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Grupo Elektra Announces Revenue of Ps.17,257 Million and EBITDA of Ps.2,562 Million in 1Q14

—Solid dynamism in consolidated bank deposits; growing 15% to Ps.82,363 million—

—Continued increase of gross loan portfolio; 5% expansion to Ps.76,828 million—

—Strategies to further strengthen financial and commercial businesses are expected to translate into future yields—

MEXICO CITY, April 29, 2014 (GLOBE NEWSWIRE) -- Grupo Elektra, S.A.B. de C.V. (BMV: ELEKTRA*; Latibex: XEKT), Latin America's leading specialty retailer and financial services company and the largest non-bank provider of cash advance services in the United States, reported today its financial results for the first quarter of 2014.

Consolidated first quarter results

Consolidated revenue was Ps.17,257 million, compared to Ps.17,453 million for the same period last year. Costs and operating expenses were Ps.14,695 million from Ps.14,399 million for the same period of 2013.

Grupo Elektra reported EBITDA of Ps.2,562 million, compared to Ps.3,054 million for the previous year's quarter; EBITDA margin was 15% this quarter. The company reported a net loss of Ps.175 million, from a net loss of Ps.582 million a year ago.

1Q 2013 1Q 2014 Change
Ps. %
Consolidated revenue $17,453 $17,257 $(196) -1%
EBITDA $3,054 $2,562 $(492) -16%
Net result $(582) $(175) $407 70%
Net result per share $(2.45) $(0.74) $1.71 70%

Figures in millions of pesos

As of March 31, 2013, Elektra outstanding shares were 237.2 million and as of March 31, 2014, were 237.3 million.

Revenue

Consolidated revenue fell 1%, as a result of a reduction of 2% in financial revenue and a 1% increase in commercial sales.

Financial revenue grew to Ps.12,103 million, from Ps.12,364 million last year, in line with the performance of Banco Azteca Mexico income that totaled Ps.8,251 million from Ps.8,262 million in the same quarter a year ago.

The increase in commercial revenue comes from growing customer satisfaction, through an optimal mix of merchandise on the sales floor, which is offered in the most competitive market conditions. This, together with actions to further strengthen service in the store, will drive additional merchandise business.

Costs and expenses

Consolidated costs for the quarter increased 5% to Ps.7,060 million, from Ps.6,750 million from the previous year. The change mainly derives from a 14% increase in financial cost —to Ps.3,598 million compared to Ps.3,153 million a year ago— and a 4% reduction in commercial cost.

The change in financial cost mainly resulted from the creation of loan loss reserves—in the context of growth of the consolidated portfolio; as well as more interest paid to savers, as a result of a strong increase in traditional deposits.

Consolidated operating expenses were Ps.7,635 million, practically without change when compared to Ps.7,649 million for the same quarter of the previous year.

EBITDA and net result

Consolidated EBITDA was Ps.2,562 million, compared to Ps.3,054 million a year ago; the EBITDA margin for the quarter was 15%.

The most significant change below EBITDA was a positive Ps.613 million in other financial results, as a consequence of a lesser decrease in the market value of the underlying assets of financial instruments owned by the company –which does not imply cash flow–compared to last year.

Grupo Elektra reported net loss of Ps.175 million, from net loss of Ps.582 million a year ago.

Consolidated balance sheet

Loan portfolio and deposits

Banco Azteca Mexico, Advance America —the largest non-bank provider of cash advance services in the US— and Banco Azteca Latin America's consolidated gross portfolio as of March 31, 2014, was Ps.76,828 million, 5% higher than the Ps.73,400 million the previous year, a result of the preference of customers for our credit products, which directly improve quality of life. Consolidated delinquency rate was 8.3% at the end of the period, from 8.4% a year ago.

The gross portfolio of Banco Azteca Mexico was Ps.62,961 million, compared to Ps.62,273 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 8.5%. The non-performing loan portfolio is reserved 1.3 times. The average term of the credit portfolio for principal credit lines –consumer, personal loans and Tarjeta Azteca– was 61 weeks at the end of the first quarter.

The Advance America loan portfolio was Ps.3,310 million, 8% higher than the Ps.3,060 million a year ago. More dynamism in the operations of the company is expected with the successful launch of title loans in a growing number of points of sale in the U.S.

Grupo Elektra consolidated deposits grew 15%, to Ps.82,363 million, compared to Ps.71,717 million a year ago. Deposits of Banco Azteca Mexico were Ps.76,405 million, 8% higher from Ps.70,594 million a year ago.

Financial products that satisfy clients in the best way, with world class service, resulted in the increase in deposits and credit portfolios, which anticipate strong future yields.

As of March 31, 2014, the capitalization index of Banco Azteca Mexico was 13.4%. The company considers the index to be at a level that optimizes equity profitability.

Debt

As of March 31, 2014, consolidated total debt with cost was Ps.22,444 million, of which Ps.18,060 million correspond to the commercial business, and Ps.4,384 million to the financial business.

