Corporacion America Airports’ Mixed Earnings Call Reveals Growth and Challenges

Corporacion America Airports ((CAAP)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for Corporacion America Airports revealed a mixed sentiment. While the company showcased strong international passenger growth and a robust financial position in markets like Italy and Uruguay, challenges in Argentina, particularly due to declining domestic traffic and the devaluation of the Argentine peso, negatively impacted revenues and EBITDA. Despite these hurdles, strategic initiatives and expansions offer a positive outlook, though the negative trends in Argentina continue to weigh on overall performance.

Record Passenger Traffic

In December 2024, Corporacion America Airports reached record passenger traffic levels, with approximately 20 million travelers in the fourth quarter alone. Notably, international traffic in Argentina increased by 11.3% year-over-year, driven by a recovery in outbound tourism.

Strong Performance in Italy and Uruguay

Italy and Uruguay emerged as strong performers, with Italy experiencing an 11% rise in passenger traffic, encompassing both international and domestic travel. Uruguay also saw a mid-single-digit increase in passenger traffic, bolstered by new and resumed routes.

Robust Financial Position

The company maintained a strong financial standing, with a net leverage ratio of 1.1 times at year-end. This reflects successful debt reductions and early redemptions in Argentina and Armenia, underscoring a robust cash flow.

Cargo Volume Growth

Cargo volumes saw a significant boost, growing by 16% year-over-year in the fourth quarter. This growth was supported by positive contributions from all countries where the company operates.

Strategic Initiatives and Expansions

Corporacion America Airports is actively pursuing strategic projects to enhance passenger experience and drive commercial revenue growth. These include expansions in Argentina and Brazil, as well as new facilities in Uruguay.

Decline in Passenger Traffic

Despite some positive trends, overall passenger traffic declined by 1.2% year-on-year. Domestic traffic in Argentina showed some sequential improvement but remained 7% lower compared to the previous year.

Impact of Argentine Peso Devaluation

The sharp devaluation of the Argentine peso in late December 2023 adversely affected year-over-year comparisons, impacting revenues and adjusted EBITDA.

Reduced Duty-Free and Cargo Revenues

The quarter saw a 7% decline in adjusted EBITDA, pressured by reduced duty-free sales and lower cargo revenues in Argentina.

Challenges in Domestic Argentina Market

Argentina’s domestic market faced challenges, particularly due to the absence of the Previaje Government Incentive Program, which had previously supported local tourism in 2023.

Forward-Looking Guidance

Looking ahead to 2025, Corporacion America Airports expressed cautious optimism. While total passenger traffic declined by 1.2% year-over-year, excluding the discontinued Natal Airport, it increased by 1.5%. The company anticipates a recovery in Argentina’s domestic traffic and continued strong performance in key markets like Italy, Uruguay, and Brazil. Total revenues, excluding IFRIC12, were slightly down, but revenue per passenger improved to $19.3.

In summary, the earnings call for Corporacion America Airports highlighted a mixed sentiment, with strong international growth and financial stability in some regions countered by challenges in Argentina. The company’s strategic initiatives and expansions provide a hopeful outlook, despite the negative trends impacting overall performance. Investors and market watchers will be keen to see how the company navigates these challenges and capitalizes on growth opportunities in 2025.