使用警語:中文譯文來源為 Google 翻譯,僅供參考,實際內容請以英文原文為主
Operator
Good morning. My name is Matthew, and I will be your conference operator today. At this time, I would like to welcome everyone to the ASUR First Quarter 2007 Earnings Conference Call.
[OPERATOR INSTRUCTIONS]
Thank you. Mr. Castro, you may begin your conference.
Adolfo Castro - CFO
Thank you, Matthew. Good morning, everybody. This is Adolfo Castro, Chief Financial Officer of ASUR. Welcome to the discussion of our results for the first quarter 2007.
Allow me to remind you that certain statements made during the course of our discussion today may constitute forward-looking statements, which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including risks that may be beyond our Company's control. For an explanation of these risks, please refer to ASUR's filings with the Securities and Exchange Commission and the Mexican Stock Exchange.
Today, I will start with a discussion of the progress made to date at Cancun airport and where we stand with respect to a potential second airport in Quintana Roo. And we'll then comment on Fernando Chico Pardo's indicative tender offer, and we'll then close the call with a brief review of the results for the quarter.
Passenger traffic during the quarter, during the winter season has been strong. Nevertheless, we were successful to accommodate them with the current terminal capacity at Cancun airport. You may remember that during the fourth quarter 2006, we restarted partial operations at Terminal 1, having capacity for an additional 1.5 million passengers. The construction process for Terminal 3 is progressing very well, and we continue to expect that it will begin operation during the second quarter of this year. With these new terminals, we will increase the terminal capacity at Cancun airport by 53%.
Work for the second runway is also moving along and will remain on schedule for the year 2008. In terms of the potential second airport in Quintana Roo, we have learned that the new Mexican authorities that took place last December are expected to use a bidding process for the award of the concession for the construction, operation and management for an international airport in the Mayan Riviera in the state of Quintana Roo. As I have mentioned in the past, we are interested in participating in this process. We do not know when this could happen, neither the possible terms of such bidding process.
As you have seen, on March 30th, Mr. Fernando Chico Pardo delivered to the Board of Directors an indicative proposal for the acquisition of 42.65% of ASUR's total share at the price of MXN56 per share through a tender offer. Keep in mind that the indicative offer only presents the terms under which Mr. Chico Pardo will be prepared to proceed with a tender offer.
The offer would be made simultaneously in Mexico and the United States. If successful, it will result in Mr. Chico Pardo owning 54% of ASUR's capital stock. The remaining 42.35% of ASUR's capital stock would remain publicly held through the New York Stock Exchange and the Mexican Stock Exchange. The indicative proposal states that Mr. Chico Pardo, he is not planning to any significant changes to the current operations or management of ASUR and that the technical assistance agreement between ASUR and ITA would continue to be in effect following the success of the offer.
The indicative offer also notes that Copenhagen Airports has expressed interest in tendering [2.5%] of ASUR's [technical difficulty]. Any offer would be subject to approvals by the Secretary of Communications and Transportation, the stock exchange and the antitrust authorities as well as ASUR's Board of Directors.
Let me now discuss the results for the quarter. The numbers are in yesterday's press release. So, as usual, I will not go too much in detail. As I have mentioned it, we reported a strong passenger traffic growth for the quarter. This was a 28% year-over-year growth. This improvement continued to be largely driven by the pick-up in international passenger traffic, which rose 35.64%.
Domestic traffic also increased, following the trend we saw in 2006, up 16% this quarter. Passenger traffic for the quarter at Cancun and Cozumel airports was up by 36% compared with a decline of 24.6% in the first quarter 2006. Traffic also benefited from the growth of 33.4% at Veracruz airport, reflecting the new routes operated by local carriers.
As we have seen since the second half of the year 2006, passenger traffic at Oaxaca continued to be impacted by the ongoing public demonstrations in the region. At this moment, we are unable to predict whether or how the situation will be resolved or how the ongoing demonstrations may affect our operations.
Total passenger traffic grew year-over-year by 62.87%, 37.5% and 27.48% for the months of January, February and March, respectively, for passengers to and from the United States. International passenger traffic accounted for 65.3% of the total traffic of the quarter, for the first time exceeding the 53.3% posted in the third quarter of 2005 before the hurricane. Passenger traffic between Mexico, Canada and the United States represents 89.89% of the total traffic, slightly above the 89.87% for the first quarter 2006.
Total revenues also show a strong growth this quarter, up 30.04%, mainly driven by the 32.9% increase in aeronautical revenues.