The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.15,446 million at the end of the period; as a result, net debt for the commercial business was Ps.2,614 million.

Expansion

Grupo Elektra currently has 6,849 points of sale, 4% more than 6,580 from a year ago; the change comes from the addition of 327 Blockbuster stores during the period.

As previously announced, the company acquired 100% of the shares of Blockbuster Mexico on January 2014, which added points of sale to the distribution network of Grupo Elektra. The Blockbuster stores are located in 108 cities throughout the country, mainly located in the B and C demographic areas, which will expand the customer base of the company. In the new locations, Grupo Elektra plans to offer commercial products, in addition to strengthening its current financial services platform, and promote the transformation of the digital entertainment distribution network.

Grupo Elektra has 3,781 points of sale in Mexico, 2,446 in the United States, and 622 in Central and South America. The wide distribution network allows the company to keep its proximity and closeness to clients; granting superior market positioning in the countries where it operates.

Company Profile:

Grupo Elektra (www.grupoelektra.com.mx) is Latin America's leading financial services company and specialty retailer and the largest non-bank provider of cash advance services in the United States. The Group operates over 6,000 points of sale in Mexico, USA, Brazil, Guatemala, Honduras, Peru, Panama and El Salvador.

Grupo Elektra is a Grupo Salinas company (www.gruposalinas.com), a group of dynamic, fast-growing, and technologically advanced companies focused on creating shareholder value, contributing to build the middle class of the countries in which they operate and improving society through excellence. Created by Mexican entrepreneur Ricardo B. Salinas (www.ricardosalinas.com), Grupo Salinas operates as a management development and decision forum for the top leaders of member companies. The companies include Azteca (www.irtvazteca.com), Azteca America (www.aztecaamerica.com), Grupo Elektra (www.grupoelektra.com.mx), Banco Azteca (www.bancoazteca.com.mx), Advance America (www.advanceamerica.net), Afore Azteca (www.aforeazteca.com.mx), Seguros Azteca (www.segurosazteca.com.mx) and Grupo Iusacell (www.iusacell.com.mx). Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders. Grupo Salinas has no equity holdings. However, the member companies share a common vision, values and strategies for achieving rapid growth, superior results and world-class performance.

Except for historical information, the matters discussed in this press release are forward-looking statements and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Other risks that may affect Grupo Elektra and its subsidiaries are identified in documents sent to securities authorities.

