Grupo Aeroportuario del Sureste, S. A. B. de C. V. Q1 2025 Earnings Report

Grupo Aeroportuario del Sureste, S. A. B. de C. V. EPS Results

• Actual EPS: $5.74
• Consensus EPS: $5.77
• Beat/Miss: Missed by -$0.03
• One Year Ago EPS: N/A

Grupo Aeroportuario del Sureste, S. A. B. de C. V. Revenue Results

• Actual Revenue: $430.05 million
• Expected Revenue: $462.98 million
• Beat/Miss: Missed by -$32.93 million
• YoY Revenue Growth: N/A

Grupo Aeroportuario del Sureste, S. A. B. de C. V. Announcement Details

• Quarter: Q1 2025
• Date: 4/22/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, April 23, 2025
• Conference Call Time: 10:00AM ET

Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR) 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, S. A. B. de C. V. Q1 2025 Earnings Call Transcript

Presentation

[Operator]

As a reminder, today's call is being recorded.

[Operator]

Now I'd like to turn this call over to Mr. Rodolfo Castro, Chief Executive Officer. Please go ahead, sir.

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

Thank you, Larry, 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 current 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 first 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 the Investor Relations section. Following my presentation, I will be available for Q and A. As usual, all comparisons discussed on this call will be year on year and figures are expressed in Mexican pesos, unless specified otherwise.

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

During the quarter, we welcomed a total of 18,600,000 passengers across our three countries of operations, largely flat compared to the same period last year. Continued growth in Puerto Rico and Colombia offset a softer performance in Mexico. Looking more closely at the traffic results by country, Puerto Rico was the best performing market, maintaining a strong positive trend, up nearly 11%, with international traffic expanding in the high teens and domestic traffic in the low double digits. While traffic remained resilient, we continue to expect normalization after benefiting from Frontier Airlines expansion of operations last year. Colombia was the next best performing market.

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

As anticipated, traffic in Colombia began not to normalize to more sustainable levels of 2023, pricing just over 6%, driven growth in international traffic in the mid teens and domestic traffic in the low single digits. In Mexico, traffic comparisons were impacted by Easter shift, which occurred in March during 2024. In turn traffic declined nearly 5% during the quarter, reflecting a high single digit decline in international passengers while the trend in domestic markets improved, declined just below 1%. Cancun, our largest airport, continued to felt the effects of Tulum effort. Overall, traffic in Mexico continued to experience year on year declines from almost all regions during the quarter.

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

Specifically traffic from Europe decreased 0.8%, from The U. S. Ten Point Five Percent and from South America by 2.8%, while traffic from Canada remained unchanged. Domestic traffic remained affected by continued capacity limitation at Mexico City Airport since early twenty twenty four, with respect to be lifted in the second half of the year. Together with the ongoing patent with the engine restriction, additionally, Genco's airport has experienced a modest impact from the initial ramp up of operations of the nucirumab.

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

For context, Tulum is projected to handle approximately 2,900,000 passengers during this entire year compared to the 1,200,000 last year and over 30,000,000 travelers that passed through Cancun in 2024 or 8,000,000 in this quarter alone. Looking ahead, we anticipate traffic in Mexico will begin to stabilize next year as the impact of traffic with the engine issued rates as Tulum Airport completes its initial ramp up phase. As I have mentioned in the past, beyond that, we expect passenger volumes at both Cancun and Tulum to expand in line with the growth dynamics specific to each region. Currently, the global macro situation is fluid and unpredictable. However, aggregate disruptions, particularly related to The U.

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

S. And the impact of travel to Mexico have proven not to be have proven to be short line. Now as we move to review our financial performance, recall that all reference to revenue and cost figures exclude construction. Total revenues were up 14% year on year to billion, supported by solid increases across all operations. Mexico represented 73% of total revenues, posted a high single top, a high single digit top line increase.

