Grupo Aeroportuario del Sureste Q2 2025 Earnings Report

Grupo Aeroportuario del Sureste EPS Results

• Actual EPS: $3.80
• Consensus EPS: $6.01
• Beat/Miss: Missed by -$2.21
• One Year Ago EPS: N/A

Grupo Aeroportuario del Sureste Revenue Results

• Actual Revenue: $464.62 million
• Expected Revenue: $8.98 billion
• Beat/Miss: Missed by -$8.51 billion
• YoY Revenue Growth: N/A

Grupo Aeroportuario del Sureste Announcement Details

• Quarter: Q2 2025
• Date: 7/22/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 23, 2025
• Conference Call Time: 10:00AM ET

Grupo Aeroportuario del Sureste (NYSE:ASR), S. A. B. de C. V. holds concessions to operate, maintain, and develop airports in the southeast region of Mexico. The company operates airports that are located in the cities of Cancún, Cozumel, Mérida, Huatulco, Oaxaca, Veracruz, Villahermosa, Tapachula, and Minatitlán. It provides aeronautical services, which include passenger, aircraft landing and parking, passenger walkway, and airport security services. The company also offers non-aeronautical services, such as leasing of space at its airports to retailers, restaurants, airlines, and other commercial tenants; catering, handling, and ground transportation services, as well as engages in the various commercial operations. In addition, it holds concessions to operate the Luis Muñoz Marín International Airport in San Juan, Puerto Rico; and various airports in Colombia, including the Enrique Olaya Herrera Airport in Medellín, the José María Córdova International Airport in Rionegro, the Los Garzones Airport in Montería, the Antonio Roldán Betancourt Airport in Carepa, the El Caraño Airport in Quibdó, and the Las Brujas Airport in Corozal. Grupo Aeroportuario del Sureste, S. A. B. de C. V. was founded in 1996 and is headquartered in Mexico City, Mexico.

Grupo Aeroportuario del Sureste Q2 2025 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Passenger traffic was flat at 17.7 million year-on-year, with Mexico down 2% due to the Tulum ramp-up and weak international demand offset by 3% growth in Puerto Rico and 1% in Colombia.
• Positive Sentiment: Total revenues rose 5% to 7.4 billion pesos, driven by high-teens growth in Puerto Rico, 15.4% growth in Colombia and modest 0.7% growth in Mexico, while commercial revenue per passenger grew mid-single digits.
• Negative Sentiment: Expenses jumped nearly 10% year-on-year—driven by a 12% minimum wage hike and higher operating costs—causing Mexico EBITDA to fall 1.6% and overall adjusted EBITDA margin to slip to 68% from 69%.
• Negative Sentiment: The bottom line was hit by a 1.2 billion-peso foreign exchange loss due to peso strength, compared with a 942 million-peso FX gain in the year-ago quarter.
• Positive Sentiment: With 20 billion pesos in cash, net debt/EBITDA of 0.1x, and 1.4 billion in capex underway, the company paid a 50-peso dividend in May and two 15-peso extraordinary dividends, underscoring a strong balance sheet.

Presentation

[Operator]

Good day, ladies and gentlemen, and welcome to Assure's Second Quarter twenty twenty five Results Conference Call. My name is Christine, and I'll be your operator. At this time, all participants are in a listen only mode. We will conduct a question and answer session toward the end of today's conference. If you would like to ask a question, please press 1.

[Operator]

If you want to withdraw your question at any time, please press 2. If you are using a speakerphone, please lift the handset before making a selection. As a reminder, today's call is being recorded. Now I'd like to turn this call over to mister Rodolfo Castro, chief executive officer. Please go ahead, sir.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Thank you, Christine, and good morning, everyone. Before I begin discussing our results, let me remind you that certain statements made during the call today may constitute forward looking statements, which are based on risk management expectations and beliefs and are subject to several risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our company's control. Additional details about our second quarter twenty twenty five results can be found in our press release, which was issued yesterday after market close and is available on our website in Investor Relations section. Following my presentation, I will be I will be available for q and a. As usual, all comparisons discussed on this call will be year on year figures and are expressed in Mexican pesos unless specified otherwise.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

