Grupo Aeroportuario del Sureste (NYSE:ASR), or ASUR, reported its second-quarter results this week. The Mexican airport operator delivered strong earnings growth on the wings of a strong increase in traffic. Driving this traffic growth was once again the company's crown jewel Cancun airport, which continues to attract more travelers from around the world.
Traffic continues to soar
ASUR reported a 14.3% year-over-year increase in traffic at its nine Mexican airports. The bulk of that traffic continues to come from its Cancun airport as it received more than 1.5 million domestic passengers in the quarter, which was up 8.8% year over year and accounted for 52% of total domestic traffic. Even more importantly, nearly 3.5 million international passengers landed at the airport in the quarter, or 94% of total international passengers, which was up 15.3% year over year.
Other strong contributors on the domestic side were the Mérida, Veracruz, and Villahermosa airports. Not only do all three contribute to roughly 10% of domestic traffic apiece, but all three delivered double-digit year-over-year growth in domestic traffic. Meanwhile, the only other large contributor to its international traffic is the Cozumel airport, however, its growth was below average at just 7.2%.
Converting more traffic to revenue
ASUR's growing passenger traffic helped boost the company's revenue by 58.2% year over year, however, that growth was largely skewed by a 1,058% surge in construction services revenue, which is subsequently offset by an equally large jump in capex expenses. That said, operational related revenue still did see a nice boost from the increased traffic as aeronautical revenue increased by 21.2% while non-aeronautical revenue moved higher by 26.5%. These increases were not only driven by higher traffic, but the company was also able to increase commercial revenue per passenger by 11.9%. This is exactly what investors want to see from the company as it's not only seeing revenue soar from higher traffic, but its earning more revenue on each passenger that passes through its airports.
This enabled the company to deliver a 29.2% year-over-year increase in its EBITDA. That said, the company's overall EBITDA margin did decline from 65.2% in the second quarter of last year to 53.3% in this quarter. This is after cost of services increased 6.2% due to higher professional and software license fees, administrative costs increased 5% due to higher marketing and lease expenses, while concession fees paid to the Mexican government rose 21.1% due to an increase in regulated revenues. That said, the company still was able to grow its net income and earnings per share by 32.1% year over year.
ASUR is doing two things very well. Not only is it driving more traffic to its airports, especially its key Cancun airport, but it's also earning more revenue per passenger. That's providing the company with two tailwinds, which is more than overcoming a slight headwind from rising costs, enabling profitability to soar.