Grupo Aeroportuario del Sureste (NYSE:ASR), or ASUR, has been working to diversify its operations away from Mexico in recent years. Those investments paid off during the first quarter as the company experienced strong passenger traffic growth at its recently acquired airports. That helped offset slower growth at the company's Mexican operations.

ASUR's results: The raw numbers

Metric

Q1 2019

Q1 2018

Year-Over-Year Change

Total passenger traffic

13.8 million

12.8 million

7.9%

Earnings per share

$2.53

$2.50

1%

Data source: Grupo Aeroportuario del Sureste.

What happened with ASUR this quarter? 

Puerto Rico and Colombia led the way:

  • Total passenger traffic at ASUR's nine Mexican airports rose 2.4% compared to last year's first quarter to 8.7 million. The company's Cancun airport handled nearly 6.7 million of those passengers, which was 1.7% more than the prior-year period. ASUR's other eight locations brought in the other roughly 2.1 million passengers, an increase of 4.4% year over year.
  • Traffic at the company's majority-controlled airport in San Juan, Puerto Rico, jumped nearly 24% to 2.3 million. Strength in both domestic and international passenger traffic propelled growth at that location, which continues to recover from the impact of Hurricane Maria.
  • Passenger traffic at the company's Colombian airport group surged 15% to more than 2.7 million, driven mainly by a 16.5% boost in domestic traffic.
  • Revenue rose 4.7% year over year. The main drivers were a 7.5% improvement in Mexico and 32.6% growth in San Juan, primarily due to the increase in passenger traffic. That more than offset a roughly 30% decline in revenue from the Colombian airport group as a result of a significant year-over-year reduction in construction revenue, which the company records as it builds commercial services venues such as restaurants and retail locations at its airports.
  • Earnings didn't grow quite as much as revenue due to a 12% increase in operating expenses. The main contributors were higher energy, security, and maintenance costs at its Mexican airports and an expense relating to the early termination of a parking lot concession at one of its airports in Colombia.
An airplane parked at an airport with the sun rising ahead.

Image source: Getty Images.

Looking forward 

ASUR has several projects underway to increase its capacity to handle passenger traffic at its airports. While Cancun gets most of the attention, the company is also expanding the terminal at its Merida airport, which is Mexico's eighth largest by traffic. It's completely reconfiguring that terminal as part of its master development plan to modernize its Mexican airports.

The company has significantly improved its balance sheet over the past year by retaining earnings to pay down the debt it took on to acquire its Colombian airport group and increase its stake in San Juan. As a result, ASUR is in the position to return more cash to shareholders. It recently declared not only a regular dividend but an extraordinary cash dividend out of last year's retained earnings. Furthermore, it set aside its remaining net profits from 2018 to repurchase shares.