statements speak only as of the date they are made and, except as may be required by applicable law, we do not have an obligation to update or revise them, whether as a result of new information, future or otherwise.

SOURCE Grupo Aeroportuario del Sureste, S.A.B. de C.V.