PINFRA seeks to minimize the potential negative effects of the various economic risks to which it is exposed on its financial performance through the implementation of different strategies. In the first instance, it seeks to achieve natural hedges for such risks. When this is not possible or is not economically feasible, the Company evaluates the use of derivative instruments, unless the risk is considered insignificant for the Company’s financial position, performance, and cash flows.
Capital risk management
The Company manages its capital to ensure business continuity, while maximizing the return to its shareholders through the optimization of its capital structure, for which PINFRA analyzes the capital structure for each project independently, in order to minimize the risk to the Company and optimize the benefit to its shareholders.
Risk management of exposure to investment units (UDIs)
Due to the fact that in the usual course of its operations and that a portion of its debt is denominated in UDIs, PINFRA is exposed to the possibility that changes in the conversion rate from UDIs to Mexican pesos could adversely affect the value of its financial assets and liabilities, performance, or future cash flows. For this, the Company has a natural hedge, since the revenues generated by the concessions are subject to annual adjustments based on inflation.
Exchange risk management
Regarding foreign exchange risk, PINFRA considers that its exposure is insignificant due to the few operations and balances that are denominated in foreign currency.
Interest rate risk management
PINFRA is exposed to market risks related to interest rates, since some of its issuance of domestic notes bear interest at variable rates linked to the TIIE. In order to reduce its exposure to interest rate fluctuations, the Company has arranged derivative financial instruments and maintains a policy of not entering into derivative contracts for speculation purposes.
Credit risk management
The main credit risk arises from cash and cash equivalents, investments in securities, and accounts and notes receivable. PINFRA's policy is to maintain cash and cash equivalents only with institutions of recognized reputation and high credit quality; investments are limited to instruments of high credit quality, where the main investments are made through trusts consolidated in the financial statement, which have strict investment policies that limit credit risk.
In the case of accounts and notes receivables, the credit risk arises mainly from the port operation and the asphalt plant, which perform credit analysis, prior to granting, and carry out transactions with renowned companies; otherwise, the corresponding guarantees are obtained in accordance with the pre-established credit policies.
The credit risk on liquid funds and derivative financial instruments is limited as the counterparties are banks with high credit ratings assigned by recognized rating agencies.
Liquidity risk management
For several years, PINFRA has maintained a policy of incurring debt exclusively through its subsidiaries. For this purpose, the highway operated by a specific subsidiary is used to support the payment of its debt, without using or committing resources that would affect the Company. Therefore, PINFRA, as a holding company, has no debt or guarantee obligations of its own and therefore all consolidated debt represents debt incurred by its subsidiaries.
In the future, PINFRA may evaluate additional sources of financing depending on market conditions. However, the Company believes that its current sources of liquidity will be sufficient to finance its operating expenses and asset investments for the foreseeable future.