Aena Sme S.A Unsp/Adr

Thank you for standing by. My name is Dee, and I will be your conference operator today. At this time, I would like to welcome everyone to the IUNA first half 2024 results presentation. 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 would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Carlos Gallego, Head of Investor Relations. Please go ahead.

Good afternoon, everybody, and welcome to our first half of 2024 resource presentation. This is Carlos Gallego speaking, Head of IR. It's a real pleasure being with all of you today. Our Chairman and Chief Security Officer, Mauricio Lucena, will host the call together with Ignacio Castejón, CFO, and myself. We are going to cover some of the main topics explained in the results presentation that is already available on our website and on the CMD website. And we will finish with a Q&A session. Without any further ado, I give the floor to Marisi Lutena. Thank you.

Thank you very much, Carlos. Good afternoon, ladies and gentlemen, and thank you for joining us to go through our first half 2024 results presentation. Usually I will start commenting the highlights of the financial results, and then I will give the floor to Ignacio Castejón, our CFO, and at the end, as Carlos Gallego mentioned, there will be a Q&A session. I will start with traffic. globally, traffic increased year on year by 10.5%, up to 172.7 million passengers. And in Spain, in the Spanish network, the increase was, I would say, a very considerable 11.4%, reaching 144.2 million passengers. If I move to the UK, London Luton Airport traffic grew year-on-year by 3.2%. In Brazil, our, let's say, first concession, what we call ANB, A-N-B, Its traffic grew by 9.5%. And our second concession around Congonhas, around the airport of Sao Paulo, Boabé, with its 11 airports, grew the first half of the year by 6.1%. if we compare it to the same period of 2023. Let me now please briefly comment on the impact of the very impressive disruption caused by the IT outage that took place the 19th of July. As you know, I think that the Spanish airports We could clearly say that performed in relative terms pretty well. I would even say that they performed in relative terms excellently. Our Spanish airports remain fully operational. Although of course, some activities during that day performed slower than usual. But at the end of the day, We had, let's say, only, of course, it's in relative terms, 400 flights canceled out of more than 8,000. And I must say that these 400 canceled flights, most of them were canceled because of the disruption that the autos cost on the airlines. So all in all, it was a really impressive event. But I'm a CEO of the company. I would say I'm... very satisfied of our response because I think that operationally our response was very robust and fast. Okay, now I will move, if you allow me, to the financials. You know that in the first half of 2024, total revenue grew by 17.7%. Aeronautical revenue increased by 16.4%. Commercial revenue by 17.7%. Real estate revenue by 18% and international activity by 25.6%. And on the side of costs, total operating expenses grew in the first half of the year 3.2%, which is not bad at all, taking into account the impressive increase of our activity. So, in total, the EBITDA for the period came at 1.6 billion euros, and this means that our EBITDA margin stood at 56.6%. The net profit in the first half of the year increased by 33.1%, reaching a total 0.8 billion euros. Okay, now I move to commercial activity. In the commercial activity, we have witnessed robust growth trend and this robust growth trend I think that it simply continues the trend that let's say started back in 2022 and it continued in 2023 and fortunately it has even increased in the current year. Total sales grew by 13.4% year on year, thanks to mainly, of course, the traffic strength. Secondly, the increased spending by EU and UK passengers. And thirdly, due to the introduction of new brands and concepts that are performing very, very well. In addition, we, as you know, we continued our process of renewing the commercial offer. And I would say that the new contracts awarded have resulted in, I don't know if we could again call them impressive, but not very short of impressive in any way. And I will give you some figures that demonstrate how strong our commercial perspectives are considered by the market. The minimum annual guaranteed rents of the contracts awarded in specialty shops exceed exceeds by 21% this minimum annual warranted rents of 2023 in 2024 in the current year and by 35% in the next year in 2025. And if I consider the food and beverage new contracts awarded this year, these increases are 21% if we consider 2024 compared to 2023 and 45%, I repeat it, 45% if we compare the rents in 2025 with the rents in 2023. Now I will refer briefly to our 2025 tariff proposal. Yesterday, the board of directors approved the tariff proposal applicable from March 1st, 2025 at 10.4 euros per passenger. And this represents an increase of 0.54% compared to the current tariffs. And I clearly do not foresee any reason by which this proposal could be modified. In other words, I think that this 0.54% tariff increase will be the one that will effectively take place in March next year. If I now move to Brazil, I would like simply to underline that you know that on the last quarter of 2023, we took full control over the 11 airports included in our second Brazilian concession, what we call Boabé. And in the first half of 2024, The EBITDA contribution of this new concession was 50.4 million euros, which implies an EBITDA margin above 55%. Now