Commercial revenues, in turn, rose 23.31% with revenues from direct operations down 10.41%, reflecting the strategy to discontinue the direct operations of three restaurants and bars. As a result commercial revenues per passenger fell 3.73%. Excluding the impact of the discontinuation of the direct operations, commercial revenues per passenger rose 3.84% to MXN29.22. This is below the 46.31% -- sorry, the MXN46.31 recorded in fourth quarter 2006. Remember that in the fourth quarter 2006, we received one-time income from some concessionaires.
Finally, operating margin for the quarter rose 45.25% from 36.93% in the year ago. Driven by a strong increase in revenue which more than offset the 10.82% rise in cost of services. The increase was mostly due to the higher insurance premium, expenses required to comply with Sarbanes-Oxley requirements, a higher concession fee and technical assistance fee.
As a percentage of revenues, however, cost of services for the quarter declined to 53.8% from 63.1% in the year ago quarter, even the growth in revenue. Again, keep in mind that, as we have said before, expenses on absolute terms will continue to rise as a result of the opening of Cancun's airport Terminal 3 and due to the maintenance expense resulting from the security equipment installed in 2005.
Net income rose by almost 65.6% to MXN223.6 million during the quarter. And during the quarter, we have made investments of MXN243.16 million.
Now let me open the floor for questions. Matthew, please go ahead. Matthew?
Operator
[OPERATOR INSTRUCTIONS]
And your first question comes from the line of Nick Sebrell.
Nick Sebrell - Analyst
Good morning, Adolfo. Two quick questions. First, could you discuss a little bit about the commercial aeronautic mix in revenue? We saw a mix shift obviously because of the one-time item that you mentioned. How do you see that going forward? Do you see a growth trend similar to what we saw before? Do you think that there's an inflection point? That's the first question.
Second one is if you could just give a discussion or if you have an estimate of the additional costs associated with Terminal 3?
Adolfo Castro - CFO
Okay. Hi, good morning, Nick. In terms of commercial revenues, you know that we have experienced some problems -- congestion problems at Cancun airport since the end of 2005. Yes, it's true that we have opened -- partially reopened Terminal 1 during the fourth quarter 2006. But the reality is that today we have -- we still have a congested terminal building. Due to this, the people is not spending the same as they would if they had no problems or no queues in the checking -- in the counters of the commercial space.
My expectation is that once Terminal 3 is open, you will see an increase in the commercial revenue per passenger. In terms of the additional cost from Terminal 3, we're still looking for a number to provide you. But the reality is that we don't know exactly how much is this going to cost us. What I know is that we will have an increase due to the fact that we will increase 53% the square meters of terminal capacity in Cancun airport.
Nick Sebrell - Analyst
And in terms of passengers, what's that capacity represent? What's that square foot represent?
Adolfo Castro - CFO
It's around 6 million passengers.
Nick Sebrell - Analyst
Super. Thank you.
Operator
Your next question comes from the line of Esteban Polidura.
Esteban Polidura - Analyst
Thank you. Good morning, Adolfo. Congratulations on the report. Two questions, if I may?
First, would you expect your EBITDA margin to decrease throughout the rest of the year? And if so, which level would you consider sustainable? And second, are there more store openings scheduled for the rest of the year?
Adolfo Castro - CFO
Hi, good morning, Esteban. The first one, the margins -- you know that the margin is related to revenues because in this company most of the costs are fixed. So the first quarter and what you have seen in the report is the best, let's say, EBITDA margin on a quarterly basis. I do not expect to have a higher EBITDA margin in the following quarters if we compare this with the first one. If we talk about the annual EBITDA margin, what I think is that we should see an EBITDA margin somewhat more or less equivalent of the one that we saw last year due to the fact of increases in the cost of services from Terminal 3.
And your second question was?
Esteban Polidura - Analyst
Second question, if there are any more -- if there are more store openings scheduled for the rest of the year?
Adolfo Castro - CFO
Of course, you will see the ones in Terminal 3. All of them are going to be new.
Esteban Polidura - Analyst
Perfect. Thank you.
Operator
Your next question comes from the line of Gonzalo Fernandez.
Gonzalo Fernandez - Analyst
Hi, good morning, Adolfo. And also congratulations on the report. And one question about taxes. Could you elaborate on the impact of the changes of the asset tax calculation and if you can provide an estimate of your tax rate for the year, both nominal and effective tax rate?
Adolfo Castro - CFO
Gonzalo, in the case of the asset tax, as you know, at the end of this last year, the Mexican authorities decided to change the way to calculate asset tax. So now instead of the tax rate of 1.8, we have a rate of 1.25. But also they change the way of the calculation in the sense that we cannot deduct liabilities from the asset base. You can see during the -- you can see in the report that we presented yesterday that during the quarter we have paid MXN23.6 million. If you compare this with the previous quarters or the year-over-year, you can find an important difference. This has resulted from the decrease in the tax rate.
