ASUR’s Earnings Call: Growth Amid Challenges

Grupo Aeroportuario Del Sureste ((ASR)) has held its Q1 earnings call. Read on for the main highlights of the call.

ASUR’s recent earnings call painted a picture of strong revenue growth and a robust financial position, despite facing challenges in certain markets. The company reported impressive performance in Puerto Rico and Colombia, which helped offset some of the difficulties encountered in Mexico due to traffic declines and increased operational costs. The sentiment during the call was cautiously optimistic, with management acknowledging the hurdles while expressing confidence in their strategic direction.

Strong Revenue Growth

ASUR’s total revenues saw a 14% year-on-year increase, reaching MXN8.2 billion. This growth was driven by significant contributions from all operational regions, with Puerto Rico and Colombia leading the charge. Mexico, while experiencing a high single-digit increase, lagged behind its counterparts due to specific market challenges.

Positive Commercial Revenue Trends

The company opened 40 new commercial spaces, which played a crucial role in driving a high single-digit growth in commercial revenues. Puerto Rico and Colombia were standout performers, posting impressive increases of 23% and 38%, respectively.

Solid Financial Position

ASUR reported a remarkable 35% year-on-year increase in cash and cash equivalents, totaling nearly MXN23 billion. The company’s net debt to EBITDA ratio stood at a favorable negative 0.5 times, underscoring its strong financial health.

Record Passenger Growth in Puerto Rico

Puerto Rico experienced nearly 11% passenger growth, driven by high teens growth in international traffic and low double-digit growth in domestic traffic. This record growth highlights the region’s strategic importance to ASUR’s overall performance.

Increased EBITDA

Despite rising costs, ASUR’s consolidated EBITDA rose 12% year-on-year to MXN5.7 billion. Both Puerto Rico and Colombia contributed to this double-digit EBITDA growth, showcasing their operational efficiency and market potential.

Traffic Decline in Mexico

Passenger traffic in Mexico declined nearly 5%, primarily due to the Easter shift and competition from the newly opened Tulum Airport. Cancun was particularly affected, with international traffic declining in the high single digits.

Increased Operating Costs

Total expenses rose 18% year-on-year, driven by significant cost increases in Mexico, Puerto Rico, and Colombia. Factors such as the depreciation of the Mexican peso and increased wage costs contributed to these rising expenses.

Impact of Tulum Airport on Cancun

The new Tulum Airport, expected to handle 2.9 million passengers this year, has diverted traffic from Cancun, impacting its performance. This development poses a competitive challenge that ASUR will need to navigate carefully.

Forward-Looking Guidance

ASUR’s forward-looking guidance suggests a cautious yet optimistic outlook. The company anticipates traffic in Mexico to stabilize by 2026 as operational constraints ease. Passenger volumes at Cancun and Tulum airports are expected to grow in alignment with regional dynamics. ASUR’s strategic investments in modernization and expansion projects at its Mexican airports are aimed at supporting this anticipated growth.

In conclusion, ASUR’s earnings call highlighted a mix of strong growth and strategic challenges. The company’s impressive performance in Puerto Rico and Colombia, coupled with a solid financial position, provides a strong foundation for future growth. However, the challenges in Mexico, particularly the impact of Tulum Airport, require careful management. Overall, ASUR remains well-positioned to navigate these dynamics and capitalize on emerging opportunities.