During the second quarter, we served 17,700,000 passengers across all airports we operate with traffic remaining largely flat year on year. Once again, bad performance in Colombia and Puerto Rico offset softness in Mexico. Puerto Rico was the best performing market this quarter, posting 3% growth in passenger traffic, supported by domestic traffic and sustained strength in the international traffic. In Colombia, traffic was up 1% with international travel up 12% and domestic contracting at low single digit. Lastly, Mexico reported a decline of nearly 2% in total traffic with an increase of 1.2% in domestic, offset by a decrease by 4.5 in international travel.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

International travel in Mexico continued to experience year on year declines from all regions during the quarter. Passenger volumes from Europe were down 4.7%, from The US 5.3%, South America 2.7%, and Canada 1.6%. A meaningful portion of this decline, approximately 38%, is attributable to the ramp up of the new airport in Tulum, which continues to draw some passenger flow previously concentrated in Gangulyo. Beyond this shift, we believe the broader softness in industrial traffic reflects broader market dynamics, including a more cautious demand environment across several sorts of markets. While while the underlying drivers vary, some of these pressures are so also evident in other international markets as well.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Looking ahead, we expect traffic in Mexico to gradually stabilize over the course of next year as the effect of the engine related aircraft problems appear to have bottomed out and Tulum Airport reaches more normalized level of operations. With respect to the potential US depart of transportation restrictions on Mexican carriers, Azul does not expect a material impact on our operations from these measures as our exposure to the affected airlines is minimal. To put this in context, Aeromexico accounted for just 0.3% of total passengers traveling between our airports and The US. While Viva, Airbus, and Polaris together represented approximately 1.3%. As I noted in price prior calls, which is long term growth potential for both and.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

It's driven by the specific demand dynamics of their respective catchment area. While the product market environment remains uncertainty, History has shown that travel related disruptions, particularly those tied to US and Mexico demand tend to be temporary in nature. Now turning to a review of our financial performance. People that all reference to revenue and cost figures, new construction. Total revenues increased 5% year on year to 7,400,000,000.0 pesos, reflecting top line growth across operations, particularly in Puerto Rico and Colombia.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Mexico, which accounted for 72% of total revenues, posted a low single digit increase of 0.7% with relatively growth in aeronautical and nonaeronautical revenues. Puerto Rico contributed 17.7% of the total revenues with top line growth in the high teens This compared to growth in high 20s in the prior quarter that was supported by the foreign exchange rate benefit resulting from a weaker pest. Colombia, which accounted for 12% of the total revenues, posted a 15.4% top line growth, decelerating from growth in the low thirties achieving prior quarters. This was driven by both aeronautical and nonaeronautical credits, which benefited from the continued recovery in domestic traffic and international traffic, and the opening of 35 new commercial spaces over the past twelve months, partially offset by strong Mexican peso. As part of our ongoing strategy to engage our commercial offerings, We opened 47 new commercial spaces over the last twelve months.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

As I said, 35 in Colombia, seven in Mexico, five in Puerto Rico. This expansion supported high single digit growth in total commercial revenues driven by strong performance in Colombia and Puerto Rico and a modest increase in Mexico. On a per passenger basis, commercial revenue reached nearly a 140 pesos in the quarter, representing mid single digit year on year growth with contributions from all three regions. Colombia leads with a 22 increase, followed by 30% gain in Puerto Rico. Those are achieved despite less favorable exchange rates.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

In Mexico, commercial revenue per passenger rose nearly 3% to a hundred and fifty nine deaths even as passenger traffic disrupted. Moving on to cost. Total expenses increased nearly 10 percent year on year. This is accelerating from the 18% growth we saw in prior quarter. In Mexico, cost rose 7% private primarily reflecting the 12% increase in minimum wage effective at the start of the year.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