And in terms of liabilities, yes, we have some liabilities in some of the airports because this calculation has to be done on a per company basis. But you can see an important, I would say an important effect on the payment reduction. In terms of the tax rate, what I recommend to you is again to see the history of the company, and you can see that we have normally a tax rate that is very close to the corporate rate. So for these years, it should be close to 28% by the end of the year.
Gonzalo Fernandez - Analyst
Okay. Thank you, Adolfo.
Operator
Your next question comes from the line of Stephen Trent.
Stephen Trent - Analyst
Good morning, Adolfo. Steve Trent from Citigroup. Just a quick question for me. Looking at the commercial revenue side, to some extent a follow-up on questions already posed. I was wondering if you have in your mind sort of a 12-month or some sort of medium-term figure or medium-term range as to where you'd like the company to be in terms of commercial revenue per passenger?
Adolfo Castro - CFO
Well -- hi, good morning, Steve.
Stephen Trent - Analyst
Good morning.
Adolfo Castro - CFO
What I would say to you is that today we have a level of US$3.50 per passenger. And we know for sure that we are not doing the best that we can, and we can increase this I would say significantly in the future. I do not have a specific number for you, but you can expect that this $3.50 will be more next year.
Stephen Trent - Analyst
Great. Good to hear. Thanks for that, Adolfo.
Operator
Your next question comes from the line of [Eduardo Cortina].
Eduardo Cortina - Analyst
Hello, Adolfo. One question. I didn't catch whether you said or not. Do you have an estimate costs for the Terminal 3 in Cancun and the costs for any subsequent years coming on?
Adolfo Castro - CFO
The cost of operating Terminal 3, I do not have an exact amount for that.
Eduardo Cortina - Analyst
And the cost for --?
Adolfo Castro - CFO
We will have to wait and see until we open the -- during the second half of this year. I can say to you is that the expectation could be that the margin of this year will not be higher due to this specific issue. So that's what I can say to you right now.
Eduardo Cortina - Analyst
Okay. Do you have how much you're going to spend on this terminal?
Adolfo Castro - CFO
I don't have an amount.
Eduardo Cortina - Analyst
Okay.
Adolfo Castro - CFO
Or if you are talking about investment? The investment is on budget, and we're talking about less than $100 million.
Eduardo Cortina - Analyst
Okay, great. Thank you.
Operator
[OPERATOR INSTRUCTIONS]
Your next question comes from the line of Nick Sebrell.
Nick Sebrell - Analyst
Thanks for taking a follow-up, two follow-up questions. The first is if you could just go through which of your airports pay income tax versus which ones pay asset tax? And then the second question was just a follow-up. No, never mind. Forget the second question. Just the one.
Adolfo Castro - CFO
Okay, Nick. In terms of income tax and asset tax, today we are still paying asset tax in all of the airports that we have.
Nick Sebrell - Analyst
Okay, and how do you expect that change going forward?
Adolfo Castro - CFO
Well, of course, that will depend on passenger traffic and the profits in the future. But what I can say to you is that most of the airports will not pay income tax in the near future.
Nick Sebrell - Analyst
All right. So we shouldn't expect a significant change in percentage tax rate going forward, aside from what we saw due to the law change in December?
Adolfo Castro - CFO
No.
Nick Sebrell - Analyst
Okay. Thanks very much.
Adolfo Castro - CFO
You're welcome.
Operator
Your next question comes from the line of [Mauricio Santos].
Mauricio Santos - Analyst
Hi, Adolfo. Good morning. I have a couple of questions. The first one, are you expecting the Terminal 3 to be ready by the end of the second quarter? And the second question was regarding the indicative proposal of Fernando Chico Pardo. Do you have any timing when this proposal will be an official tender offer? Thank you.
Adolfo Castro - CFO
Okay, in the case of the first one, yes. We expect to open Terminal 3 at the end of the second quarter. We are very close and almost ready in the case of Terminal 3 could be [the month].
In the case of the time of the offer, a timing for that, what I can say to you is my personal opinion, which is that Fernando made this announcement on the 30th -- on the 29th of March to the Board of Directors. He should be making the filings to get the approvals on such date. So what I expect is 30 days after that date. But of course this is just my personal opinion and personal estimation. I don't have any particular information in regard to this.
Mauricio Santos - Analyst
Okay. Thank you very much.
Operator
You have no further questions at this time.
Adolfo Castro - CFO
No more questions?
Operator
No, sir. There are no more questions.
Adolfo Castro - CFO
Okay, great. Thank you, everybody, and thank you for being here with me in the conference. Bye.
Operator
And this concludes today's conference call. You may now disconnect.