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

Aeronautical revenues were up 9% with aeronautical revenues rising 10%, reflecting a strong commercial revenues per passenger. Puerto Rico contributed 15% of the total revenues and continued to deliver steady growth in the high 20s, driven by both aeronautical and non aeronautical revenues, further supported by exchange rate benefits from weaker peso. Colombia accounted for 12% of total revenues, posting continued solid top line growth in low 30s. Growth was driven by both aeronautical and non aeronautical revenues, which benefited from a continued recovery in domestic and international traffic and the opening of 26 new commercial spaces over the past twelve months also benefited from the weaker peso. Advancing our strategy to expand commercial offerings, we opened 40 new commercial spaces over the last twelve months.

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

This included 11 in Mexico, Three in Puerto Rico and 26 in Colombia. As a result, total commercial revenues grew in the high single digits with Puerto Rico posting an early 23% increase and Colombia delivering a strong year over the growth of 38%. In Mexico, commercial revenues show a low single digit increase, marking a positive shift from previous trend. Commercial revenues per passenger reached nearly 147 in the quarter, reflecting a strong year on year in the high teens. Robust growth across all three regions supported this performance.

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

In Puerto Rico and Colombia, commercial revenues increased in the high 20s driven by a favorable exchange rate in Mexico and in Puerto Rico and the contribution of new commercial openings in Colombia. Mexico also delivered solid growth in the low single digits, reaching 169 per passenger ordered in part by currency effects. In terms of cost, total expenses were up 18% year on year. In Mexico, cost increased 10%, primarily reflecting decreases in concession fees migrated by the Mexican government, higher administrative fees and the impact of the 12% increase in minimum wage effective January one of this year. In both Puerto Rico and Colombia, costs were up 30% with increase in Puerto Rico and Colombia reflecting the depreciation of Mexican peso against the U.

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

S. Dollar and the Colombian peso. As a result, consolidated EBITDA rose 12% year on year to 5,700,000,000.0 in the quarter. While adjusted EBITDA margin, which excludes construction, stood at 70% compared with 71.4% a year ago. The decrease was attributable to the slight margin decrease in each country due to higher operating costs.

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

Notably, Puerto Rico and Colombia posted double digit EBITDA growth of 2430%, respectively, while Mexico saw an 8% increase in EBITDA despite the lower passenger traffic. Our balance sheet remains strong with nearly 23,000,000,000 in cash and cash equivalents, up 35% year on year and net debt of EBITDA ratio of negative 0.5 times. During the quarter, we invested $645,000,000 in capital expenditures, mainly deployed towards modernization and expansion effort in our Mexican airports. Main projects during the quarter included the reconstruction and expansion of Terminal Guajacancu Airport as well as expansion of Terminal in Oaxacauga. In Puerto Rico, frontway pavements and rehabilitation was completed, and we're currently working on taxiway hotel.

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

Recall that all construction activities are taking place outside the operational areas to ensure no disruption to airport operations. As mentioned during our prior earnings call, we continue to anticipate gradual increase in CapEx as we move forward with several strategic infrastructure projects this year. Among the most significant disruption and expansion of Terminal 1 at Cancun Airport, which is slated for completion in 2026. Terminal '4 at Cancun remains on track for completion by 2028. Additionally, once Terminal 1 is operational, we expect to implement key upgrades at Terminal 2 to easy existing capacity pressures, particularly in non aeronautical areas.

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

This entails also designed to streamline traffic flows, particularly from South America, unlocking additional commercial revenue potential. As part of our ongoing commitment to delivering value to shareholders in light of our solid financial performance, subject to approval at today's Annual General Meeting, the Board of Directors proposed a total cash dividend from accumulated return earnings and share buyback reserve to be paid in three times. The first tranche includes an initial ordinary net cash dividend of MXN0.50 per share payable in May 2025, followed by two extraordinary net cash dividends of MXN0.15 each payable in September and November 2025. Before opening to our Q and A, note that last week we published our 2024 sustainability report, the twentieth report and the Secularo Week and encourage you to read them, all of which can be found on our website. Let me take a brief moment to provide an update on our sustainability efforts.