In both Puerto Rico and Colombia, cost increased in low teens, benefiting from the position of Mexican peso against the US dollar and the Colombian peso. As a result, consolidated EBITDA rose slightly 2% over year over year, reaching 5,000,000 pesos in the quarter. Notably, Puerto Rico and Colombia posted a double digit growth of 2015% respectively, while Mexico saw a 1.6% decrease in EBITDA in line with the passenger traffic, the negative impact of the total peso, and the higher cost I just explained. The adjusted EBITDA margin, which exclude construction revenue, stood at nearly 68% compared with the 69 in the same quarter last year. The slight margin contraction was mainly achievable to a 170 points decline in Mexico, while Colombia post the moment, 20 basis point decrease.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Puerto Rico, we only have delivered a 120% margin improvement in a cost in the March. Our bottom line this quarter was negatively impacted by a foreign exchange loss of 1,200,000,000 pesos driven by the acquisition of the Mexican peso and the US dollar. This compares with to a foreign exchange gain of 942,000,000 in the same quarter last year, which reflected the opposite effect driven by the the depreciation of the peso during the last year. Moving on to our balance sheet. We maintain a strong cash position, closing the quarter with nearly 20,000,000,000 pesos in cash and cash equivalents, up 30 year on year.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Net debt to EBITDA ratio increased slightly to 0.1 times, reflecting the drop down of a loan facility in Mexico for 9,500,000,000.0 pesos in the quarter. Turning to capital allocation. Reflecting our solid financial position, in May, we paid a 50 peso per share cash dividend, accounted from account accounted accumulated to Genanx. In addition, we will be paying two extraordinary dividends of 15 pesos per share each in September and another one in November. Capital expenditures in the quarter totaled 1,400,000,000.0 pesos with most of these investments directed towards modernization and expansion projects at our Mexican average.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

This includes the ongoing work of the reconstruction and expansion of Terminal 1 at Lincoln Airport and the terminal expansion in Wuhan. In Puerto Rico, we're currently advancing in the construction of taxiway hotels. All construction activities continue to take place outside operational areas to ensure no disruption to operation of to airport operations. Lastly, on the governance front, during the quarter, this is a very clear to our support to our board of directors as an independent member. Following the resignation, mister Guajardo Ricardo Guajardo Tushe.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

With this, 57 of our board is comprised of independent directors, and female representation has increased to 36%. We thank mister Guajardo Tushe for his valuable contribution and years of service on the board. Missus Prieto brings a wealth experience in both public and private sector, beginning in financial services. To close, our second quarter performance underscores the resilience of our diversified portfolio and our sustained cost on efficiency improvements. We continue investing in infrastructure, elevating passenger experience, and delivering sustainable long term growth.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

We also remain attentive to evolving global macroeconomic conditions and believe our healthy financial position will help to mitigate potential risk. This concludes my prepared remarks. Christine, please open the floor for questions.

[Operator]

Thank you. We will now begin the question and answer session. To ask a question, dial in by phone and press star then one on your telephone keypad. Please sure the mute your mute function is turned off. And if you are using a speakerphone, please pick up your headset before pressing the keys.

[Operator]

Our first question comes from the line of Jen Sees with Morgan Stanley.

[Jens Spiess, Vice President at Morgan Stanley]

I have basically two. One is regarding nonair revenues. So just just wondering what drove, like, the sequential decline in in nonair revenues. Was it was it mix of the touch passengers or or if anything else explaining it? And secondly, I mean, you already mentioned the the DOT situation with The US not impacting you.

[Jens Spiess, Vice President at Morgan Stanley]

But I was thinking that maybe one outcome might be that the capacity restrictions in Mexico City might be lifted, which would end up benefiting potentially the the passenger traffic in the system as a whole. What what in in in case that materializes, how much of a positive impact would you expect? Thank you.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Okay. Thank you, James, and good morning.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Well, in the case of non aeronautical revenues, of course, exchange rate played an important role during the quarter. You know, I would say, of course, a slight difference in the in the passenger mix, international versus domestic. And also, in the case of domestic, the situation that we have in Terminal 2. In terms of your second question, I don't know if you saw thirty days ago that the Mexican government decided to increase or to ease to ease restriction they have in Mexico City Airport from 43 to 44. This announcement explained that they have made an analysis of the airspace in Mexico City and also an analysis on the cellular buildings.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

