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Grupo Elektra Announces 8% Increase in EBITDA to Ps.2,635 Million in 3Q15

Operating profit increases 15% to Ps.1,984 million in the period

Continued dynamism in sales from the commercial business;
21% increase to Ps.6,549 million

14% growth in consolidated deposits to Ps.98,598 million
generates solid perspectives in the financial business

MEXICO CITY, Oct. 28, 2015 (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 third quarter and first nine months of 2015.

Consolidated third quarter results

Consolidated revenue increased 2% to Ps.18,501 million, from Ps.18,177 million for the same period last year. Costs and operating expenses were Ps.15,866 million, compared to Ps.15,744 million for the same period of 2014.

As a result, Grupo Elektra reported EBITDA of Ps.2,635 million, 8% higher when compared to Ps.2,433 million from the previous year’s quarter; EBITDA margin was 14% this period, one percentage point above the previous year. Operating profit increased 15%, to Ps.1,984 million, from Ps.1,713 million a year ago.

The company reported net loss of Ps.1,220 million, from a net income of Ps.1,836 million a year ago.

3Q 2014 3Q 2015 Change
Ps.%
Consolidated revenue$18,177 $18,501 $324 2%
EBITDA $2,433 $2,635 $202 8%
Net result $1,836 $(1,220)$(3,055)---
Net result per share$7.75 $(5.18)$(12.93)---
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of September 30, 2014, Elektra outstanding shares were 236.9 million and as of September 30, 2015, were 235,7 million.


Revenue

Consolidated revenue grew 2%, as a result of increases of 21% in commercial sales, which partly offset a 7% decrease in financial revenue.

The increase in commercial sales —of Ps.6,549 million from Ps.5,393 million last year— increased as a result of strategies that generate growing customer satisfaction through an optimal mix of merchandise on the sales floor, offered by a highly trained sales force under the most competitive market conditions.

The decrease in financial revenue —to Ps.11,952 million from Ps.12,785 million from the previous year— results mainly from a 11% reduction in revenue from Banco Azteca Mexico, to Ps.7,462 million, compared to Ps.8,412 million from the previous year.

Costs and expenses

Consolidated costs for the quarter decreased 4% to Ps.7,689 million, from Ps.8,026 million for the previous year. The change is mainly due to a 24% reduction in financial cost —largely driven by a reduction in provisions for loan losses, along with the strength in asset quality— and a 21% increase in commercial costs, in line with the performance of commercial revenue.

Sales, administration and promotion expenses increased 6% to Ps.8,177 million, as a result of higher operating expenses.

EBITDA and net result

Consolidated EBITDA increased 8% to Ps.2,635 million this quarter.

The most significant change below EBITDA was a negative variation of Ps.4,295 million in the other financial results, as a consequence of a reduction in the market value of the underlying assets of financial instruments owned by the company –which does not imply cash flow– compared to increase last year.

Grupo Elektra reported a net loss of Ps.1,220 million, compared to a net gain of Ps.1,836 million a year ago.

Consolidated balance sheet

Loan portfolio and deposits

Banco Azteca Mexico, Advance America and Banco Azteca Latin America’s consolidated gross portfolio as of September 30, 2015, was Ps.67,646 million, compared to Ps.76,494 million from the previous year. Consolidated delinquency rate was 7.7% at the end of the period, from an 8% from the previous year.

The gross portfolio increased 3% from Ps.65,745 million as of June 30, 2015, as a result of strategies that strengthen the growth in credit, with solid quality.

The gross portfolio of Banco Azteca Mexico was Ps.52,273 million, compared to Ps.61,657 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 7.1%, compared to 8% a year ago. The non-performing loan portfolio is reserved 1.64 times, reflecting loan loss reserves of Ps. 6,093 million, compared with a non-performing loan balance of Ps.3,718 million as of September 30, 2015. 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 third quarter.

The Advance America loan portfolio was Ps.5,309 million, 15% higher than the Ps.4,598 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 14%, to Ps.98,598 million, compared to Ps.86,701 million a year ago. Deposits of Banco Azteca Mexico were Ps.91,927 million, 14% higher than the Ps.80,802 million a year ago. Financial products that satisfy clients with world class service resulted in the increase in deposits. The higher deposit base sets a strong foundation for future financial business growth.

As of September 30, 2015, the estimated capitalization index of Banco Azteca Mexico was 17.2%.

Debt

Consolidated debt with cost as of September 30, 2015, was Ps.19,812 million, from Ps.19,798 million for the prior year.

Consolidated debt was comprised of Ps.17,871 million for the commercial business, and Ps.1,940 million for the financial business. The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.22,113 million at the end of the period; as a result, the net cash commercial balance —excluding debt with cost— is favorable in Ps.4,242 million.

