Grupo Aeroportuario del Sureste SAB de CV (ASR) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to the ASUR Fourth Quarter 2013 Results Conference Call. My name is Laurie, and I'll be your operator. At this time, all participants are in listen only mode. We will conduct a question and answer session towards the end of the conference.

(Operator Instructions)

As a reminder, today's call is being recorded. For opening remarks and introductions, I'd like to turn this call over to Mr. Adolfo Castro, Chief Executive Officer. Please proceed.

Thank you, Laurie, and good morning everybody. Thank you for joining us today for the conference call to discuss our fourth quarter 2013 results. Allow me to remind you that certain statements made here in the course of our discussion today maybe forward looking statements which are beliefs that are subject to a numbers of research that could cause actual results to differ materially, including factors that may be beyond our company's control.

For explanation of these risks, please refer to our filings with the Securities and Exchange Commission and the Mexican Stock Exchange.

I will start today's call with an overview of the -- events, followed by an update on the San Juan International Airport. Afterwards, I will briefly review the results for the quarter.

As you know, early January we received approval for our Master Development plan. It's an accurate and -- for 2014 to 2018. We're pleased with the results of the negotiations. CapEx for the five year period are in line with our expectations. (Inaudible) CapEx for the period also includes moving forward a consumption of a new terminal.

Cancun airport to support it's growing passenger traffic. Cancun and terminal airports' capacity today stands at around 70 million passengers, close to the passengers they did last year. We also talked to some extension of terminal three at Cancun airport, as well as extending the terminal building at Vera Cruz airport, as well other, ongoing endeavors.

Also the negotiations also included a 2.7% reduction in tax on (inaudible). (Inaudible) at 0.7%. We also paid a cash dividend of MXN4.4 per share, last December, for a total amount of (inaudible) million.

Moving up to San Juan airport, passenger traffic for the quarter was 1.9 million. That's 7.5% quarter on quarter decline, affecting -- reaching 6.9 million passengers in February 28, 2013.

On the financial front, our net income contributes to 50% ownership for the quarter was a net loss of MXN48.5 million. We're focused on taking the (inaudible) of San Juan airport, to improve the level offers our passenger traffic, and with these direct commission revenues, which at the moment are -- to at least nine years ago, all the while reducing operating costs. On this line, we continue to move forward on our plan to upgrade airport facilities.

Last November, we closed terminal B to start remodeling work, which we expect to complete by the year end. Keep in mind that the full -- of San Juan terminals is a process that will continue for approximately three years, as we remodel Terminal C and make some minor adjustments at Terminal A.

Moving on to the results for the quarter, passenger traffic increased 9% year over year. With domestic traffic up 8%, up four million passengers, a record for the fourth quarter. Domestic traffic was particularly strong at Cancun, Merida, Veracruz, Minatitlan, Oaxaca and Villahermosa airports. Traffic remained strong with 1.2 million passengers, a record for the fourth quarter.

International traffic was also strong, up by 10% year on year, reaching 2.7 million passengers, also a record for the fourth quarter. The share of international traffic grew slightly to 52.7 percent of the total traffic from 52.4 in the fourth quarter 2012. Passenger traffic between Mexicana and the United States represented 90.3% of the total of 90% a year ago. Revenues were off by 10.2%, reflecting higher traffic.

Commercial vending grew and increased construction revenues. Commercial vendors the passenger increased 57%, total 75.38 passengers year on year, an all-time high. While we remain focused on maximize the volume of revenue growth, we do not expect a significant expansion in commercial -- due to the capacity of strength of results. Investment in the MDP will provide the required additional capacity between --

Operating profit expenses 7.3%, year on year, mainly due to the 15% increase in production costs. Including production costs, operating have increased 3.3%. As anticipated, this includes the cost of reopening of the terminal one at the new airport too. EBITDA for the quarter was up by 13.5%, year on year, reaching a total of MXN752 million, with an EBITDA amount increase of 131 basis points, to 51.53%.

