TAV Airports
- 27.10.2010 10:03
Weak bottom-line despite in line operating performance
TAV recorded TRL50mn net income in 3Q10 vs. TRL77mn over a year ago. Bottom-line is worse than both our estimate of TRL89mn and market consensus of TRL72mn net income. The results seem to be in line with the market consensus at the operating levels, however, bottom-line is undermined by higher than expected financial and income tax expenses.
Record high quarterly revenues in 3Q10
TAV’s revenues were TRL473mn in 3Q, implying 9% YoY growth. Record high 3Q revenues were supported by the 20% YoY growth in aviation income, as there was 12% growth in TAV’s total traffic. Besides, 17% growth in ground handling income has been driven by 6% and 54% growth in aircraft served by Havas and TGS, respectively. Aeronautical revenues, which showed a faster growth than service revenues, comprised 46% of total revenues vs. 42% in 3Q09.
Adj. EBITDA of TRL170mn in 3Q is in line
TAV recorded TRL 170mn EBITDA in 3Q, indicating 36% EBITDA margin. Decline by 2.8pp YoY was mainly driven by Eur10mn increase in other operating expenses. Also note that, there was Eur9mn one-off gain from TAV Tunisia stake sale in 3Q09.
Net financial expenses undermined the bottom-line in 3Q
TAV’s net finance expenses amounted to Eur26mn in 3Q. On the back of strong Euro against other currencies, TAV recorded Eur10mn FX loss in 3Q. On the other hand, since TAV Tunisia had started to book interest expenses which were capitalized before, TAV recorded Eur16mn interest expense in the same period. Further, consolidated net debt of TAV was at Eur1,322mn as of 3Q, increased from Eur1,270mn at 1H10 end.
Maintain OUTPERFORM with TRL8.05 target price.
3Q operating performance was in line with market consensus, despite the weak bottom-line. We expect the strong growth in TAV’s total traffic to continue in 2010. Although we maintain our OUTPERFORM rating, we are currently in the process of revising our forecasts for the company.