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

I am pleased to share that 2024 marked a year of meaningful progress. We took several key steps towards achieving our ESG goals building on our long term vision. We expanded our flagship social investment program to our third indigenous community in Yucatan, training in a sustainable tourism 59% more than the previous year. On the climate front, following our 2023 commitment to the science based targets initiative, we completed our first Scope three emissions inventory in Mexico. This milestone helped us better understand the broader impact of our value change as we move forward to net zero emissions.

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

Geodiversity presentations remain a top priority. In 2024, we began building long term alliances with global organizations to protect emblematic species and restore natural ecosystems in the Southeast Of Mexico. Lastly, from a governance perspective, we are proposing the appointment of a new female Board at the of our upcoming Annual General Shareholders Meeting. If approved, this will bring female representation on our Board to 36%, while 57% of the Board will be independent. In closing, our first quarter twenty twenty five performance reflects the strength of our diversified portfolio, our resilient operational performance, disciplined execution and our continuous focus on efficiency.

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

Despite navigating industry challenges such as patent with new engine, the capacity reductions at Mexico City Airport reported a 14% increase in net majority income to $3,500,000,000 All else equal, we expect the solid remainder of 2025 as we continue investing in infrastructure, elevating the passenger experience and delivering sustainable growth. At the same time, we are cognizant of the potential macro challenge on a global basis that we are monitoring closely. Larry, that concludes my prepared remarks. Please open the floor for questions.

[Operator]

Thank you. Our first questions come from the line of Rodolfo Ramos with Bradesco BBI. Please proceed with your questions.

[Rodolfo Ramos, Head of Mexico Research and Strategist at Banco Bradesco]

Good morning, Adolfo. Thanks for taking my question. I have a couple, if I may. The first one is regarding the driver of your strong commercial revenue. I mean, you made some comments on this front, but if you can elaborate a little bit more on the performance that we saw during the quarter, perhaps your outlook.

[Rodolfo Ramos, Head of Mexico Research and Strategist at Banco Bradesco]

I mean, the Mexican peso depreciation certainly had a role, but the growth per tax was also stronger than in the first quarter of last year when the peso appreciated. So any additional color there would be helpful. And secondly, when you think about your CapEx, your investment your committed investments, especially in Cancun, And this year is expected to ramp up. And you mentioned that you don't expect to deliver these until 2026, these projects. I don't know if there's anything when you look at what you've already invested so far that could impact your operating expenses, your margins as you open more areas or more expansions, just want to get a sense of when we could start seeing your cost structure swelling up as a result of these investments, if at all?

[Rodolfo Ramos, Head of Mexico Research and Strategist at Banco Bradesco]

Thank you.

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

Hi, Bruno. Thank you for your questions. Well, in terms of commission revenue, of course, the most important effect in comparison of last year is related to Puerto Rico and Colombia, and those are also affected by the positive dollar versus the peso. If we go back to the end of first quarter last year, the exchange rates with the dollar of the Mexican peso was 16.5. At the end of this year, we are talking about 20.4.

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

So the peso depreciation basically played an important role on the case of commercial revenues per passenger in Puerto Rico and also in the case of Colombia. In the case of Mexico, would say, yes, we had a very good quarter that has to do with the passenger mix and some of the impact for duty free related to peso dollar again. In terms of CapEx, yes, we are working today, as I mentioned, in the remodeling and expansion of Terminal 1 that should be completed by the third quarter next year. And then you are right in the sense to say that the cost will change once this infrastructure is open. And of course, we will have new areas and we will have to maintain and clean and secure all of these new spaces.

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

In the case of Terminal 4, as I mentioned, we are expecting to conclude the project by the end of twenty twenty eight. I don't know if this answers your questions.

[Rodolfo Ramos, Head of Mexico Research and Strategist at Banco Bradesco]

Yes. Thank you, Elanco.

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

You're welcome.

[Operator]

Our next questions come from the line of Jens Fiess with Morgan Stanley.

[Jens Spiess, Vice President at Morgan Stanley]

I have a question regarding your like capital allocation and the dividend you will be paying. And in light of that, if you probably saw that CCR is selling their airport assets in Brazil. Do you have interest in those? Or can we read from your dividend that basically that's not part of your upcoming capital allocation? Thank you.

