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Grupo Elektra Announces 37% Growth in Operating Profit to Ps.2,065 Million in 4Q15

—EBITDA increases 18% to Ps.2,729 million in the period—

—Continued dynamism in sales from the commercial business;
16% increase to Ps.8,402 million—

—8% growth in consolidated deposits to Ps.100,573 million
generates solid perspectives in the financial business—

Notable reduction in the delinquency rate of Banco Azteca Mexico;
decreases four percentage points to 5.3%—

MEXICO CITY, Feb. 24, 2016 (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 fourth quarter, and 2015.

Consolidated fourth quarter results

Consolidated revenue was Ps.20,399 million, from Ps.20,402 million for the same period last year. Costs and operating expenses decreased 2% to Ps.17,670 million, compared to Ps.18,094 million for the same period of 2014.

As a result, Grupo Elektra reported EBITDA of Ps.2,729 million, 18% higher than the Ps.2,307 million of the previous year’s quarter; EBITDA margin was 13% this period, two percentage points above previous year. Operating profit grew 37% to Ps.2,065 million during the quarter.

The company reported net income of Ps.769 million, from net income of Ps.7,010 million a year ago.

4Q 2014 4Q 2015 Change
Ps.%
Consolidated revenue$20,402 $20,399 $(3) 0%
EBITDA $2,307 $2,729 $422 18%
Net result $7,010 $769 $(6,241) -89%
Net result per share$29.65 $3.24 $(26.41) -89%

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of December 31, 2014, Elektra outstanding shares were 236.4 million and as of December 31, 2015, were 237.4 million.

Revenues

Consolidated revenue remained virtually unchanged as a result of a 16% increase in commercial sales, offset by a 9% reduction in financial revenue.

The increase in commercial sales —of Ps.8,402 million from Ps.7,272 million last year— was the result of strategies to offer products and services that effectively improve the quality of life of clients, under the most competitive market conditions, with world-class service.

The decrease in financial revenue —to Ps.11,997 million from Ps.13,129 million from the previous year— results mainly from a 7% decrease in revenues of Banco Azteca Mexico, to Ps.7,889 million, in comparison to Ps.8,515 million a year ago.

Costs and expenses

Consolidated costs for the quarter decreased 13% to Ps.8,650 million, from Ps.9,951 million for the previous year, as a result from a 37% decrease in the financial cost —largely driven by a reduction in provisions for loan losses, along with the strength in asset quality—and an 8% increase in commercial costs, in line with the performance of commercial revenue.

Sales, administration and promotion expenses increased 11% to Ps.9,020 million, as a result of higher operating expenses.

EBITDA and net result

Consolidated EBITDA increased 18% to Ps.2,729 million this quarter. Operating profit grew 37% to Ps.2,065 million, from Ps.1,510 million in same quarter of 2014.

The most significant change below EBITDA was a negative variation of Ps.4,092 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.

Impairment of intangible assets increased Ps.2,776 million in the period, mainly due to impairment charges on the value of goodwill and other intangible assets —which does not imply cash flow— related to Advance America.

Grupo Elektra reported net income of Ps.769 million, compared to net income of Ps.7,010 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 December 31, 2015 was Ps.67,199 million, compared to Ps.75,901 million from the previous year. Consolidated delinquency rate was 6.1% at the end of the period, from 9% for the previous year.

The gross portfolio of Banco Azteca Mexico was Ps.53,214 million, compared to Ps.60,121 million a year ago. In comparison to the balance of Ps.52,273 million as of September 30, 2015, gross portfolio grew 2%, as a result of strategies to strengthen the growth of credit with solid quality.

The delinquency rate of the bank at the end of the quarter was 5.3%, four percentage points lower than the 9.3% from the previous year. The non-performing loan portfolio is reserved 1.99 times, reflecting loan loss reserves of Ps.5,626 million, compared with a non-performing loan balance of Ps.2,833 million as of December 31, 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 fourth quarter.

The Advance America loan portfolio was Ps.4,941 million, compared to Ps.5,002 million a year ago.

Grupo Elektra consolidated deposits grew 8%, to Ps.100,573 million, compared to Ps.93,147 million a year ago. Deposits of Banco Azteca Mexico were Ps.96,457 million, 10% higher than the Ps.87,573 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 December 31, 2015, the estimated capitalization index of Banco Azteca Mexico was 18.35%.

Debt

Consolidated debt with cost as of December 31, 2015, was Ps.18,119 million, 4% less than the Ps.18,940 million for the prior year.

During the quarter, Grupo Elektra amortized Ps.1,575 million in Certificados Bursatiles with the company’s own funds, generated from solid financial performance.

Consolidated debt was comprised of Ps.16,536 million for the commercial business, and Ps.1,583 million for the financial business. The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.26,116 million at the end of the period; as a result, the net cash commercial balance —excluding debt with cost— is favorable at Ps.9,580 million.

Infrastructure

Grupo Elektra currently has 7,963 points of sale, compared to 9,337 units a year ago. The reduction results from strategies that focus on maximizing the profitability of the units.

