ASUR 3Q11 Passenger Traffic Up 8.15% YOY

MEXICO CITY, Oct. 20, 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 nine-month periods ended September 30, 2011.

3Q11 Highlights(1):

• EBITDA(2) increased by 44.95% to Ps.588.21 million

• Total passenger traffic was up 8.15%

• Total revenues increased by 9.78% due to increases of 12.75% in aeronautical revenues and 13.34% in non-aeronautical revenues, which more than offset the 11.85% decline in construction services revenues

• Commercial revenues per passenger increased by 7.11% to Ps.64.39

• Operating profit rose by 64.71%

• EBITDA margin increased to 56.07% from 42.47%  in 3Q10

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 nine-month periods ended September 30, 2011, and the equivalent three and nine-month periods ended September 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. 13.7994.
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 third quarter of 2011, total passenger traffic increased year-over-year by 8.15%. Domestic passenger traffic rose 12.07% while international passenger traffic increased 4.65%.

The 12.07% increase in domestic passenger traffic was due to increases of 9.95%, 151.76%, 37.23%, 37.28%, 10.30%, 5.12% and 4.47% in domestic traffic at Cancun, Cozumel, Huatulco, Villahermosa, Merida, Veracruz and Oaxaca, respectively. These increases were partially offset by the 26.17%, and 8.24% declines in passenger traffic at Tapachula and Minatitlan. The 4.65% increase in international passenger traffic resulted mainly from an increase of 5.59% in international traffic at the Cancun airport.

Passenger traffic for the nine-month period ended September 30, 2011 increased 3.00% compared to the same period in 2010, reflecting increases of 5.31% in domestic passenger traffic and 1.44% in international passenger traffic.

Consolidated Results for 3Q11

Total revenues for 3Q11 increased year-over-year by 9.78% to Ps.1,048.98  million. This was mainly due to increases of:

• 12.75% in revenues from aeronautical services, principally as a result of the 8.15% rise in passenger traffic; and

• 13.34% in revenues from non-aeronautical services, reflecting the 15.15% increase in commercial revenues detailed below.

These increases were partially offset by the 11.85% decline in revenues from construction services as a result of reduced capital expenditures and other investments in concessioned assets during the period.

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 15.15% year-over-year during the quarter, principally due to higher passenger traffic. There were increases in revenues in the following activities:

• 48.30% in ground transportation;
• 22.62% in retail operations;
• 18.67% in food and beverage;
• 14.24% in duty-free stores;
• 14.10% in teleservices;
• 11.45% in parking lot fees;
• 7.02% in other revenues;
• 6.77% in advertising; and
• 5.00% in banking and currency exchange services.

These increases were partially offset by a decrease of 3.92% in car rental revenues.

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 3Q11, ASUR recognized Ps.107.70 million in revenues from "Construction Services" because of improvements to its concessioned assets, an 11.85% year-on-year decrease. 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 decline in Construction Revenues in 3Q11 did not result in a proportionate decline in the EBITDA Margin, which is equal to EBITDA divided by total revenues.

Total operating costs and expenses for 3Q11 decreased 15.16% year-over-year. This was primarily due to the following declines:

• 27.44% in costs of services principally reflecting the one-time increase in 3Q10 of the reserve for doubtful accounts resulting from the bankruptcy announced by Grupo Mexicana de Aviacion in that period, which did not impact 3Q11 results;
• 11.85% in construction costs due to fewer improvements made to the concessioned assets during the period; and
• 9.94% in depreciation and amortization resulting mainly from the net effect of the elimination of pre-operative expenses in 2010 at one of the Company's subsidiaries.

These declines were partially offset by the following increases:

• 44.95% in the technical assistance fee paid to ITA, reflecting the increase in EBITDA for the quarter (a factor in the calculation of the fee);
• 8.47% in concession fees paid to the Mexican government, mainly due to an increase in regulated revenues (a factor in the calculation of the fee); and
• 3.71% in administrative expenses, principally due to an increase in marketing expenses, including ASUR's participation in the World Route Development Forum and telephone service.

Operating margin for the quarter increased to 46.85% from 31.23% in 3Q10. This was mainly due to the 9.78% increase in revenues and the 15.16% decrease in expenses during the period.

Comprehensive Financing Cost for 3Q11 increased year-over-year by Ps.14.19 million, to Ps.21.23 million from Ps.7.04 million in 3Q10. During 3Q11, the Company reported net interest income of Ps.6.13 million, resulting from interest income of Ps.19.81 million and accrued interest expenses of Ps.13.68 million. During the quarter ASUR posted a Ps.0.64 million mark-to-market gain in its interest rate swap and an exchange rate gain of Ps.14.44 million.

During 3Q10, ASUR reported net interest income of Ps.0.24 million resulting from interest income of Ps.9.15 million and accrued interest expenses of Ps.8.91 million. During the quarter ASUR reported a Ps.0.27 million mark-to-market gain on the Company's interest rate swap and a Ps.6.51 million exchange rate gain.