I move to dividends. You know that on May 7th the company paid a gross dividend of 7.66 euros per share. And this would be the end of my presentation in ordinary times, but I would like to add a very brief qualitative assessment regarding the announcement that yesterday was made by two political parties, Esquerra Republicana de Catalunya on the one hand and the Partit dels Socialistes de Catalunya, the Catalan Socialist Party, on the other. This agreement mentions the airports that are owned by AENA in Catalonia, and I would like simply to convey at the present time three messages, which I hope that are very clear. The first message I would like to convey concerning this agreement is that AENA had noticed yesterday during the board of directors meeting of the leak of this agreement and the board of directors agreed in real time, it agreed what was later communicated to the market. which is the following. INA is going to carry out a very detailed monitoring of the development and the potential effects that this agreement may have on the company. My second message is the following one. For the above-mentioned purpose, we are going to have the support of the best legal experts, which are going to be hired in the next few days. And thirdly, my third message is probably the most important one. The company will undoubtedly defend its interests and you know that in my period of more than six years as chairman and CEO of the company, I have shown that this defense of the interest of the company has has always been my main driver and the company's main driver. In other words, I think that we have shown in my more than six years period as chairman and CEO of the company, that the defense of the interest of the company will be the unique and the only principle that will guide our future actions in this regard. So having said that, and of course we will have time to analyze this and other issues during the Q&A period, I now end my presentation and give the floor to Ignacio Castejón, IANA CFO. Thank you. Ignacio Castejón Thank you very much, Mauricio. Hello, everyone. This is Ignacio. I will go through some details related to traffic, revenues, cash regeneration, and international footprint of AENA. And after that, we will start the Q&A, as explained by the chairman. Let me start with the updated traffic forecast that the company published some weeks ago. We revised upwards our traffic forecast to 306.7 million passengers. That is a year-on-year increase of 8.3% compared to the previous forecast of 3.8%. Basically, the main drivers for that decision were the traffic performance for the first months of the year, the improved economic conditions, and our views on what was happening from a traffic standpoint and what we think might happen in the following months. With respect to performance so far, if we look at the Spanish network, we have seen a double-digit year-on-year growth, as you have seen through these months, with international traffic growing at 13.5%. If we look at our main markets, market shares and growth rates are very similar to the growth that we have seen previously. And I would like just to highlight the impressive growth coming from our main airlines. Ryanair growing at 10.3 percent, Iberia Express 10.5 percent and ECGF 13.3 percent. So significant growth coming from our main airline customers. I'll move to commercial revenues. If we look deeper into our commercial revenues, first, I would like to emphasize that total commercial revenue growth was 17.4% year on year. We reached 889.2 million euros at the end of this semester. In passenger terms, we reached 6.2 euros per pack in this first semester. That would compare to 5.9 euros in the first semester of the previous year. If we exclude the straight lining and other adjustments of our commercial revenues, the growth was 14% year-on-year. These revenues, as you know, are composed of two main elements, the fixed and the variable rents. with a growth of 10.3% and they accrue that unbilled minimum annual and guaranteed rents. The growth of the minimum annual and guaranteed rents were very strong, reaching 13.2 – 13 – 38.2% year-on-year. That's basically, as you know, the reason for – the reason behind that growth is all the new contract that the company has been signing in the last – in the last months. If we look at some of our commercial business lines, let's start with duty-free. That is our main commercial line. The increase of the sales was 15.4%, and basically the performance is very explained by the tourist airports and by the British passengers. If we look at the growth in Alicante, Tenerife, Lanzarote, Gran Canaria, and Palma de Mallorca, we can see growth, all of them, north of 10% and around 20%. At the variable rents, you will see that variable rents have not grown, have grown less than the minimum and guaranteed rents. The main reason, the main drivers for that is something that we already discussed in the first quarter resource presentation. As you know, we are adding more products to that business line. We are having construction activities around those business lines, and that's diluting a bit the variable rents that we are achieving in that commercial line. the variable rents that are part of the contract that we are working that year are also a bit flattest or lower compared to the variable rents that we had in our previous contracts. If we move into F&B, this segment increase, the sales in this segment increase by circa 13%, one three, with the variable rents fixed and variable rents already growing at almost 16%. We have opened new food and beverage sites in Madrid and Palma and we have had