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

Thank you, James. Good morning. Well, basically, if you see what we proposed to the Board and the Board to the shareholders and family, is almost what we have in cash. Cash and cash equivalents for the quarter ended in BRL22 billion and the dividends for the whole year will be BRL24 billion. Yes, we are seeing the project and the offering of CCI.

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

We're analyzing this carefully. In the case of this will all of this will be funded by debt.

[Jens Spiess, Vice President at Morgan Stanley]

Okay, perfect. And if I may, just one more question regarding any weakness that you're potentially seeing from like airlines removing frequencies maybe due to the ongoing like trade tensions and macro uncertainty, specifically the like weaker demand that some of The U. S. Airlines are seeing? Do you see any weakness coming from that?

[Jens Spiess, Vice President at Morgan Stanley]

Or is it still too early to tell at this moment? Thank you.

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

I think it's too early to tell. I don't see any effect of these at the moment. Of course, when you see the traffic in Mexico and when you see the traffic in Qantou, particularly, you will see the effect of Tulum Airport. Tulum Airport, as I was saying in my initial remarks, we're expecting these to reach 2,900,000 passengers this year. Roughly speaking, round numbers, you subtract 150,000 every month for this quarter, that's 450,000.

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

And 75% of this is international or just domestic. So that is why we're seeing Cancun numbers to be decreasing. That is the most important effect I'm seeing for the moment.

[Operator]

Thank you. Our next questions come from the line of Guilherme Mendez with JPMorgan. Please proceed with your questions.

[Guilherme Mendes, Executive Director - Equity Research at JP Morgan]

Hey, Adolfo. Good morning. Thanks for taking my question. I have two follow ups on traffic. The first one is regarding the Mexico City restrictions.

[Guilherme Mendes, Executive Director - Equity Research at JP Morgan]

You mentioned that

[Guilherme Mendes, Executive Director - Equity Research at JP Morgan]

you do expect some of

[Guilherme Mendes, Executive Director - Equity Research at JP Morgan]

the restrictions to be lifted in the second half of this year. Can you elaborate a little bit expectations on how this should translate into traffic for Sur? And the second point is regarding to loan. You mentioned a 2,900,000 passengers this year. Just wondering what was your expectations by the time of the MDP if this 2,900,000,000 is in line, if we what was incorporated on the MDP or slightly worse?

[Guilherme Mendes, Executive Director - Equity Research at JP Morgan]

Thank you.

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

Hi, good morning. Well, in the

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

case of the Mexico City Airport, remember that last year, the January 8 in the size, the government decided to impose a restriction in terms of capacity. The restriction was to have 43 operations per hour coming from 52 operations per hour. This restriction, in my opinion, is too strong considering that you have one runway and a half. One runway can sustain 50 ATMs per hour. So if we say 101.5, that should be 75.

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

Today at 43, it's extremely low. That's one piece of the puzzle. The other piece of puzzle is we show some elimination of restriction in the case of Toluca Airport and Toluca Airport to realize at the end of last year by 20% with us. Why this is so important? Because from the value of Mexico, it is originated 50% of the domestic traffic of the group.

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

So it's extremely important that Mexico City, Toluca and I've grown their traffic growth. If we go back in time, I would invite you to compare what it was in 2019 where the IPA was not in place. And Mexico City Airport traffic was 51,000,000. If you see what the figures of last year were, you will see that after five years, almost six years, there is only a growth of $1,000,000 And this is extremely important for us. So I do believe that by the end of the third quarter, the government eliminates or changes this restriction to at least to go back to the 52 ATMs per hour that we had at the end of twenty twenty three.

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

Also keep in mind that next year, we will have the World Cup in Mexico, and it would be extremely important to have or to beat the productivity of Mexico City. In the case of Tulum, as I was saying, what we expect for this year is 2.9%. In the case of the MVP, it was almost the same. I was expecting probably €3,000,000 for this year. So not too much difference of the reality versus what I was expecting.