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 3Q11 increased by 77.92%, or Ps.65.10 million year-over-year, principally due to the following factors:

• Provisional IETU payments of Ps.2.23 million by some of ASUR's subsidiaries;
• A Ps.34.57 million increase in the provision for income taxes, because of the increase in operating profit at Cancun Airport;
• A Ps.18.74 million increase in deferred income taxes resulting from the recognition of the changes in fiscal depreciation rates beginning in 4Q10;
• A Ps.6.45 million increase in deferred IETU because of the expiry of tax credits; and
• A Ps.3.11 million increase in the provision for asset taxes because they cannot be credited against other taxes.

Net income for 3Q11 increased 63.94% to Ps.363.69 million from Ps.221.85 million in 3Q10. Earnings per common share for the quarter were Ps.1.2123, or earnings per ADS (EPADS) of US$0.8785 (one ADS represents ten series B common shares). This compares with earnings per share of Ps.0.7395, or EPADS of US$0.5359, for the same period last year.

Consolidated Results for 9M11

Total revenues for 9M11 increased year-over-year by 5.39% to Ps.3,206.5 million, mainly due to the following increases:

• 6.45% in revenues from aeronautical services as a result of the 3.00% increase in passenger traffic during the period; and

• 9.13% in revenues from non-aeronautical services, principally as a result of the 10.28% rise in commercial revenues detailed below.

These increases were partially offset by a 10.37% decline in revenues from construction services.

Commercial revenues for 9M11 rose by 10.28% year-over-year, principally as a result of revenue increases in the following areas:

• 17.80% in retail operations;
• 14.08% in ground transportation services;
• 11.68% in duty-free stores;
• 10.76% in parking lot fees;
• 7.00% in advertising.
• 6.85% in food and beverage;
• 3.36% in other income; and
• 1.05% in banking and currency exchange services.  

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

• 32.45% in teleservices; and
• 2.61% in car rentals.

Total operating costs and expenses for 9M11 decreased 5.10%, mainly due to the following declines:

• 10.37% in construction costs;
• 9.82% in cost of services, principally reflecting the one-time increase in the provision for doubtful accounts following the announcement of the bankruptcy of Grupo Mexicana de Aviacion in that period, which did not impact 3Q11 results; and
• 0.01% in depreciation and amortization mainly due to changes in the depreciation and amortization rates.

These declines were partially offset by the following increases:

• 15.28% in technical assistance costs, reflecting the corresponding increase in EBITDA during the period;
• 2.69% in administrative expenses, principally ASUR's participation in the World Route Development Forum, telephone service and security; and
• 3.35% in concession fees, mainly due to the increase in regulated revenues (a factor in the calculation of the fee).

Operating margin increased to 49.92% for 9M11, from 44.39% in 9M10.  This was mainly the result of the 5.39% increase in revenues and the 5.10% decline in operating expenses for the period.

Net income for 9M11 increased by 17.36% to Ps.1,170.08 million. Earnings per common share for the period were Ps.3.9003, or earnings per ADS (EPADS) of US$2.8264 (one ADS represents ten series B common shares). This compares with Ps.3.3233, or EPADS of US$2.4083, 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 9M11 were Ps.1,969.62 million, resulting in an annual average tariff per workload unit of Ps.142.91. ASUR's regulated revenues accounted for approximately 61.43% 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 September 30, 2011, Airport Concessions represented 79.43% of the Company's total assets, with current assets representing 17.66% and other assets representing 2.91%.

Cash and cash equivalents on September 30, 2011 were Ps.1,741.07 million, 13.23% above the Ps.1,537.71 million in cash and cash equivalents recorded on September 30, 2010.

Shareholders' equity at the close of 3Q11 was Ps.15,065.54 million and total liabilities were Ps.3,762.97 million, representing 80.01% and 19.99% of total assets, respectively. Deferred liabilities represented 59.84% of the Company's total liabilities.  

Total bank debt at September 30, 2011 was Ps.788.5 million, including Ps.1.5 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. In addition, in September of 2011, Veracruz Airport entered into a three-year credit agreement of Ps.50 million. The terms include a  floating interest rate based on the Tasa de Interes Interbancaria de Equilibrio (TIIE) plus 0.75% and quarterly principal payments.

During the quarter, ASUR made principal payments of Ps.92.5 million in connection with the Ps.350 million and Ps.570 million three-year credit agreements.

In August 2010 ASUR purchased a hedge against the risk of a significant increase in TIIE. The Company is hedged for 22% of the interest rate exposure under its Ps.350 and Ps.570 million credit agreements. The interest rate was fixed for three years at 6.37%, 6.33% and 6.21%. The interest rate hedge during the quarter resulted in a Ps.0.6 million gain.

Capital Expenditures

During 3Q11, ASUR made investments of Ps.144.56 million as part of ASUR's ongoing plan to modernize its airports pursuant to its master development plans.

3Q11 Earnings Conference Call

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.