Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (OMAB) Q2 2024 Earnings Call Transcript

In the recent earnings call for the second quarter of 2024, Grupo Aeroportuario del Centro Norte (OMA) presented a mixed bag of results, highlighting significant achievements while acknowledging challenges in certain areas. The conference call, led by CEO Ricardo Duenas Espriu and CFO Ruffo Perez Pliego, provided valuable insights into the company's operational and financial performance, strategic initiatives, and future plans.

Operational Performance and Financial Results

OMA's passenger traffic for the second quarter of 2024 was 6.5 million, marking a decrease of 2.4% compared to the same period last year. Domestic passenger traffic saw a 4.3% decline, primarily due to the impact of the Pratt & Whitney engine recall on low-cost carriers and the effect on key routes such as Monterrey to Cancun and Mexico City. However, international passenger traffic showed a strong performance, increasing by 12% year-over-year, driven by significant growth in the Monterrey airport. The robust demand for flights to Mexico City, despite the reduction of movements per hour at Mexico City International Airport, underscores the city's continued appeal for air travelers.

In terms of financial performance, aeronautical revenue decreased by 2.5%, with non-aeronautical revenues growing by 13.8%. Commercial revenues, driven by VIP Lounges and Parking, increased by 12%, while non-aeronautical revenue per passenger remained flat. The successful execution and consolidation of strategic projects throughout the year contributed to a 13.8% increase in non-aeronautical revenues. The company's diversification efforts, particularly in cargo and hotel services, showed promising growth, with revenues increasing by 27% and 16%, respectively.

Strategic Initiatives and Expansion Plans

OMA's strategic focus on enhancing airport infrastructure and services was evident in the significant milestone achieved at the Monterrey airport. The successful inauguration of the Terminal A East public area expansion, covering over 6,000 square meters, highlights the company's commitment to improving services and increasing airport capacity. This expansion is part of a larger plan to expand and remodel terminal buildings in Monterrey, Ciudad Juarez, Torreon, Culiacan, Durango, and Mazatlan, demonstrating OMA's long-term vision for airport development.

The company's financial performance also showed strength, with adjusted EBITDA reaching MXN2.2 billion in the second quarter, a 73.3% adjusted margin. Despite challenges in certain areas, OMA remains optimistic about its future prospects, particularly in the non-aeronautical business. The company's strategic initiatives, including the expansion of its industrial park and the establishment of Monterrey as a key logistics hub, position OMA for sustainable growth in the coming years.

Investor Insights

The earnings call provided valuable insights into the concerns and priorities of key shareholders and investors. Questions from financial institutions such as Santander, Bradesco BBI, Morgan Stanley, Citi, and GBM, touched on topics ranging from traffic expectations for the second half of the year to the potential for non-aeronautical revenue growth and the relevance of Toluca as an alternative to Mexico City's Felipe Angeles and ICMA airports. These interactions underscored the importance of OMA's relationship with its investors and the market's interest in the company's strategic initiatives and financial performance.

Future Outlook

Looking ahead, OMA's strategic focus on enhancing airport infrastructure, expanding non-aeronautical revenues, and capitalizing on near-shoring opportunities sets the stage for sustainable growth. The company's commitment to optimizing airport services and facilities, as well as its strategic partnership with VINCI, positions OMA for continued success in the competitive airport industry. As OMA navigates the challenges and opportunities ahead, its focus on innovation, operational efficiency, and investor relations will be key drivers of its future growth.

In conclusion, Grupo Aeroportuario del Centro Norte's Q2 2024 earnings call presented a comprehensive picture of the company's operational and financial performance, strategic initiatives, and future plans. With a focus on enhancing airport infrastructure, expanding non-aeronautical revenues, and capitalizing on near-shoring opportunities, OMA remains well-positioned for sustainable growth in the competitive airport industry. As the company moves forward, its commitment to innovation, operational efficiency, and investor relations will be crucial in shaping its future success.