[Guilherme Mendes, Executive Director - Equity Research at JP Morgan]

Very clear. Thank you, Adolfo.

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

You're welcome.

[Operator]

Thank you. Our next questions come from the line of Pablo Ricaldi with Atal. Please proceed with your questions.

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

Good morning, everyone. Thanks for taking my question. I have a question on Mexico tariffs. Based on my understanding, you haven't raised price this year. So well, two questions.

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

The first one is which percentage of your maximum tariff you're charging now? And the second is when do you expect to raise tariffs in Mexico?

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

Okay. The maximum tariffs or the maximum rate is measured once a year. You cannot say that you will be measuring that quarter by quarter. Last year, the maximum tariff compliance is that the way that we call it. It was a 99%.

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

So I would say today that the report that we presented that we disclosed yesterday to the market includes just revenues that are in accordance with the maximum rate we have today. So what we will be expecting for the end of the year, it's almost the same result that we got last year. It's not that today we are above the maximum breakdown. That's not the case on the first side. And on the other side, you cannot again measure these on a quarterly basis.

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

It's just once a year.

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

Perfect. Thanks a Thank

[Operator]

you. Our next questions come from the line of Andresa Verado with UBS. Please proceed with your questions.

[Andressa Varotto, Equity Research Analyst at UBS Group]

Hi, good morning, Andofo. Thanks for taking my question. I just have one here on my side. What is the expectation of MEGP CapEx for this year from the first quarter figure versus our expectations, it seemed a bit low. So how do you see CapEx deployment throughout the year?

[Andressa Varotto, Equity Research Analyst at UBS Group]

Thank you.

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

You're welcome.

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

You have the figures in the press release that we disclosed on 12/13/2023. Of course, those were presented in pesos as of December 2022. So if you include the inflation factor up to the end of this year, you will reach a number close to $7,000,000,000 for the case of Mexico. I would say $25,000,000 for the case of Puerto Rico and very small amount in the case of Colombia. That is what we expect for this year.

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

In terms of the seasonality, you can compare this during the years and you always see that the first quarter is the lowest and the fourth is the highest.

[Operator]

Thank you. Our next questions come from the line of Anton Mortenkatta with GBM. Please proceed with your questions.

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

Hi, Adolfo. Thank you for the call and congrats on the results. Just have one question. I mean, we understand that on Colombia, you were rolling out a strategy to increase the prices on some of your contracts or to do some catch up in the commercial side. I was just wondering if the results of this quarter are a result of this?

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

And should we expect to see some more on that front going forward?

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

Anthony. Good morning. Well, in the case of Colombia, again, I do believe that we have done a very wonderful work in the increasing commercial revenues for passenger. The recommendation there will be to follow since the end of twenty twenty, since the end of twenty seventeen, the reports on Colombian pesos. And then you will see the real effect of our work there.

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

It has been really nice. The strategy today is to continue with this as we can. Of course, some of the impact that we are seeing in the first quarter has to do with exchange rate, but also with additional spaces that we have opened and the strategy of business as usual that we continue to operate there in Colombia.

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

Thank you. Sean.

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

You're welcome.

[Operator]

Thank you. Our next questions come from the line of Stephen Trent with Citibank. Please proceed with your questions.

[Steve Trent, Managing Director at Citi]

Good morning, Adolfo, and thanks very much for taking my questions. First is actually just a follow-up on Tulum and the traffic you're seeing around that. Do you have a sense for the extent to which some of the draw is coming from commercial traffic as opposed to charter and traffic going to Tulum instead of Cancun?

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

Well, of course, some of what we see today that is related to charter flights, non charter flights that have final destination very close to Tulum. They are basically switching from Bengal to Tulum. They should not fly to Tulum anymore if the final destination is very close to Tulum. That's one piece. Of course, in the case of commercial activities, you can see that American Airlines is flying there, Junaris is flying there.

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

And Blue Maris and Lima are going down, also the American Airlines is flying there. Those are basically the commercial airlines. And we have some flight one flight from Europe. Well, they have one plant from Europe at the end of last year, it was from France.