And that's why they decided to increase that from 42 to 42 to 43. So one operation more in Mexico City Airport reflects more or less one medium passenger traffic in that airport. I was expecting restrictions to be lifted towards the end of the year. I have my serious doubts that this will happen after what we've shown this announcement. So, of course, the situation of the DOT came better, and I believe the Mexican government will have to review the situation and see what is what they're gonna say after what the DOT has expressed.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

As I said, the situation between the traffic to and from The US from our airports, it's basically managed by US airlines. I just said, out of Mexico, 0.3. In the case of Pira and Volaris together, 1.3%. So it's 1.8%, 1.16% of the total traffic between this two countries. So I do not expect any major implication of this in in our case, of course, if as a result of this, the government decided to increase the operations in Mexico City, that will be beneficial to us.

[Jens Spiess, Vice President at Morgan Stanley]

I agree. Okay. Perfect. Thank you very clear. Thank you, Adolfo.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

You're welcome.

[Operator]

Our next question comes from the line of Stephen Trent with Citi. Proceed with your question.

[Steve Trent, Managing Director at Citi]

First, just quickly on Tulum. Is this still the case that it's Charter traffic is still sort of the primary piece of the pie that's leaving Cancun and and and shifting to Tulum? Or, you know, are you seeing a little bit more of a tilt in commercial? Thank you.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Hello?

[Steve Trent, Managing Director at Citi]

Yes. Adolfo, can you hear me?

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Yeah. But could you repeat your question? Because you were you were not.

[Steve Trent, Managing Director at Citi]

Sure. Sure. No problem. Yeah. I was just curious.

[Steve Trent, Managing Director at Citi]

In terms of the what you're seeing in Tulum Airport and the traffic impact to Cancun, Am I thinking about this correctly? It's still primarily charter traffic that's the piece that's going there, or are you seeing a a little more

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

of a shift of of commercial traffic there too? Thank you. Well, it's of course, you can find some traffic lights there. But, basically, I would say most of these is commercial flights, basically, coming from The US. You know, a piece is coming from Mexico, but the most important region in that sense is US.

[Steve Trent, Managing Director at Citi]

Got it. Appreciate that. And just a very quick question on on the balance sheet. I saw there was a 1,500,000,000 investment in financial instruments in 1Q that is no longer there in two queue. And just just was curious what was sort of the rationale behind the shift? Thank you.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Okay. As you know, it's a huge amount of funds that we have in the bank in investments. So we decided to invest a piece of that in a fund instead of the usual instruments we have been in just to try to get some more return for that amount of money.

[Steve Trent, Managing Director at Citi]

Okay. Let let me leave it there. Very helpful. Thanks, Adolfo.

[Operator]

Our next question comes from the line of Guillaume Mendez with JPMorgan. Please proceed with your question.

[Guilherme Mendes, ED - Equity Research Analyst at JP Morgan]

Hi, Adolfo. Good morning. Thanks for taking the time. The first question is on a follow-up on the traffic outlook. You mentioned at the beginning that you do expect some kind of normalization on Mexican traffic into next year.

[Guilherme Mendes, ED - Equity Research Analyst at JP Morgan]

Just trying to understand what does it mean for the second half of this year. I understand the days of comparison is relatively easier. So is it fair to assume that we could expect some kind of traffic growth, let's say, single digits on next contract into the 2025 when compared to second half of twenty twenty four? And the second question is on the FX impact. So you mentioned the negative impact on aeronautical revenues.

[Guilherme Mendes, ED - Equity Research Analyst at JP Morgan]

Can you clarify what is the actual impact on commercial revenues during this quarter? Thank you.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Yes. Well, the the domestic traffic that you have seen in the numbers during the quarter is no longer decreasing. It was a small increase.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

I think traffic are basic and basically, this is because the engine problem of Preston Whitley It's basically bottomed out. So Vonage has expressed yesterday that they have, like, six aircrafts in the in the shop. And then in the in the how can I say it? In the in the grounders because Grounders. Problem.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Exactly. And that was exactly the same feature we saw during the first quarter. So this is the lowest part of the curve, I would say. As we can see with the numbers from now on, we should see an increase in domestic because of this. You know?

