Aena Sme S.A Unsp/Adr

Good morning to everybody and welcome to AENA's first quarter 2022 results. Good having you back. We are here, Jose Leo, CFO of AENA, and myself as speakers. And I will leave the floor to Jose to start the presentation. Thank you.

Thank you, Emilio. Welcome, everyone, and thank you for being part of this call. As usual, we will start sharing with you the key aspects of the quarter one 2022 results on slide number four. As you can see, we have a significant increase in the number of passengers between quarter one 2021 and quarter one 2022, 280% up for the whole consolidated group. This is clearly not coming as a surprise to anyone because the quarter one 2021 was a really bad one, fully impacted by the pandemic, which is more relevant is the level of the recovery that these numbers represent vis-a-vis the quarter one 2019 figures. And this is close to 72% of the traffic at that time, which is very good, particularly in March. The level of traffic reached something in the region of 78% in the Spanish network of the March 2019 figures. So this is an indication that the recovery that we started to experience at the beginning of the summer 2021 and that was, let's say, temporarily interrupted by the Omicron variant is back. And we are optimistic about these trends going forward. Having said that, I want to be very upfront At this moment in time, we are stopping short of reviewing or revisiting or announcing any new guidance for the whole 2021, sorry, 2022 traffic. Of course, we are positive. Of course, these traffic trends are very promising. Furthermore, the summer season capacity that the airlines are putting forward is indicating that it is looking good. But there are a number of uncertainties that are leading us to believe that it is better to wait. Probably in the coming months we will be back to you making a more clear statement about our views for 2022. Clear statements, I mean, in terms of specific levels of recovery we expect for the year. For the time being, suffice to say that we are optimistic that clearly the trends are indicating that things are going in the right direction. Potentially, who knows, the 68% traffic recovery for the year can be considered significant. Conservative, I wouldn't call it conservative, I would say it's just a view that to be revisited we need some more clarity. Moving on to the revenues, clearly the revenues are going up by 93%. everybody can see that this is not consistent with the passenger numbers with the recovery in the passenger numbers there is a very significant element there impacting the figures and this is the accounting entries affecting the commercial revenues that we will discuss later on. This translates into a positive EBITDA of 72.6 million euros, clearly against the 2021 losses. Of course, I'm sure we will discuss this later and to what extent this is affected by the by the operating expenses evolution. Still, we are incurring losses in Q1 2022, 96.4 million euros. The loss is driven by the fact that quarter one is normally a quarter heavily impacted by one-off costs, namely the impact of the local taxes accounting treatment. But it's true that this happened as well before the COVID pandemic. Nowadays, it is more difficult to get back to normal, let's say, and back to profits. until such a time where the traffic is in full fledge. And I think this will be happening in the coming quarters, to be clear. In terms of the cash generated by the operating activities, this is good news. We have already delivered 343 million euros of positive operating cash flows. Of course, you may notice that this is pretty inconsistent with the EBITDA figures. The reason for that are mainly driven by the accounting things around... Well, there is a combination of things. To start with, the accounting entries on the max that are impacting EBITDA, but clearly have no effect in terms of cash. Secondly, also the collections in the first quarter of the year of the MACs accumulated in the previous year. These MACs are all of them obviously fully supported by contracts and the DF7. So we are not talking anymore about MACs that were, let's say, disputed by our tenants. Other than that, I would like to move on to the next slide. I would like to highlight the operating cost side of the business. Clearly, the OPEX is also evolving in a way that is dragging a bit the EBITDA. The most relevant part of it is the electricity cost increases to the tune of 47 million euros more than in the first quarter of 2021. This is to give you an idea, this is four times, four-fold the electricity costs in the first quarter of 2021. On top of that, there are some other elements playing there. Looking at the Spanish network, clearly as the traffic is recovering and as we mentioned in previous calls, we open substantially all the facilities. There are a number of items that are growing, such as the security costs, the maintenance costs, So I wouldn't point out at any particular operating cost item. I would say across the board, different elements of the service provisions are involving a higher cost. Not coming as a surprise. I think I mentioned that a number of times previously. On top of that, our subsidiaries Luton and the Brazilian airports are also starting to work on a completely different environment. Luton, for instance, kept the costs very, very tightly managed. And now, obviously, they need to start getting back to normal. So this is also impacting the cost bill for the group. Likewise, the Brazilian airports that are now in full operation, Frankly, operating at 100% of the traffic levels of 2019. So both Luton and Brazil are adding some 35 million euros quarter on quarter. So it's part of a broader picture of everybody coming back to normality. Other than that, I will jump to slide number 9. commercial revenues. When looking at this slide, what you see is roughly the accounting, the headline, so to speak, the headline revenue figures. indicating that our revenues overall are down year on year. Of course, the commercial revenue per passenger is also down big time because in quarter one 2021, there were max accumulated on the basis of the contractual arrangements. So, well before the DF7 came into place. So this is just headline figures that in my view have no interest at all for you anymore. So let's move on to the next slide where we are trying to provide more insightful information. Splitting the figures between the business activity, what we can say is the underlying business activity. You see there revenues growing by 177%. That is a combination of two different lines. The rents that are being invoiced and collected monthly, they are a combination of variable rents in the cases where the contract arrangements provide for that, or fixed rents in the cases where contract arrangements provide for this other form of rent. But both of them are literally the everyday life of the business, billing and collecting. And this is going up by 224%. So this is more consistent with the traffic evolution. With regard to MACs, the MACs are being, let's say, calculated here pro forma for Q1 2021, as if... In Q1 2021, the DF7 would have been already in place. And clearly for 2022, this is the actual figure. So those two lines are showing the reality of the activity. Below that, what you see is the two adjustments, accounting adjustments, very positive in 2021. although we know that that didn't fly finally, and negative in 2022 as a result of the accounting treatment that we already discussed when submitting the year-end accounts. So for me, this is probably the most relevant slide of the presentation. I mean, in terms of providing some more clarity about the underlying commercial business. Let me give you a headline and then I will hand you over to Emilio who will be dwelling a little bit more on this particular aspect of the business. I have to say the commercial business these days is doing well. I think we are witnessing a recovery which is really positive. I would say surprisingly positive at times. This is clearly can be seen in the fixed and variable rent line there, which is growing very healthily. And it's getting us back in terms of the underlying activity, the spend per packs, to levels of 2019. So By way of headline, this is what I wanted to share with you. This is promising. I don't know whether this is going to be the trend as we have more and more and more traffic, but I have the impression that this is going to last for a while. On top of that, the new contracts that we are tendering out in the commercial business are coming back to us with very competitive offers. And the new contracts are being signed with MACs at the level of 2019 being back very quickly. Overall, on average, by 2023, we expect for these contracts to recover in full the 2019 MACs. So the combination of both things, the current underlying activity, the trends that we can witness in the business, and the new contracts being tendered and awarded are very positive signals of the evolution of the commercial business. I will stop here. As I said before, Emilio will give you some more color on the on the commercial business trends and then we will start the Q&A. Thank you very much.