[Steve Trent, Managing Director at Citi]

Okay. That's very helpful. Appreciate it. And just a quick follow-up on the dividend. Of course, this year, it's a big one, and it looks like a substantial percentage of the company's retained earnings.

[Steve Trent, Managing Director at Citi]

How should we think about moving forward, how a sort of might potentially source future dividends? Would it come from a different piece of shareholders' equity? Or should we assume kind of steady state?

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

Yes,

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

Steve. Well, in the case of what we have proposed to the shareholders' assembly is basically the result of what we have done in the past in our financial performance. As I mentioned during the remarks and some of the questions before, We have MXN 24,000,000,000 in cash and cash equivalents at the end of the quarter, MXN 22,000,000,000 and the dividend the proposed dividend for the three tranches is almost BRL24 billion. So we are just paying what we have achieved in terms of results of the company. Going forward, we will have to see what the results are and then we will propose something to share on this section.

[Operator]

Our next questions come from the line of Fernando Rechia with BTG.

[Fernanda Recchia, Equity Research Director at BTG Pactual]

Hey, good morning, Adolfo. Thank you for taking my question. So just two follow ups here from our side. So just to explore a little bit further the traffic outlook for Puerto Rico and Colombia. I think you mentioned in your remarks that you expect a normalization, but maybe if you could provide us with a bit more color on what kind of traffic you're expecting for this year and when Puerto Rico should start to normalize?

[Fernanda Recchia, Equity Research Director at BTG Pactual]

This is the first one. And the second, on the commercial revenues in Mexico. As you mentioned, you're working on the remodeling of Terminal 2, so which is expected to finish by the first half of next year. So maybe if you could give us any color on what kind of increase in commercial revenues per pax should we anticipate because of this conclusion would be great. You.

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

Hi, Fernando. Well, the traffic in Puerto Rico, as I mentioned in my initial remarks, there is still very strong. And I was expecting these to normalize in the low single digits, but this is still strong after the quarter, and we're happy to see that. In the case of Colombia, now you can see that things are normalizing. You can see what the growth was for the month of March and that's what we believe it should be for the rest of the year.

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

Commercial revenues, we are just expanding and remodeling Terminal 1 to alleviate the capacity problems we have today in Terminal 2. And those capacity problems are basically eliminating commercial opportunities that we have today. We know for sure that in the middle of the day, there's no chance with the passenger to have a meal because all the spaces are full. Once we open the NL-one, we will work in Terminal 2 to improve the situation and that of course will increase or have an impact on commercial revenue per passenger. It's not easy for me to say how much it will be.

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

Will have to wait and see once these spaces are fully operational and that should occur fourth quarter next year.

[Operator]

Our next questions come from the line of Jorge Vargas with GMB. Please proceed with your questions.

[Jorge Cuadra, Equity Research Analyst at GBM]

Hi, good morning, everyone. Thanks for taking my question. Just a quick one from my side. Are there any updates on the Aeroporto Evalu investment or any other international expansion opportunities being considered? Thank you.

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

Thanks, Maury. No updates on Barro. The situation is still the same, Maria, the legal process, and that will continue for some time.

[Operator]

Thank you. Our next questions come from the line of Gabriel Heidelberg with Scotiabank. Please proceed with your questions.

[Gabriel Himelfarb, Associate Director at Scotiabank]

Hi, Pablo. Thanks for the call. Just a question based on your experience. In the cases of US recession, how much do you think it might drop international traffic and visitors coming from The US and Canada to conclude? I know it's difficult to forecast, but based on your past experience?

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

Hi, Gabriel. Well, let me tell you a story. If you see the presentation that we have in Azure web page, where we are presenting our traffic since 1990. That is the same chart that I used twenty five years ago to make the IPO process of this company. And we've set to go back to 1990 because that was at the moment the last year's economic recession To see what was the effect of The U.

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

S. Economic recession in the international passenger traffic. If you see the chart, international traffic grew from 2,600,000 to 2,800,000 even with U. S. Economic recession.