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

That is, in my opinion, the most important situation, of course. The situation in Mexico City helps from this. You know? But as as we said, there was a small increase in the restriction from 42 to 43. So from now on, I think it should be better than how it worked before.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

In the case of the effects in the commercial revenues, this has to do with the exchange rate activities there on one side. On the other side, it has to do with duty free. And, of course, what I have mentioned before, the situation we have in in the case of terminal two. So so that's why you're seeing a very soft, I would say, nominal, low, medium revenues in the second quarter compared with the first quarter this year. Maybe put in a different way, do you have high high level numbers on what is the the USD exposure you have on your commercial activity?

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

It's it's not that easy because, of course, the only one that is related to US dollars is really free. You know? The other thing is the way the people expense, you know, in terms of food and beverage prices are in pesos, but that doesn't mean that the people will spend more in Mexican peso depreciates, which is not the case in the stores. In the stores, again, the the prices are in pesos, You know? But the people tends to spend more if the Mexican peso depreciate.

[Guilherme Mendes, ED - Equity Research Analyst at JP Morgan]

Got it. Thank you, Adolfo. Have a nice day.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

You're welcome.

[Operator]

Our next question comes from the line of Pablo Monsievias with Barclays.

[Pablo Monsivais, Equity Research Analyst at Barclays]

A follow-up on on the commercial revenues question. What should we expect for the next two quarters with the situation you're naming on Terminal 2? Should we expect again a couple of quarters of still a soft commercial revenue activity? And my second question is maybe to put different the question of Guilherme. What percentage of the rents that you have in your tenants at Cancun are in US dollars?

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Thank you. And, Pablo, because in the case of Terminal 2, we should expect that for the next four quarters. It will be up to the third quarter next year when we will be able to open the new reconstruction and expand in Terminal 1, which should alleviate in a significant way with the creation of Terminal 2. My my charges or the way that we charge in the commercial revenues is basically a minimum 90 payment per passenger and a percent special to sales. Normally, what they pay to us is the percentage of the their sales.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

And as I said before, if their sales are in pesos, in between brackets, this is pesos. That is not the currency. The the thing that explains the spending behavior has to do with the passenger weakness of of these law. In the past, I used to say what Russia needs to do is guide in the duty free. No.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

And it has to do with with the packaging, not with what is there.

[Pablo Monsivais, Equity Research Analyst at Barclays]

Okay. Thank you very much.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

You're welcome.

[Operator]

Our next question comes from the line of Pablo Ricaldi with Itau Asset Management.

[Pablo Ricalde, Research Analyst at Itaú Corretora de Valores SA]

I have two questions. The first one is from the Mexico profitability or EBITDA margin. I don't know if you can explain a little bit further what happened on the cost line. You mentioned we saw an increase in labor cost and utilities. So just wondering if maybe you register a provision or something and and that's why expenses do that much and profitability decline that much.

[Pablo Ricalde, Research Analyst at Itaú Corretora de Valores SA]

And how should we think of profitability in Mexico going forward? And and my second question is from your balance sheet and your cash and balance. Is that gonna be may I mistaken 60% of your cash is in USD? I just want to double check that number.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

And, yes, Pablo.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Well, in the case of of of the margin, you know, and, normally, I don't want to or I don't like to talk about margins because revenues and expenses are basically independent. The expenses side grew 7% and and basically because of the annual wage increase of 12% as from the beginning of the year. So It was less than what we had in the first quarter. So we have to to take some actions there due to the situation of the weak traffic we had to in the the combination of both is what you're saying, a decrease in the market. No?

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

That is is something that you need to see on an independent basis. No?

[Pablo Ricalde, Research Analyst at Itaú Corretora de Valores SA]

Okay.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

In the case of of the what you're saying in in the balance sheet, what was your question?

[Pablo Ricalde, Research Analyst at Itaú Corretora de Valores SA]

Like that, how which which percentage of your cash is in USD?

