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01/11 05:00
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several negative factors: increased concession taxes, rising operational costs, and a decline in passenger traffic and aeronautical revenue. The Q&A section highlights a lack of clear guidance, particularly concerning future traffic and CapEx plans. Although non-aeronautical revenue growth and a slight net income increase are positives, they are overshadowed by broader financial and operational challenges. Given the market cap, these factors are likely to result in a stock price decline of -2% to -8% over the next two weeks.
Passenger Traffic 6.5 million, a decrease of 2.4% year-over-year due to a 4.3% decline in domestic passengers, primarily impacted by the Pratt & Whitney engine recall affecting low-cost carriers.
Aeronautical Revenue Decreased by 2.5% year-over-year, driven by lower domestic passenger traffic.
Non-Aeronautical Revenue Increased by 13.8% year-over-year, attributed to successful strategic projects and growth in commercial revenues.
Commercial Revenue Increased by 12% year-over-year, driven by VIP Lounges and Parking revenues.
Duty Free Revenue Increased due to the strategy of relocating international flights among terminals in Monterrey, boosting passenger exposure.
Diversification Revenue Increased by 27% year-over-year, mainly due to a 35% increase in OMA cargo revenues.
Hotel Services Revenue Grew by 16% year-over-year, with occupancy rates of 85% for Terminal 2 NH and 79% for Hilton Garden Inn.
Total Revenues Grew by 1.1% to MXN2.9 billion in the quarter.
Construction Revenue Decreased by 22% year-over-year to MXN556 million due to lower MDP investment execution speed.
Concession Tax Increased by 71% to MXN239.3 million due to a rate increase from 5% to 9% on revenues generated by airport concessions.
Adjusted EBITDA Was MXN2.2 billion with a margin of 73.3%. Excluding concession tax surplus, it would have been MXN2.3 billion with a margin of 76.3%.
Net Income Was MXN1.3 billion, an increase of 1.5% year-over-year.
Cash Generated from Operating Activities Amounted to MXN1 billion in the second quarter.
Total Debt Amounted to MXN10.9 billion at the end of the quarter.
Net Debt to Adjusted EBITDA Ratio Was one times at the end of the quarter.
New International Routes: In the first half of the year, we launched six new international routes, four of which were based on the Monterrey airport, further strengthening our international connectivity.
Cargo Operations: During May, we began operations with our new client Lufthansa Cargo, offering air cargo transport services with an initial frequency of one flight per week between Mexico City, Monterrey and Frankfurt.
Passenger Traffic: In the second quarter of 2024, OMA's passenger traffic reached 6.5 million, a decrease of 2.4% versus the second quarter of last year.
International Passenger Traffic: International passenger traffic achieved a strong performance in the second quarter with a 12% increase compared to the second quarter of last year.
Commercial Revenue Growth: Non-aeronautical revenues grew by 13.8%, underscoring the successful execution and consolidation of several strategic projects throughout the year.
Terminal Capacity Expansion: We successfully inaugurated the Terminal A East public area expansion, covering over 6,000 square meters, contributing to improving our services and increasing airport capacity.
Diversification Strategy: On the diversification front, revenues increased 27%, with OMA cargo contributing most of this quarter's growth with an increase of 35%.
Infrastructure Development: We are actively working on expanding and remodeling terminal buildings in Monterrey, Ciudad Juarez, Torreon, Culiacan, Durango, and Mazatlan.
Passenger Traffic Risks: Passenger traffic decreased by 2.4% compared to the previous year, with domestic traffic down 4.3%. This decline was attributed to the Pratt & Whitney engine recall affecting low-cost carriers, particularly impacting routes from Monterrey and Culiacan.
Regulatory Risks: The Mexican Government's reduction of movements per hour at the Mexico City International Airport has led to a 10% decline in routes, posing a risk to connectivity and operational efficiency.
Economic Factors: The increase in concession tax from 5% to 9% has raised operational costs significantly, with a 71% increase in concession tax expense recorded, impacting overall profitability.
Cost Increases: General and administrative expenses rose by 16.5%, driven by the expansion of operational areas and higher unit costs, including electricity and contracted services.
Supply Chain Challenges: The ongoing recovery of tourist infrastructure in Acapulco post-hurricane OTIS is affecting domestic passenger traffic, indicating potential vulnerabilities in the supply chain related to tourism.
Passenger Traffic: In Q2 2024, OMA's passenger traffic reached 6.5 million, a decrease of 2.4% year-over-year, primarily due to the Pratt & Whitney engine recall affecting domestic low-cost carriers.
International Routes: International passenger traffic increased by 12% compared to Q2 2023, driven by significant growth in routes from Monterrey to Atlanta, Las Vegas, Toronto, and Orlando.
Commercial Revenues: Non-aeronautical revenues grew by 13.8%, with commercial revenues increasing by 12%, driven by VIP Lounges and Parking revenues.
Cargo Operations: OMA cargo revenues increased by 35%, with new operations with Lufthansa Cargo contributing to growth.
Infrastructure Development: In Q2 2024, OMA inaugurated the Terminal A East public area expansion at Monterrey airport, enhancing capacity to 13.9 million passengers annually.
CapEx Investments: During the quarter, OMA invested MXN816 million in major maintenance and strategic projects, including expansions in multiple airports.
Revenue Expectations: Total aeronautical and non-aeronautical revenues grew 1.1% to MXN2.9 billion in Q2 2024.
Adjusted EBITDA: Adjusted EBITDA for Q2 2024 was MXN2.2 billion, with an adjusted margin of 73.3%.
Concession Tax Impact: Starting January 2026, excess concession tax amounts paid will be recovered through maximum tariffs.
Debt Position: Total debt at the end of Q2 2024 was MXN10.9 billion, with a net debt to adjusted EBITDA ratio of one times.
Dividend Payment: During the quarter, we paid the first installment of the dividend declared in our previous shareholder meeting.
Shareholder Return Plan: None
Despite positive financial performance, including increased passenger traffic and revenues, concerns about regulatory uncertainty, inflationary pressures, and rising costs balance out the positive sentiment. The lack of clear guidance on international expansion and the potential impact of the ongoing MDP negotiations further contribute to a neutral outlook. The market cap indicates moderate sensitivity to these mixed signals, suggesting a neutral stock price movement.
The earnings call reflects strong financial performance with an 11% increase in passenger traffic and a 17% rise in aeronautical revenues. Despite some uncertainties in the Q&A, such as reduced airline capacity, the overall sentiment is positive due to strong growth metrics, high EBITDA margins, and a stable dividend policy. The market cap of over 3 billion suggests moderate volatility, leading to a positive stock price movement prediction of 2% to 8% over the next two weeks.
The earnings call reveals mixed results: strong financial performance with revenue growth and a declared cash dividend, but also challenges like regulatory issues, supply chain problems, and increased expenses. The Q&A section highlights cautious management regarding demand and capacity, with no new partnerships or strategic moves that might boost sentiment. The market cap suggests a moderate reaction, leading to a neutral prediction.
The earnings call reveals several negative factors: increased concession taxes, rising operational costs, and a decline in passenger traffic and aeronautical revenue. The Q&A section highlights a lack of clear guidance, particularly concerning future traffic and CapEx plans. Although non-aeronautical revenue growth and a slight net income increase are positives, they are overshadowed by broader financial and operational challenges. Given the market cap, these factors are likely to result in a stock price decline of -2% to -8% over the next two weeks.
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