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

So in that sense, at the moment, we were resilient for The U. S. Economic recession. I don't know what will happen today and if the recession will be there or not. But on the other side, I have to say that what we are seeing today in the case of The United States is a very strong decrease of tourism towards these countries.

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

And if we can catch up some of these effects, it would be great for us. Let me say, the case of Canada is decreasing significantly for the summer, let's say, for the case of Europe and let's say, North Asia and South America. So again, we can catch some of these decrease will be excellent for us. Know why they are not willing to go there. And we will try to relocate our commercial activities to focus on this market of reinforce the commercial or the marketing activities on this market.

[Gabriel Himelfarb, Associate Director at Scotiabank]

Okay. And have you seen any kind of ramp up from Canadian traffic? Like, you're moving from The U. S. To Canada, but from traveling to The U.

[Gabriel Himelfarb, Associate Director at Scotiabank]

S. Instead traveling to Mexico?

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

Well, if you see what I said to

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

your initial remarks, the only region that was flat for the quarter or that was not negative for the quarter was Canada.

[Gabriel Himelfarb, Associate Director at Scotiabank]

Okay.

[Operator]

Our next questions come from the line of Jens Spice with Morgan Stanley.

[Jens Spiess, Vice President at Morgan Stanley]

Just one follow-up on also on like on Pablo's question regarding the MAX tariff. I know that compliance is annual. So quarterly, we shouldn't be worrying. But for the first quarter, I think you published that the unit tariff was $352,000,000 which I think is very close to the maximum tariff, if I'm not mistaken. So given like all the FX volatility that might be ahead, and I know that more recently, the business appreciated, so it plays in your favor, but not regardless, there's a lot of volatility.

[Jens Spiess, Vice President at Morgan Stanley]

So do you think that there should be a bit more cushion just to factor that in? Or do you feel comfortable with the current level? Thank you.

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

Let me try to explain the case of the maximum rates. And I'm just going to just say numbers to be more clear like such. If we say that maximum rate is contract and we during the quarter obtained, let's say, hundred and five, what we report is just 100 and the other five goes to the maximum tariff itself. So you will not see the five in the P and L for the quarter. If the maximum rate is 100 and the result is 98, What you are going to see in the P and L is 98.

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

So in terms of exchange rate, just to put this very clear, the end of last year the end of last sorry, the end of the first quarter last year, the exchange rate was at 16.5%. The end of 'twenty four was 20.78%, the March was 20.43% and the current exchange rate was around 19.5%. Coming from 16.5% to 19.5% to 3% give us a lot of room to maneuver. So that is why I was saying that we expect for this year almost the same as in terms of maximum tax compliance of what we got last year.

[Jens Spiess, Vice President at Morgan Stanley]

Okay, that's clear. Thank you.

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

You're welcome.

[Operator]

Thank you.

[Operator]

You. I'm showing no further questions at this time. That does conclude the question and answer portion of today's conference call. I would like to turn the call back over to Mr. Castro for closing remarks.

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

Thank you, Darren, and thank you all again for joining us today for the first quarter twenty twenty five conference call. We wish you a good day and goodbye. Now you may disconnect.

[Operator]

Thank you. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Participants

Analysts

• Adolfo Castro Rivas, CEO at Grupo Aeroportuario del Sureste
• Rodolfo Ramos, Head of Mexico Research and Strategist at Banco Bradesco
• Jens Spiess, Vice President at Morgan Stanley
• Guilherme Mendes, Executive Director - Equity Research at JP Morgan
• Pablo Ricalde, Research Analyst at Itaú Corretora de Valores SA
• Andressa Varotto, Equity Research Analyst at UBS Group
• Ernst Anton Mortenkotter, Equity Research - Real Assets at GBM
• Steve Trent, Managing Director at Citi
• Fernanda Recchia, Equity Research Director at BTG Pactual
• Jorge Cuadra, Equity Research Analyst at GBM
• Gabriel Himelfarb, Associate Director at Scotiabank