[Pablo Ricalde, Research Analyst at Itaú Corretora de Valores SA]

And try to understand what those effects loss of your p and l. If I'm not mistaken, around 60% of your effects is in your of all of your cash is in your end.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Yeah. And because of my thing, at the end of the quarter, we have $700,000,000 in dollars.

[Pablo Ricalde, Research Analyst at Itaú Corretora de Valores SA]

Okay. Thanks.

[Operator]

Our next question comes from the line of Fernando Rechia with ETT Capital. Please proceed with your question.

[Fernanda Recchia, Equity Research Director at BTG Pactual]

Hello. So good morning. Thank you for taking my question.

[Fernanda Recchia, Equity Research Director at BTG Pactual]

Two here from our side as well. So the first one, the dividend policy going forward, we saw that despite the payment of the first tranche, your leverage is in a pretty comfortable level. So just wondering what we can think about the next year onward if we could expect such a due dividend payment like we saw in 2025? And second, still a follow-up on Detune. Maybe if you could elaborate a little bit further, when do you expect this airport to reach full capacity, and when do you expect it to stop hurting Cancun figures? Thank you.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Thank you, Fernando. Well, I think it's okay. Let's for next year. Let's let's try to to go through this year. But, you know, we have another payment in September, another one in in November, then we would have to evaluate what's the situation for the year and and the results of operations.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

And then next year, we will propose something to the board and then to shareholders. In the case of Pulumi Airport, if we see last twelve months, Tulum Airport reached around 1,500,000 passengers. If we see the last twelve months December, it was 1.2. So there was an increase of 300,000 passengers during the first half of the year. I was expecting a better ramp up.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

If you go back to my first conference call of the year, I was expecting 2,900,000 for this airport. You know? But recent news, basically, showing cancellation of some routes over the in terms of being out on some others. Basically, are saying to me that this airport will not reach what I was expecting at the beginning of the year. This airport should have, roughly speaking, 2,900,000.0 in accordance with the location this airport has.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

So going back to your question, when will not be hurting from these is one of these airport reaches the 2,900,000. In the meantime, we will have to continue talking about the ramp up of Tulum.

[Fernanda Recchia, Equity Research Director at BTG Pactual]

Okay. Thank you very much.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

You're welcome.

[Operator]

Our next question comes from the line of Andres Aguirre with GBM. Please proceed with your question.

[Andres Aguirre Campillo, Equity Research Analyst at GBM]

Good morning, Alfon. Thanks for the call. Wondering if you could share the rationale behind the new debt. And given your current high cash balance, how are you thinking about deployment going forward and possibly for further leverage for CapEx? Thank you.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Hi, Andre. Well, the new debt has to do with the taxes expenses in in Cancun Airport. No? We thought that it was something important for us to maintain some cash in hand for the future given the fact that dividend the proposed dividend the proposed amount that I think for this year is a top line of 24,000,000,000. No.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

So it was important to to to be sure that we were able to fund that situation.

[Andres Aguirre Campillo, Equity Research Analyst at GBM]

Thank you.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

You're welcome.

[Operator]

Our next question comes from the line of Ebrahim Suarez with Banco Santander. Please proceed with your question.

[Analyst]

Hello. Good morning. We have seen a drop in the number of tourists that are visiting The US. Do you think that Mexico could capture any of those passengers? And if that will be the case, when do you think we can be to see the effect in terms of traffic?

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Well, this is true. The diminishing decline from all the regions in The US in terms of tourism. We have approached some Canadian airlines and and and talk about the situation. And, basically, what they're saying is that they will evaluate the situation towards the end of the year. If this continue, of course, they will jump into into our region.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

You know? For the moment, what they have extracted that they do not want to lose their slots in their most important airports in The US they have. So, basically, I do believe that next year, we will see some positive effect of this, basically, from Canada and from from Europe.

[Analyst]

Okay. Thank you.

[Operator]

Our next question comes from the line of Enrique Sogaro with Fundamenta Capital.

[Enrique Sojo, Equity Research Analyst at Fundamenta Investments]

I wanted to quickly dive into international traffic dynamics in Mexico. And most specifically, during this first half of the year, we have seen traffic internationally fall. It is a nine and a half in the first Q and 4% in the second Q. Now if this has been happening basically with Tulum not ramping up. How do you expect international traffic to kind of continue in the second half of this year?