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
1Q13 1Q14 Change
Financial income 12,364 71% 12,103 70% (261) -2%
Commercial income 5,088 29% 5,154 30% 65 1%
Income 17,453 100% 17,257 100% (196) -1%
Financial cost 3,153 18% 3,598 21% 445 14%
Commercial cost 3,597 21% 3,463 20% (134) -4%
Costs 6,750 39% 7,060 41% 310 5%
Gross income 10,703 61% 10,197 59% (506) -5%
Sales, administration and promotion expenses 7,649 44% 7,635 44% (14) 0%
Depreciation and amortization 656 4% 656 4% (0) 0%
Operating expenses 8,304 48% 8,290 48% (14) 0%
Operating income 2,398 14% 1,906 11% (492) -21%
EBITDA 3,054 17% 2,562 15% (492) -16%
Comprehensive financial result:
Interest income 49 0% 128 1% 79 --
Interest expense (420) -2% (378) -2% 42 10%
Foreign exchange (loss) gain, net (368) -2% 83 0% 451 --
Other financial results, net (2,601) -15% (1,988) -12% 613 24%
(3,340) -19% (2,155) -12% 1,185 35%
Other income (expense), net 9 0% (6) 0% (16) --
Participation in the net income of
CASA and other associated companies (2) 0% (37) 0% (35) --
Loss before income tax (934) -5% (291) -2% 643 69%
Income tax 363 2% 116 1% (247) -68%
Loss before discontinued operations (571) -3% (175) -1% 396 69%
Loss from discontinued operations (11) 0% -- 0% 11 --
Consolidated net loss (582) -3% (175) -1% 407 70%
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MILLIONS OF MEXICAN PESOS
Commercial Business Financial Business Grupo Elektra Commercial Business Financial Business Grupo Elektra Change
At March 31, 2013 At March 31, 2014
Cash and cash equivalents 3,819 15,475 19,294 2,983 18,069 21,052 1,758 9%
Marketable financial instruments 23,154 13,002 36,156 12,463 20,870 33,333 (2,823) -8%
Performing loan portfolio 224 49,675 49,898 -- 50,277 50,277 378 1%
Total past-due loans 263 5,353 5,616 -- 6,194 6,194 578 10%
Gross loan portfolio 487 55,028 55,515 -- 56,471 56,471 956 2%
Allowance for credit risks 264 8,055 8,319 -- 8,735 8,735 416 5%
Loan portfolio, net 223 46,973 47,196 -- 47,737 47,737 540 1%
Inventories 7,071 7,071 6,139 6,139 (931) -13%
Other current assets 9,299 8,295 17,593 3,358 8,166 11,524 (6,069) -34%
Total current assets 43,565 83,745 127,310 24,943 94,841 119,785 (7,526) -6%
Financial instruments -- -- -- 10,507 200 10,708 10,708 --
Performing loan portfolio 236 17,128 17,364 20,142 20,142 2,778 16%
Total past-due loans 1 520 521 215 215 (306) -59%
Loan portfolio 237 17,648 17,885 -- 20,357 20,357 2,472 14%
Other non-current assets 844 168 1,013 4,385 2 4,387 3,374 --
Investment in shares 3,893 -- 3,893 4,240 4,240 347 9%
Property, furniture, equipment and
investment in stores, net 4,087 2,862 6,949 4,765 2,897 7,662 713 10%
Intangible assets 544 6,295 6,839 623 6,615 7,239 399 6%
Other assets 760 387 1,148 1,024 614 1,637 489 43%
TOTAL ASSETS 53,932 111,105 165,037 50,488 125,526 176,014 10,977 7%
Demand and term deposits 71,717 71,717 82,363 82,363 10,646 15%
Creditors from repurchase agreements 2,709 2,709 3,490 3,490 782 29%
Short-term debt 9,163 2,872 12,036 4,150 518 4,668 (7,367) -61%
Short-term liabilities with cost 9,163 77,299 86,462 4,150 86,372 90,522 4,060 5%
Suppliers and other short-term liabilities 6,798 6,124 12,922 8,578 6,637 15,215 2,293 18%
Short-term liabilities without cost 6,798 6,124 12,922 8,578 6,637 15,215 2,293 18%
Total short-term liabilities 15,961 83,422 99,384 12,728 93,009 105,737 6,353 6%
Long-term debt 10,633 1,112 11,745 13,910 3,866 17,776 6,031 51%
Long-term liabilities with cost 10,633 1,112 11,745 13,910 3,866 17,776 6,031 51%
Long-term liabilities without cost 8,562 949 9,511 5,757 1,259 7,016 (2,495) -26%
Total long-term liabilities 19,196 2,060 21,256 19,667 5,124 24,791 3,536 17%
TOTAL LIABILITIES 35,157 85,482 120,640 32,395 98,133 130,528 9,889 8%
TOTAL STOCKHOLDERS' EQUITY 18,775 25,623 44,397 18,093 27,393 45,486 1,088 2%
LIABILITIES + EQUITY 53,932 111,105 165,037 50,488 125,526 176,014 10,977 7%
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
INFRASTRUCTURE
1Q13 1Q14 Change
Points of sale in Mexico
Elektra (1) 967 15% 988 14% 21 2%
Salinas y Rocha (1) 55 1% 55 1% -- 0%
Freestanding branches 2,387 36% 2,411 35% 24 1%
Blockbuster -- 0% 327 5% 327 100%
Total 3,409 52% 3,781 55% 372 11%
Points of sale in Central and South America
Elektra (1) 217 3% 215 3% (2) -1%
Freestanding branches 447 7% 407 6% (40) -9%
Total 664 10% 622 9% (42) -6%
Points of sale in North America
Advance America 2,507 38% 2,446 36% (61) -2%
Total 2,507 38% 2,446 36% (61) -2%
TOTAL 6,580 100% 6,849 100% 269 4%
(1) Each store has a Banco Azteca branch.
Floor space (m²)
Elektra Mexico 836,259 51% 843,900 48% 7,640 1%
Elektra Central and South America 156,125 10% 151,891 9% (4,234) -3%
Salinas y Rocha 58,995 4% 58,995 3% -- 0%
Freestanding branches 246,437 15% 241,389 14% (5,048) -2%
Advance America 343,500 21% 335,142 19% (8,358) -2%
Blockbuster -- 0% 110,000 6% 110,000 100%
TOTAL 1,641,316 100% 1,741,316 100% 100,000 6%
Employees
Mexico 59,278 76% 67,516 79% 8,238 14%
Central and South America 12,610 16% 11,327 13% (1,283) -10%
North America 6,348 8% 6,666 8% 318 5%
Total employees 78,236 100% 85,509 100% 7,273 9%

CONTACT: Investor Relations Bruno Rangel Grupo Salinas Tel. +52 (55) 1720-9167 jrangelk@gruposalinas.com.mx Rolando Villarreal Grupo Elektra S.A.B. de C.V. Tel. +52 (55) 1720-9167 rvillarreal@gruposalinas.com.mx Press Relations Luciano Pascoe Grupo Salinas Tel. +52 (55) 1720 1313 ext. 36553 lpascoe@gruposalinas.com.mx Daniel McCosh Grupo Salinas Tel. +52 (55) 1720-0059 dmccosh@gruposalinas.com.mxSource:Grupo Elektra SAB de CV