Infrastructure

Grupo Elektra currently has 8,069 points of contact, compared to 9,252 a year ago. The reduction results from strategies that focus on maximizing the profitability of the units.

Grupo Elektra has 4,932 points of sale in Mexico, 2,364 in the United States, and 773 in Central and South America. The extensive distribution network allows the company to maintain close contact with clients; granting superior market positioning in the countries where it operates.

Nine months consolidated results

Total consolidated revenue in the first nine months of the year was Ps.55,705 million, 4% higher than the Ps.53,572 million for the same period of 2014, boosted mainly by a 20% growth in the commercial business.

EBITDA was Ps.7,883 million, 10% higher than the Ps.7,186 million for the same period a year ago; the EBITDA margin in the first nine months of 2015 was 14%, one percentage point above the prior year. The company registered a consolidated net loss of Ps.5,922 million, compared to a gain of Ps.547 million a year ago, mainly due a larger decrease in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to the prior year.

9M 2014 9M 2015 Change
Ps.%
Consolidated revenue$53,572 $55,705 $2,133 4%
EBITDA $7,186 $7,883 $697 10%
Net result $547 $(5,922 )$(6,470)----
Net result per share$2.31 $(25.13 )$(27.44 )----
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of September 30, 2014, Elektra outstanding shares were 236.9 million and as of September 30, 2015, were 235,7 million.

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 8,000 points of contact 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 TV 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), Totalplay (www.totalplay.com.mx) and Enlace TPE (www.enlacetpe.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.


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.mx

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
3Q143Q15Change
Financial income 12,785 70% 11,952 65% (833) -7%
Commercial income 5,393 30% 6,549 35% 1,156 21%
Income 18,177 100% 18,501 100% 324 2%
Financial cost 4,502 25% 3,411 18% (1,091) -24%
Commercial cost 3,524 19% 4,278 23% 754 21%
Costs 8,026 44% 7,689 42% (337) -4%
Gross income 10,152 56% 10,812 58% 660 7%
Sales, administration and promotion expenses 7,718 42% 8,177 44% 459 6%
Depreciation and amortization 702 4% 651 4% (51) -7%
Operating expenses 8,421 46% 8,828 48% 408 5%
Operating income 1,731 10% 1,984 11% 253 15%
EBITDA 2,433 13% 2,635 14% 202 8%
Comprehensive financial result:
Interest income 89 0% 71 0% (18) -20%
Interest expense (342) -2% (355) -2% (13) -4%
Foreign exchange gain, net 81 0% 87 0% 6 7%
Other financial results, net 990 5% (3,305) -18% (4,295)----
818 5% (3,501) -19% (4,320)----
Other (expense) income, net (13) 0% 7 0% 20 153%
Participation in the net income of
CASA and other associated companies 62 0% (117) -1% (179)----
Income (loss) before income tax 2,598 14% (1,627) -9% (4,226) 163%
Income tax (743) 452 2% 1,195 -161%
Income (loss) before discontinued operations 1,856 10% (1,175) -6% (3,031) 163%
Result from discontinued operations (20) 0% (44) 0% (24) -123%
Consolidated net income (loss) 1,836 10% (1,220) -7% (3,055) 166%

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
9M149M15Change
Financial income 37,557 70% 36,494 66% (1,062) -3%
Commercial income 16,015 30% 19,211 34% 3,196 20%
Income 53,572 100% 55,705 100% 2,133 4%
Financial cost 11,954 22% 11,818 21% (136) -1%
Commercial cost 10,798 20% 12,907 23% 2,109 20%
Costs 22,752 42% 24,724 44% 1,973 9%
Gross income 30,820 58% 30,981 56% 161 1%
Sales, administration and promotion expenses 23,634 44% 23,098 41% (536) -2%
Depreciation and amortization 2,029 4% 1,882 3% (147) -7%
Operating expenses 25,663 48% 24,980 45% (683) -3%
Operating Income 5,157 10% 6,000 11% 844 16%
EBITDA 7,186 13% 7,883 14% 697 10%
Comprehensive financial result:
Interest income 304 1% 269 0% (36) -12%
Interest expense (1,106) -2% (1,079) -2% 27 2%
Foreign exchange gain, net 91 0% 164 0% 73 80%
Other financial results, net (3,451) -6% (13,116) -24% (9,665)----
(4,162) -8% (13,763) -25% (9,600)----
Other (expense) income, net (295) -1% 0 0% 296 ----
Participation in the net income of
CASA and other associated companies 73 0% (378) -1% (451)----
Income (loss) before income tax 773 1% (8,140) -15% (8,912)----
Income tax (119) 0% 2,289 4% 2,408 ----
Income (loss) before discontinued operations 653 1% (5,851) -11% (6,504)----
Result from discontinued operations (106) 0% (71) 0% 34 32%
Consolidated net income (loss) 547 1% (5,922) -11% (6,470)----


GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MILLIONS OF MEXICAN PESOS
Commercial BusinessFinancial BusinessGrupo Elektra Commercial BusinessFinancial BusinessGrupo Elektra
Change
At September 30, 2014 At September 30, 2015
Cash and cash equivalents 2,736 16,226 18,963 2,117 18,284 20,401 1,438 8%
Marketable financial instruments 13,086 29,509 42,595 19,996 54,297 74,293 31,698 74%
Performing loan portfolio - 52,597 52,597 - 45,105 45,105 (7,493) -14%
Total past-due loans - 5,819 5,819 - 4,927 4,927 (892) -15%
Gross loan portfolio - 58,417 58,417 - 50,032 50,032 (8,385) -14%
Allowance for credit risks - 8,901 8,901 - 8,055 8,055 (846) -10%
Loan portfolio, net - 49,515 49,515 - 41,977 41,977 (7,539) -15%
Inventories 6,249 - 6,249 6,287 6,287 38 1%
Other current assets 4,886 4,676 9,562 2,552 9,390 11,942 2,379 25%
Total current assets 26,957 99,927 126,884 30,951 123,948 154,899 28,015 22%
Financial instruments 10,042 222 10,264 4,252 292 4,543 (5,721) -56%
Performing loan portfolio - 17,744 17,744 - 17,367 17,367 (378) -2%
Total past-due loans - 332 332 - 248 248 (85) -25%
Loan portfolio - 18,077 18,077 - 17,614 17,614 (462) -3%
Other non-current assets 2,101 1,000 3,101 - 912 912 (2,189) -71%
Investment in shares 4,394 4,394 3,938 3,938 (456) -10%
Property, furniture, equipment and
investment in stores, net 4,645 2,821 7,467 3,912 2,825 6,737 (730) -10%
Intangible assets 628 6,707 7,334 544 8,180 8,724 1,390 19%
Other assets 703 628 1,331 1,115 385 1,501 170 13%
TOTAL ASSETS 49,471 129,381 178,852 44,713 154,156 198,868 20,016 11%
Demand and term deposits 86,701 86,701 98,598 98,598 11,897 14%
Creditors from repurchase agreements 3,817 3,817 5,034 5,034 1,216 32%
Short-term debt 2,244 161 2,405 7,624 817 8,442 6,037 251%
Short-term liabilities with cost 2,244 90,680 92,924 7,624 104,450 112,074 19,151 21%
Suppliers and other short-term liabilities 8,713 6,521 15,234 8,770 9,491 18,261 3,027 20%
Short-term liabilities without cost 8,713 6,521 15,234 8,770 9,491 18,261 3,027 20%
Total short-term liabilities 10,957 97,201 108,158 16,395 113,940 130,335 22,177 21%
Long-term debt 16,244 1,149 17,393 10,247 1,123 11,370 (6,023) -35%
Long-term liabilities with cost 16,244 1,149 17,393 10,247 1,123 11,370 (6,023) -35%
Long-term liabilities without cost 4,851 1,580 6,431 2,980 3,693 6,673 242 4%
Total long-term liabilities 21,095 2,729 23,824 13,227 4,816 18,043 (5,781) -24%
TOTAL LIABILITIES 32,051 99,930 131,982 29,621 118,756 148,378 16,396 12%
TOTAL STOCKHOLDERS' EQUITY 17,420 29,451 46,871 15,091 35,400 50,491 3,620 8%
LIABILITIES + EQUITY 49,471 129,381 178,852 44,713 154,156 198,868 20,016 11%

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
INFRASTRUCTURE
3Q14
3Q15
Change
Points of sale in Mexico
Elektra 988 11% 958 12% (30) -3%
Salinas y Rocha 55 1% 52 1% (3) -5%
Banco Azteca 2,003 22% 1,673 21% (330) -16%
Freestanding branches 2,527 27% 2,002 25% (525) -21%
Blockbuster 312 3% 247 3% (65) -21%
Total 5,885 64% 4,932 61% (953) -16%
Points of sale in Central and South America
Elektra 206 2% 191 2% (15) -7%
Banco Azteca 298 3% 215 3% (83) -28%
Freestanding branches 431 5% 367 5% (64) -15%
Total 935 10% 773 10% (162) -17%
Points of sale in North America
Advance America 2,432 26% 2,364 29% (68) -3%
Total 2,432 26% 2,364 29% (68) -3%
TOTAL 9,252 100% 8,069 100% (1,183) -13%
Floor space (m²) 1,740 100% 1,610 100% (130) -7%
Employees
Mexico 61,676 77% 50,658 76% (11,018) -18%
Central and South America 11,269 14% 9,427 14% (1,842) -16%
North America 6,947 9% 6,667 10% (280) -4%
Total employees 79,892 100% 66,752 100% (13,140) -16%

Source:Grupo Elektra SAB de CV