Corporación América Airports (CAAP) Q2 Earnings call transcript Aug 22, 2024

Corporación América Airports held its second-quarter 2024 earnings call, showcasing a resilient performance despite facing macroeconomic challenges in Argentina and aircraft constraints in Brazil. The call, led by CEO Martin Francisco Eurnekian and CFO Jorge Arruda, highlighted the company's strategic initiatives, financial health, and operational developments.

Performance and Challenges

Eurnekian began the call by emphasizing the company's ability to mitigate domestic traffic declines in Argentina through its geographic diversification. Despite a mid-single-digit decline in passenger traffic, revenues per passenger increased by 9%, underscoring the company's adaptability in challenging market dynamics. However, EBITDA ex-IFRIC12 declined by 9% due to macroeconomic challenges in Argentina and lower duty-free sales in the country.

Arruda delved into the financial details, reporting a stable total revenue ex-IFRIC12, with aeronautical revenues up 3% and commercial revenues down 3%. The revenue per passenger grew to $20.1 from $18.5 in the second quarter of 2023. Total cost and expenses ex-IFRIC12 increased by 6%, reflecting inflationary pressures in Argentina.

Strategic Growth Initiatives

Looking ahead, the company is actively negotiating a $400 million CapEx plan with the Armenian government and seeking approval for the new master plan for Florence Airport in Italy. Eurnekian also mentioned assessing expansion projects across various geographies, in line with the company's strategic roadmap to pursue value creation.

Outlook and Expectations

Eurnekian expects the positive dynamics in Uruguay and Italy to continue throughout the year, while anticipating soft domestic traffic in Argentina due to the persisting recession. The company remains committed to delivering strong results and maintaining a healthy balance sheet, with a record low net leverage ratio.

Shareholder and Investor Interactions

Key shareholders and investors expressed concern over the tariff discussion in Argentina and the master plan for Italy. Eurnekian assured that the regulatory agency is working on adjusting the domestic tariffs to catch up with the exchange rate and expects the economic equilibrium of the concession to be rebalanced by the end of the year. Regarding the master plan for Italy, the company is in the final stages of obtaining approvals from various agencies.

Conclusion

The second-quarter 2024 earnings call provided insight into Corporación América Airports' resilient performance and strategic growth initiatives. Despite facing challenges in Argentina and Brazil, the company demonstrated its ability to adapt and maintain a strong financial position. With ongoing negotiations for new projects and expansion plans, investors and analysts remain optimistic about the company's future growth prospects.