Investors MXN292 million this quarter, mainly to complete expansion works in the terminals of Huatulco, Oaxaca, and Villahermosa. In terms of our balance sheet, we closed the quarter and cash and cash equivalent of --. After the -- repayment, we made under 727, (inaudible) MXN2.8 billion year on year, at the year end.

Finally, a few comments on factors before opening the floor for questions. An important factor in the -- board made by the Mexican tax authority at the end of the quarter. Among them, the most important ones include the cancellation of the flat tax rate; the practice of the provision that allows for the results from the corporate tax system 30 to 28 -- in 2014, and adjusted -- adjustment in Value Added Taxes for Mexico's border region, which includes Cancun, from 11 to 16; manual taxes of 15% for not inside --

Now, let me open the floor for questions. Please, Laurie, go ahead.

Thank you. (Operator Instructions). Eugenio Amador with Credit Suisse.

Good morning, also thank you for the conference call. I was wondering if you could provide some more -- some guidance, the San Juan, Puerto Rico operations for 2014. What would be your estimated profit and loss at a year-end in 2014? And, also, if there is any guidance on numbers, (inaudible) revenue? For passenger or -- or any sort of guidance?

Good morning, Eugenio. You know that we do not provide guidance because it is hard for us to predict the future. What I can say with you is what we have seen during the -- the last ten months, because as you know, in two days we will comply the first year of operations at this airport. So, it's, the first 10 months, in terms of the 50% take of ASUR, what we saw was a loss of MXN148 million.

Remember that MXN112 is the result of one-time events, so in reality what you can see is a loss of MXN 30 million, more or less, for these first 10 months. Remember, that what we get for the concession or for the long-term lease agreement was MXN650. If you divide these by 40 years, which is the length of -- of the agreement, that means you have an amortization of MXN50 million every year.

So, the MXN30 million, let's say round numbers, 54 million for the MXN100 million, if you add on top of these 400 million, 15 million of amortization, you have a positive EBITDA. This is something you need to think on -- on San Juan, Puerto Rico's numbers.

You are asking of the future, as I said, we have not yet been there for one year, so we cannot say what is going to happen in the future. In terms of the commercial revenue of the past year, as I said in the initial remarks, what we can now today as (inaudible) years ago.

Also, it's important to understand that the modern process, you can try to steam -- in terms of commercial revenues for passengers in our website, in our presentation, and please go back over what has happened in the year 2000, and 2001.

Look at that piece of the graph, and you will see what I'm talking about in terms of taking over, making, closing a piece of the building, making a remodeling process and then open these pieces of the building. That's what I've got to say to you.

Thank you, Adolfo.

Paul Montanez with Vector.

Hi, Adolfo, good morning, and thank you for the call. A couple of questions, if I may. Regarding the revenues from direct operations, is there any plan to increase its proportion in the future? And do you have any plans to embody more business in your direct operations when the contracts with third parties finish? Thank you very much in advance.

Good morning, Mark. And, no, we do not expect to -- to have more direct (inaudible) in terms of additional (inaudible) line. You know we are operating directly today. The parking lot advertising in convenience stores, and that's what I believe we will continue in the future. The proportion -- the proportion is, for the future, is how much -- is going to grow against the other activities, is hard to say, but I believe we should remain more or less steady in terms of proportion.

Okay, thank you very much, Adolfo.

You're welcome.

We'll go next to Stephen Trent with Citigroup.

Well, this Kevin standing in for Stephen. I guess our first question is, will the expansion of Cancun's Terminal 3 require any shutdown time? I know you mentioned it in the call, but I just wasn't sure.

I'm sorry, what was your question?

Well, the expansion of Cancun require shutdown time?

We are expecting to open that next year. I would say, second semester --

Okay. Just one other question? What are views on projects outside of Mexico? It looks like La Guardia airport is taken, but what about other opportunities?

Well, for the moment, we are not seeing any other, the other one that could come, we will at least see the documents is (inaudible).

Okay, thank you.

You're welcome.

We'll go next to Neal Dihora with Morningstar Equities.