The company has 4,939 points of sale in Mexico, 2,323 in the United States, and 701 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.

Twelve month consolidated results

Resulting from sound management in both the commercial and the financial divisions, the results of the company gradually strengthened during the year. Total consolidated revenue in 2015 was Ps.75,902 million, 3% higher than the Ps.73,629 million for 2014, as a result of a 19% growth in the commercial business.

EBITDA was Ps.10,734 million, 13% higher than the Ps.9,479 million for the same period a year ago; the EBITDA margin in 2015 was 14%, one percentage point above the prior year. Operating profit was Ps.8,194 million, 23% higher than the Ps.6,670 million of 2014.

The company registered a consolidated net loss of Ps.5,153 million, compared to a gain of Ps.7,558 million a year ago, mainly due to i) a decrease in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to the prior year, as well as ii) an increase in the impairment of intangible assets —which does not imply cash flow— related to Advance America.

2014 2015 Change
Ps.%
Consolidated revenue$73,629 $75,902 $2,273 3%
EBITDA $9,479 $10,734 $1,255 13%
Net result $7,558 $(5,153 )$(12,711)----
Net result per share$31.97 $(21.71 )$(53.68 )----

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of December 31, 2014, Elektra outstanding shares were 236.4 million and as of December 31, 2015, were 237.4 million.

Company Profile:

Grupo Elektra 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 close to 8,000 points of contact in Mexico, USA, 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.tvazteca.com; www.irtvazteca.com), Azteca US (us.azteca.com), Grupo Elektra (www.elektra.com.mx: 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 TP (enlacetp.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
4Q14 4Q15 Change
Financial income 13,129 64% 11,997 59% (1,132) -9%
Commercial income 7,272 36% 8,402 41% 1,129 16%
Income 20,402 100% 20,399 100% (3) 0%
Financial cost 4,650 23% 2,921 14% (1,729) -37%
Commercial cost 5,301 26% 5,729 28% 427 8%
Costs 9,951 49% 8,650 42% (1,302) -13%
Gross income 10,451 51% 11,749 58% 1,299 12%
Sales, administration and promotion expenses 8,143 40% 9,020 44% 877 11%
Depreciation and amortization 797 4% 664 3% (133) -17%
Operating expenses 8,940 44% 9,684 47% 744 8%
Operating Income 1,510 7% 2,065 10% 555 37%
EBITDA 2,307 11% 2,729 13% 422 18%
Comprehensive financial result:
Interest income 176 1% 402 2% 225 128%
Interest expense (391) -2% (337) -2% 54 14%
Foreign exchange gain, net 306 2% 52 0% (255) -83%
Other financial results, net 7,418 36% 3,327 16% (4,092) -55%
7,511 37% 3,443 17% (4,068) -54%
Other expense, net (408) -2% (46) 0% 362 89%
Participation in the net income of
CASA and other associated companies 53 0% (361) -2% (415)----
Income (loss) before income tax 8,666 42% 5,100 25% (3,566) -41%
Income tax (1,266) -6% (1,244) -6% 22 2%
Income (loss) before discontinued operations and impairment 7,400 36% 3,857 19% (3,544) -48%
Result from discontinued operations (226) -1% (147) -1% 79 35%
Impairment of intangible assets (164) -1% (2,940) -14% (2,776)----
Consolidated net income (loss) 7,010 34% 769 4% (6,241) -89%


GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
12M14 12M15 Change
Financial income 50,384 68% 48,302 64% (2,082) -4%
Commercial income 23,245 32% 27,600 36% 4,355 19%
Income 73,629 100% 75,902 100% 2,273 3%
Financial cost 16,504 22% 14,598 19% (1,906) -12%
Commercial cost 16,068 22% 18,626 25% 2,559 16%
Costs 32,572 44% 33,224 44% 652 2%
Gross income 41,057 56% 42,678 56% 1,621 4%
Sales, administration and promotion expenses 31,578 43% 31,945 42% 366 1%
Depreciation and amortization 2,809 4% 2,539 3% (270) -10%
Operating expenses 34,388 47% 34,484 45% 96 0%
Operating Income 6,670 9% 8,194 11% 1,524 23%
EBITDA 9,479 13% 10,734 14% 1,255 13%
Comprehensive financial result:
Interest income 481 1% 670 1% 190 39%
Interest expense (1,497) -2% (1,416) -2% 81 5%
Foreign exchange gain, net 398 1% 218 0% (180) -45%
Other financial results, net 3,966 5% (9,790) -13% (13,756)----
3,348 5% (10,317) -14% (13,665)----
Other expense, net (703) -1% (46) 0% 658 94%
Participation in the net income expense of
CASA and other associated companies 126 0% (739) -1% (866)----
Income (loss) before income tax 9,441 13% (2,908) -4% (12,349)----
Income tax (1,372) -2% 1,052 1% 2,423 ----
Income (loss) before discontinued operations and impairment 8,069 11% (1,856) -2% (9,925)----
Result from discontinued operations (348) 0% (357) 0% (9) -3%
Impairment of intangible assets (164) 0% (2,940) -4% (2,776)----
Consolidated net income (loss) 7,558 10% (5,153) -7% (12,711)----