a very active activity with respect to tenders and awards in the first six months of the year involving Tenerife Islands, involving the Madrid airport as well. With respect to specialty shops, the growth is also material and I would like to highlight all the significant activity that the company has had in this first six months of the year. 41 tenders for 54 outlets have been published. And 29 tenders for 43 stores have already been awarded. I would like to highlight all the activity in Malaga Airport, in Barcelona Airport. And with respect to the future, in this next semester, we'll be publishing tenders for the whole Palma de Mallorca Airport in this category. Let me stop one second the business categories that we manage as a company that I'm referring to car parks and VIP services. Car parks, we are seeing an increase of 14.7% year-on-year with new infrastructure being added by the company. We are adding spaces in Alicante, in Barcelona and Ibiza. So more capacity and also prices being updated. All these new facilities are already operational. With respect to VIP services, Total income rose north of 30%. This is basically explained by VIP lounges that represent 82% of those revenues. VIP lounges registered an increase of 25%. This growth is mainly explained by more customers because of more traffic and higher penetration, but also because of higher prices that we are achieving in this business line. With respect to car rental, I would just like to highlight that the new contract awarded by the Board of Directors back in April has not started yet. As you know, it will start the very first days of November. Having said that, with the current contract that we have with existing operators, we have been able to deliver a growth in our income of north of 10 percent. for a while in the OPEX. The chairman already referred to the performance of the OPEX of the total cost of the company in his opening remarks. Basically at group level operating expenses, total 1.2 billion euros, that's an increase of 6% compared to 2023. What are the main drivers behind that increase? Basically the consolidation of our new activities in Brazil, Congonhas and the rest of the airports of that portfolio. Higher staff costs across the group, that's a plus 10%. Cost increases in security, maintenance, P&R. Cost increases in Luton and also the energy prices evolution. If we look at AENA on a standalone basis, the increase in our OPEX amounted to 7.2%. Other operating expenses, the increase taking into account energy costs was 8.1%. Excluding energy costs, the increase would have been 10.2%. What is behind that increase? Basically new contracts that are with some higher cost, more activity, higher cost of our insurance, higher cost in cleaning, security, as we have been discussing for a while with all of you. If we look at the evolution of our other operating expenses on a per-pax basis, these costs are decreasing. We are being able to mitigate those increases through our operational leverage on a per-pax basis. There is an item on the other operating expenses that I would like to highlight, that the company has marked a provision amounting to more of 14 million euros, 1-4, related to all the DS-7 and commercial claims that we have had for a while. That is partially explaining the increase that you will have seen this quarter. From a cash standpoint, the group has performed very strongly, very robustly in this first half of the year. Cash generated by operating activities has been north of 1.4 billion Euros. That's an increase of 33.7% compared to the first six months of the previous years. From ACAR's movement standpoint, I would like to highlight that the main movements are related to the payment of the dividends, 1.1 billion euros, debt repayments amounting to 628 million euros, and CAPEX payments of circa 470 million euros. From a net debt standpoint, we keep working on the reduction of that ratio, and we are already at 1.9 times net debt to EBITDA at group level. With respect to our debt structure, I would like to highlight that we remain with a significant amount of our debt at fixed rates, 74% of our debt is at fixed rate, with only 26% is at variable rate. From a cost standpoint, the cost has increased a bit, but we are still at below 2.6% with respect to the average cost of the Aina parent company debt. Let me finish with some comments on the international business. London Luton Airport traffic keeps recovering. We are already at 93.2% of traffic of 2019. We can increase this year, year on year of 3.2%. All of our airlines with ECJET and Ryanair keep growing with recoveries of 2019 of 105, 85 and 103 respectively. Total revenues of Luton Airport grew by 55.5% compared to 2019, and we are seeing growth in revenues from an aerial and commercial standpoint. Luton managed to deliver an EBITDA of 64.3 million euros. That's an increase of 10% versus previous year. Regarding our Brazilian operations, as mentioned by our chairman and CEO, We are seeing a significant growth not only in Boabé, that's Congonhas, B-O-A-B, but also in A and B. As you know, we finished our construction activities in Recife and the other airports that are part of that portfolio, and we are witnessing a significant increase in the EBITDA of that operation in Brazil. Let me finish just highlighting the contribution of Congonhas and the rest of the airports in that portfolio from an EBITDA standpoint for the whole group amounting to R277 million for the first six months of this year. And that would be all from my side. Thank you very much. Operator, we will be ready to start the Q&A session if that's okay for everyone.