Yes, good morning, thanks. The costs for services for 2013 were pretty lower, the growth was quite low. I was just wondering if you could comment a little bit on why that was, and maybe comment on 2014? Thanks.

Talking about the operational costs?

Yes, just a comment?

Well, basically I can say that we are trying to control costs as -- as always. (Inaudible) side, keep in mind that in -- in what we are doing today is comparing with the previous year, and with the previous year we were standing some money in the case of dividend process for Puerto Rico. So, a --, so probably that -- that is why you are seeing this -- the cost between, on the one hand, I mean Puerto Rico's completely different. The (inaudible) was more expensive and apart from that I -- I don't know what I'm supposed to say to you.

Okay, that's fair. Thanks.

You're welcome.

(Operator Instructions). We'll go next to Bernardo Velez with GBM.

Hi, good morning, Adolfo. Thanks for taking my question. I was wondering for -- for dividends going forward and 2014, and if the -- the dividend approved on December was kind of an extraordinary dividend?

Bernardo, hey, good morning. In terms of your question, I don't know if the dividend we paid on December the 7th was or not part of the dividends for the year, and this is something I will have to discuss with the Board of Directors to make a proposal to the shareholders (inaudible), you know --

Okay, I got it. Thank you.

You're welcome

We'll go next to Stephen Trent with Citigroup.

Hi Adolfo, it's Kevin again. Now, one last question. You guys opened a lot in your retail areas not included in the fourth quarter. Now, would that -- would you consider that a false-normal launch of retail establishments? And if you strip these out, any sense as to what all would have happened to commercial revs per passenger? Kind of year over year business?

Okay, what you're seeing in the report for the fourth quarter was MXN10.1 million. All these -- in Terminal 1. We anticipated due to the closing (inaudible) the CapEx, we have to open Terminal 1, so we could not analyze years. So, what you're seeing is that.

Okay, thank you. That was very helpful.

You're welcome.

We'll go next to Ana Reynal with Santander.

Hello, Adolfo. Thanks for the call. Just one quick question^ what do you see at the level in the next couple of years?

Sorry, when -- what was your question?

What do you see at that level in the next couple of years? Relating to the Master Development Plan, if you are going to finance some of that with new debt?

Okay. Well, it's hard to say, if you see what I'm talking about in round numbers, Okay? And the total Master Development Plan wasMXN7 billion, of which we already paid MXN700,000, so the remaining MXN6.3 billion. If you see this as basically two times last year, again, two times last year the eight.

So, it's not in my opinion a huge amount, but of course that will depend if -- if we're going to pay -- for that will depend on what kind of resource do we have in (inaudible).

And also, what kind of investment opportunities we found, but basically, you know that we want to close it leverage or investment opportunities in -- in our opinion should be finer than that leverage.

Exactly. Ok. Thank you.

You're welcome.

We'll pause again a moment for your questions. (Operator Instructions). We'll go next to Gene Grenier with BBVA.

Hola, Adolfo. I just have a couple of questions. The first one is the MDT that you announced in January, and the work you used, that's kind of in the tradition of -- of the new maximum tariff? The other question is on the airports that have not been built in Mexico City, and just to know a little bit and what is your interest in the project?

Okay, in terms of what is not public information, in terms of Mexico City there was an announcement at the end of the fourth quarter by the Minister of Committees of Airport at (inaudible). He said they were working to solve Mexico City's problems.

He talked about an expansion of the current one, and that's basically why, no, during the month of January and almost of these three weeks of February, I have not seen any other important statement on -- on these airport. But what I believe is there, working really hard, in order to solve these -- these problems.

Okay, thanks.

You're welcome.

We'll pause again for questions. (Operator Instructions). And with no other questions in queue, I'd like to turn the conference back over to Mr. Castro for any additional or closing remarks.

Thank you Laurie, and thanks everybody for joining us today for the call. As always, do not hesitate to contact me if there's any further questions. And thank you, all of you, and have a good day. Goodbye.

That does conclude today's conference. Thank you all for your participation.