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 December 31, 2014 At December 31, 2015
Cash and cash equivalents 3,810 19,384 23,194 2,878 20,043 22,921 (273) -1%
Marketable financial instruments 15,564 32,915 48,480 23,238 45,622 68,860 20,380 42%
Performing loan portfolio - 52,298 52,298 - 45,691 45,691 (6,607) -13%
Total past-due loans - 6,647 6,647 - 3,986 3,986 (2,661) -40%
Gross loan portfolio - 58,945 58,945 - 49,677 49,677 (9,267) -16%
Allowance for credit risks - 9,283 9,283 - 7,425 7,425 (1,858) -20%
Loan portfolio, net - 49,662 49,662 - 42,253 42,253 (7,409) -15%
Inventories 5,906 - 5,906 6,578 6,578 672 11%
Other current assets 1,920 9,266 11,186 1,826 13,455 15,281 4,095 37%
Total current assets 27,200 111,227 138,427 34,520 121,372 155,892 17,464 13%
Financial instruments 11,016 245 11,260 6,223 299 6,522 (4,738) -42%
Performing loan portfolio - 16,769 16,769 - 17,417 17,417 648 4%
Total past-due loans - 187 187 - 105 105 (82) -44%
Loan portfolio - 16,956 16,956 - 17,522 17,522 565 3%
Other non-current assets 7,198 1,200 8,398 629 912 1,540 (6,858) -82%
Investment in shares 4,262 4,262 3,210 3,210 (1,053) -25%
Property, furniture, equipment and
investment in stores, net 4,459 2,916 7,375 3,653 2,785 6,439 (936) -13%
Intangible assets 565 7,174 7,738 581 5,275 5,856 (1,883) -24%
Other assets 1,002 408 1,411 1,071 389 1,460 50 4%
TOTAL ASSETS 55,701 140,127 195,828 49,887 148,554 198,440 2,612 1%
Demand and term deposits 93,147 93,147 100,573 100,573 7,426 8%
Creditors from repurchase agreements 4,788 4,788 4,364 4,364 (424) -9%
Short-term debt 1,600 207 1,807 6,064 123 6,187 4,380 242%
Short-term liabilities with cost 1,600 98,142 99,742 6,064 105,059 111,124 11,382 11%
Suppliers and other short-term liabilities 8,606 6,804 15,410 10,771 6,219 16,989 1,579 10%
Short-term liabilities without cost 8,606 6,804 15,410 10,771 6,219 16,989 1,579 10%
Total short-term liabilities 10,206 104,947 115,152 16,835 111,278 128,113 12,961 11%
Long-term debt 15,842 1,291 17,133 10,472 1,460 11,932 (5,201) -30%
Long-term liabilities with cost 15,842 1,291 17,133 10,472 1,460 11,932 (5,201) -30%
Long-term liabilities without cost 6,265 2,391 8,656 3,492 3,117 6,610 (2,046) -24%
Total long-term liabilities 22,107 3,682 25,788 13,964 4,578 18,542 (7,247) -28%
TOTAL LIABILITIES 32,312 108,628 140,941 30,799 115,855 146,654 5,714 4%
TOTAL STOCKHOLDERS' EQUITY 23,389 31,499 54,888 19,088 32,698 51,786 (3,102) -6%
LIABILITIES + EQUITY 55,701 140,127 195,828 49,887 148,554 198,440 2,612 1%


GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
INFRASTRUCTURE
4Q14 4Q15 Change
Points of sale in Mexico
Elektra 1,036 11% 970 12% (66) -6%
Salinas y Rocha 55 1% 51 1% (4) -7%
Banco Azteca 1,373 15% 1,226 15% (147) -11%
Freestanding branches 3,315 36% 2,446 31% (869) -26%
B-Store 293 3% 246 3% (47) -16%
Total 6,072 65% 4,939 62% (1,133) -19%
Points of sale in Central and South America
Elektra 206 2% 173 2% (33) -16%
Banco Azteca 206 2% 173 2% (33) -16%
Freestanding branches 439 5% 355 4% (84) -19%
Total 851 9% 701 9% (150) -18%
Points of sale in North America
Advance America 2,414 26% 2,323 29% (91) -4%
Total 2,414 26% 2,323 29% (91) -4%
TOTAL 9,337 100% 7,963 100% (1,374) -15%
Floor space (m²) 1,712 100% 1,560 100% (151) -9%
Employees
Mexico 59,618 77% 49,590 76% (10,028) -17%
Central and South America 11,100 14% 9,125 14% (1,975) -18%
North America 7,084 9% 6,631 10% (453) -6%
Total employees 77,802 100% 65,346 100% (12,456) -16%

Source: Grupo Elektra SAB de CV