Thank you, Jose. Regarding the commercial sales, I'm going here to speak about sales, not the revenue for AENA, but the sales of our commercial operators versus 2019. As Jose was mentioning, in terms of spend per packs, the trend that we have been seeing in the last quarters in duty-free and food and beverage continues to be very positive. The spend per packs is above 2019. mainly due to the positive effect of having the other shops closed, so that means that more number of passengers use and go to these duty-free and food-average shops. Also, we have seen the recovery of REITs during the last quarter, and this English passenger is spending more than in the past. First of all, mainly because being something that's just recovering the vacations and coming back to Spain, but also because we are seeing that the effect of Brexit, that they are now using duty-free versus duty-pay, is also positive for ourselves. and also positive for AENA revenue, as duty-free pays a higher variable rent in terms of percentage than duty-paid. On specialty shops, the spend per parts of specialty shops continue to be lower than in 2019, mainly due to the number of shops that continue closed. But if we do the exercise of a like-for-like spend-per-packs, so we adjust the spend-per-packs by the operating area, which nowadays is 53% of what we had back in 2019, the spend-per-packs would be similar to what we had back in 2019. Rent-a-car continues to be very positive with a very positive trend. In fact, both, well, sales and also IANA revenues are above in absolute terms than in 2019, mainly due to the lack of stock and the higher prices that are driving these revenues up. In terms of VIP services and parkings, both trends are in line with traffic performance. Maybe a slightly better VIP services than parkings, but both in line with the traffic performance. Also for the future and also tackling the tenders, the new tenders that Jose mentioned, Since November, we have attended 18 contracts in food and beverage and 113 specialty shops. All together, in 2022, minimum annual guarantees are also just slightly below 2019 minimum annual guarantees, around 90-95%, and 2023 minimum annual guarantees will be above 2019, around 110-115% higher than 2019 numbers. So I think all these figures and trends are very positive and confirming what Jose just mentioned of the positive evolution of the commercial business. This is it from our side. So now we can move to the Q&A session. Thank you.