[Enrique Sojo, Equity Research Analyst at Fundamenta Investments]

And should if and should we expect the Zoom to basically ramp up in 2626, hence, during both next year? Thank you.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Well, as I said in the initial remarks, the decline 38% of the decline of this quarter in international traffic is related to Tulum Airport. The difference is related to a weaker market from all the all the regions. All are negative.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Canada, US, Europe, and South America. What to expect for the future? Let's see what economics and on what type of economics on the other side, all of these situation with The US migration policies. And and the case of South America with the the situation of the visa for the Brazilian, the visa for the Peruvians, the mistreatment to to Colombians. So all of these is being analyzed by the Mexican government today.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

And also considering that the next year, we will have some gains of the World Cup in Mexico. They would have to do something about it.

[Enrique Sojo, Equity Research Analyst at Fundamenta Investments]

Great. And just a quick follow-up, if I may. In terms of domestic passengers, we should not continue to see it falling, but do you expect a strong rebound?

[Enrique Sojo, Equity Research Analyst at Fundamenta Investments]

Do you see that when talking to Volaris and Volaris, or do you think it will be a more casual change? Thanks.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Well, what I do expect is a better behavior, so no more business in rest of the year.

[Operator]

Our next question comes from the line of Alberto Velez with UBS. Proceed with your question.

[Alejandro Velez, Head - Monaco, Spain, Portugal, FIM Europe at UBS Group]

Thank you for taking my questions. Remind from side here is about CapEx. How should we expect the case of capital deployment for the next quarter? Gotta come a little bit low. What consensus and us was expecting.

[Alejandro Velez, Head - Monaco, Spain, Portugal, FIM Europe at UBS Group]

So how should we see the deployment of CapEx in the following quarters? Thank you very much.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

You're welcome. Well, I have to say that in addition to CapEx, we are above our internal budget for the first half of the year. It's likely above.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

What do we expect from the end of the year is to comply with with what we have. They're written in in our in our MVP roughly speaking 7,000,000,000 pesos. Remember that most of these is suspended towards the full quarter.

[Operator]

Our next question comes from the line of Alan Macias with Bank of America. Please proceed with your question. Our next question comes from the line of Anton Mortenkauer with GBM. Proceed with your question.

[Ernst Anton Mortenkotter, Equity Research - Real Assets at GBM]

Adolfo. Thank you very much for the call. Just a quick one. I mean, from Cancun and the smaller airports in Mexico, maybe like, Merida or Oaxaca, we've seen some steady performance. What what what just wondering what kind of dynamics are you seeing in those smaller airports and and and what would you expect going forward? I mean, anything interesting there?

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Well, everything in the court, of course, has its own situation. I would say, let me go in because of what happened and public public demonstrations in in what happened. Had affected, of course, the fusion there. In the case of many that, it's it's growing less than how it was before.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

It's still growing. So it's very well in the case of we get most of I would think to you, the as of the traffic. So each one has its own, like, we cannot generalize all of them.

[Ernst Anton Mortenkotter, Equity Research - Real Assets at GBM]

Okay. Thank you. You're welcome.

[Operator]

Our next question comes from the line of Kielmer Mendez with JPMorgan. Proceed with your question.

[Guilherme Mendes, ED - Equity Research Analyst at JP Morgan]

Hey, Adolfo. Thanks for for the follow-up. A quick one on traffic. There has been a lot of news on increasing stargassum in the Caribbean region. Is this kind of concerning in your view?

[Guilherme Mendes, ED - Equity Research Analyst at JP Morgan]

Could it imply downside risk to your traffic assumptions for the second half of the year?

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Well, in the case of stargassum, I have to say not if we go back into to cannot say every three years, every five years, every seven years, you will have to back in the region. The worst ever has been 2018, but what we have seen for this year, this might be the worst era. You know, a situation that is very very difficult. Of course, in terms of seasonality of the year, summer is the most important.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

So I would say after all the end of third quarter and fourth quarter, you will see that's our capital or what you will see for the summer. But, yes, it's true that this year has been very tough situation.

