Aena Sme S.A Unsp/Adr

Thank you for standing by. My name is Bhavesh and I will be your conference operator today. At this time, I would like to welcome everyone to the IENA 1H 2023 results presentation. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press the star followed by the one again. Thank you. Mr. Ignacio Castellon, Finance Director, you may begin your conference.

Thank you very much, and welcome everyone to the first half-year results for year 2023 of IENA. Without further delay, I'll pass the floor to our Chairman and CEO, Mauricio Lucena, and to José Leo, our CFO. Thank you very much.

Thank you, Nacho. Good afternoon, everybody. LET ME PLEASE FORMALLY WELCOME YOU ALL TO OUR 1H2023 RESULTS PRESENTATION. IT'S A REAL PLEASURE BEING TODAY WITH ALL OF YOU. I, AS USUAL, WILL START WITH KEY HIGHLIGHTS BEFORE I GIVE THE FLOOR CONSECUTIVELY TO JOSE LEO AND also before the Q&A to Ignacio Castejón. So, if you allow me, I will start with traffic. Concerning the first half of 2023, I think that traffic and, of course, as a consequence, also all the financial results have been performing very well. In terms of traffic, AENA as a group, as a global group, increased its traffic by 22.8%, up to 144.1 million passengers. It implies a recovery, again globally, of 100.5% compared to 2019. So we can finally, and again, confirmed that the COVID effect and the COVID wave, it's ended. So this is very good news. Specifically, concerning the Spanish network, traffic increased up to 129.4 million passengers. It represents a recovery compared to 2019 of 101.2%. London Luton, 90.3% recovery. And Brazil, and now I'm referring to the northeast Brazilian airports, not including yet... the new 11 Brazilian airports. So again, in Brazil, the first semester of 2023 represented a recovery of 100.5%. In Spain, we still are facing a kind of asymmetry. BETWEEN DOMESTIC TRAFFIC AND INTERNATIONAL TRAFFIC, BUT THE GAP IS CLOSING. DOMESTIC TRAFFIC PERFORMED EQUIVALENT TO 107% COMPARED TO 2019 AND INTERNATIONAL TRAFFIC REACHED RECOVERY OF 98.5%. THEREFORE, I CAN CONFIRM THAT WE CLEARLY STICK TO OUR 2023 traffic guidance for the spanish network which i remind you that it's between 94 percent 104 percent in terms of 2019 traffic and of course i think that we have to be realistic and we shall not forget the potential headwind headwinds ahead of us I'm referring to the evolution of the cost of living. There could be in the future supply side problems such as strikes, staff issues and aircraft deliveries problems. However, I also want to be very clear stating that it seems that many, many airlines are still very confident that the current trend continues in the last quarter 2023. So I think that the summary would be that we are realistic, but we are still pretty optimistic in terms of the traffic for the rest of the year. I now leap to financials. You can see in the press release this morning that total consolidated revenues for the AENA group reached 2.3 billion euros. Aeronautical revenue stood at 1.3 billion euros. Commercial revenue, 715.3 million euros. Real estate revenue, 47.8 million euros, and international activity, 287.5 million euros. On the costs side, which is very important in a context where the inflation is high, we are pretty satisfied, I can say, because the total OPEX stood at 1.1 billion euros plus 8.1% in comparison with the first half of 2022. But actually, I can say that, of course, apart from some inflationary pressures, you should remind that the traffic growth made AENA reopened terminals and subcontract many activities that did not exist in the first half of 2022. That is why I was saying that we are pretty much satisfied with the evolution of the OPEX, again, I repeat, in an inflationary context. The EBITDA stood at a noteworthy 1.2 billion euros. And this is very important. The EBITDA margin closed at 50.2%. This EBITDA margin, you know, is one of the highest in the airport industry. And let me stop just a few seconds in this point. at this point, because I would say that both in terms of total revenues and the EBITDA margin, I can expect and strongly expect that we will reach our strategic plan targets, I would say, well ahead in time. I think that we are in a position to beat the targets that we define in the context of our strategic plan, both in terms of revenues, and I repeat, in terms of EBITDA margin, which I guess is very good news for our shareholders. All in all, the net profit in the first half of 2023 reached €607.7 million, confirming the prospects for an attractive dividend in 2024, and the net cash from operating activities stood at 1 billion euros. I would say in short that the main drivers of our EBITDA and of our net profit were traffic growth, the very positive commercial performance. And of course, we were lucky, everyone, that we faced a lower electricity bill. And we also have, we will have time afterwards to explain what specifically it is. We also had the positive financial results as a result It is true that it was not a large one, but it really made a marginal difference, both in terms of EBITDA. I'm referring now to the net profit. We'll explain it later on. Now I now move to the commercial activity. You can... see uh when you read our results that we experienced a very robust growth trend of commercial revenues i would say that it was based on first the commercial sales of the first half of 2023 exceeded 2022 by 7.6 percent second All the material commercial businesses lines surpassed 2019s. And third, variable and fixed rents invoiced in the first half of 2023 beat 2022 figures by over 23%. And from a qualitative perspective, I would say that apart from the evident traffic growth, I think that the progressive recovery of the UK passengers under new non-European Union status in duty-free was an important qualitative factor. Another one was the reopening of most of our specialty shops. that remain closed because of the financial hurricane as a consequence of the COVID crisis. And also, I would underline that we have experienced a very welcome increase in passenger penetration rates in food and beverage. And finally, I would also like to highlight qualitatively the price increases in car parking and VIP lounges. So, I think it's been a very good performance of our commercial activity. And from, again, a qualitative perspective, I would like to... remind you all that we keep including, and we are proud of it, the minimum annual warranty arrangements as a fundamental element in our contractual framework. In figures, I would underline that since November 2021, we have awarded more than more than 280 contracts in food and beverage, specialty shops and financial services with a minimum annual guarantee rents increase of, for instance, 130% in 2023 in comparison with 2019. On the other hand, yesterday, you know that we held a meeting of the board of directors, and the board of directors made two very important decisions. First, we approved the airport charges proposal applicable from the 1st of March, 2024. setting the adjusted annual maximum revenue per passenger, the famous IMAG, for 2024 at 10.35 euros. And second, concerning the duty-free tender and leaving aside the, let's say, media noise that we experienced a few weeks ago, We are very happy to announce that we yesterday awarded the duty-free contracts for Madrid and Catalonia. And it means that the whole business, I'm now referring to the whole duty-free business for Spain. I will just give an example, the minimum annual warranty rents for 2024 are 16% higher than in 2023. So I think it's very good news for AENA, very good news for our shareholders, because all in all, it means that the new contracts, again I'm referring to duty-free contracts, Firstly, preserve our business model of minimum annual guaranteed rents. And secondly, for instance, I would highlight that it means that AENA will perceive revenues for a minimum of 6.3 billion euros in the period from 2024 to 2035. I'm now starting the end of my presentation. I would like to highlight two milestones. The first one is in the international and financial, refer to the international activities. In Brazil, you know that we were awarded last year the concession for 11 airports, including Congonhas. You know that the transfer of the facilities to AENA will happen during the second half of this year. And the second element I would like to highlight is related to financing activities. INA has recently executed a sustainable syndicated credit facility for 2 billion euros that has been signed by 14 national and international financial institutions. I'm sure that we will have time to discuss any other issues issues that you want me to comment on. But now I stop here and I just would like to thank you for your attention. Thank you very much.