[Guilherme Mendes, ED - Equity Research Analyst at JP Morgan]

Got it. Thank you.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

You're welcome.

[Operator]

Our next question comes from the line of Fernando Rechio with BTG Pactual. Please proceed with your question. Hello, Fernando.

[Fernanda Recchia, Equity Research Director at BTG Pactual]

Just a quick follow-up. Could you comment a little bit on your inorganic growth opportunities that you're currently evaluating?

[Fernanda Recchia, Equity Research Director at BTG Pactual]

I don't know if you have any update on the Valo Airport. And apart from that, is there any other opportunity that you are looking at?

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

The case of Valo is still the same. We're seeing the legal process of that For the moment, the project is on calls, and, yes, we are seeing some other opportunity.

[Fernanda Recchia, Equity Research Director at BTG Pactual]

Okay. And just a follow-up here. We know that CCR is under a development process. Is is this process make sense for you? Are you looking at it?

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

I cannot comment on on the other opportunities we're analyzing for the moment.

[Fernanda Recchia, Equity Research Director at BTG Pactual]

Great. Thank you.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

You're welcome.

[Operator]

Our next question comes from the line of Alan Lasias with Bank of America. Just

[Alan Macias, Equity Research Analyst at Bank of America Merrill Lynch]

if you give us some color on what's happening or what are the drivers for international traffic in Puerto Rico and Colombia. They're growing double digit levels and if this is sustainable for the for the second half of this year. Thank you.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Do you want to well, I mean, based on Puerto Rico, I would say this has to do with what's happening there with concerts and and everything related to music. So I Puerto Rico is really hot on that one, and some international traffic are taking opportunity to go there because of that.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

So in the case of Colombia, basically, it's it's The US. So

[Operator]

Mister Castro, are you still connected?

[Alan Macias, Equity Research Analyst at Bank of America Merrill Lynch]

I'm connected. Yes.

[Operator]

Okay. Mister Macias, was that the end of your question?

[Alan Macias, Equity Research Analyst at Bank of America Merrill Lynch]

Yes. Thank you.

[Operator]

Thank you. Our next question comes from the line of Frederico Velasci with PRG. Please proceed with your question.

[Analyst]

Yes, also. Thank you for taking my question. Quick question in incident operations. I can see a jump in cost of services in terms of revenues and or the other way you are. The question is, if there's any one off or this is the level that we have to to thinking for Mexican operation in the near future?

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

This is what you what you would have they should expect for the for the coming quarters. Yes.

[Analyst]

Okay. But it's not no no one office. 100% for the operation operations.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Yep.

[Analyst]

Okay. Thank you.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

You're welcome.

[Operator]

That concludes the question and answer portion of today's conference call. I would like to turn it back over to Mr. Castro for closing remarks.

[Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste]

Thank you, Christine, and thank you all again for joining us today for our second quarter twenty twenty five conference call. We wish you a good day and good luck.

[Operator]

Ladies and gentlemen, that concludes Assure's Second Quarter twenty twenty five Results Conference Call. We would like to thank you again for your participation. You may now disconnect.

Participants

Executives

• Adolfo Castro Rivas, CEO

Analysts

• Jens Spiess, Vice President at Morgan Stanley
• Steve Trent, Managing Director at Citi
• Guilherme Mendes, ED - Equity Research Analyst at JP Morgan
• Pablo Monsivais, Equity Research Analyst at Barclays
• Pablo Ricalde, Research Analyst at Itaú Corretora de Valores SA
• Fernanda Recchia, Equity Research Director at BTG Pactual
• Andres Aguirre Campillo, Equity Research Analyst at GBM
• Analyst
• Enrique Sojo, Equity Research Analyst at Fundamenta Investments
• Alejandro Velez, Head - Monaco, Spain, Portugal, FIM Europe at UBS Group
• Ernst Anton Mortenkotter, Equity Research - Real Assets at GBM
• Alan Macias, Equity Research Analyst at Bank of America Merrill Lynch