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Grupo Elektra Announces 15% Growth in Operating Profit to Ps.2,930 Million in 1Q16

—EBITDA increases 5% to Ps.3,336 million—

—Solid performance in revenue from the commercial division with
an increase of 7% to Ps.6,658 million—

—Notable reduction in the delinquency rate of Banco Azteca Mexico;
decreases six percentage points to 3.9%—

MEXICO CITY, April 25, 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 first quarter of 2016.

Consolidated first quarter results

Consolidated revenue was Ps.18,441 million, from Ps.19,006 million for the same period last year. Costs and operating expenses decreased 5% to Ps.15,104 million, compared to Ps.15,823 million for the same period of 2015.

As a result, Grupo Elektra reported EBITDA of Ps.3,336 million, 5% higher than the Ps.3,183 million of the previous year’s quarter; EBITDA margin was 18% this period, one percentage point above the previous year.

Operating profit grew 15% to Ps.2,930 million during the quarter, from Ps.2,550 million in same period of 2015.

The company reported net income of Ps.1,158 million, from net loss of Ps.3,280 million a year ago.

1Q 2015 1Q 2016 Change
Ps.%
Consolidated revenue$19,006 $18,441 $(565) -3%
EBITDA $3,183 $3,336 $154 5%
Operating profit$2,550 $2,930 $381 15%
Net result $(3,280)$1,158 $4,438 ----
Net result per share$(13.98)$4.85 $18.82 ----
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of March 31, 2015, Elektra outstanding shares were 234,7 million and as of March 31, 2016, were 238.9 million.

Revenue

Consolidated revenue decreased 3%, as a result of a reduction of 8% in financial revenue, partly offset by a 7% increase in commercial sales.

The decrease in financial revenue —to Ps.11,783 million from Ps.12,791 million from the previous year— results mainly from a 13% decrease in revenue of Banco Azteca Mexico, to Ps.7,172 million, in comparison to Ps.8,193 million a year ago.

The increase in sales from the commercial division —of Ps.6,658 million from Ps.6,215 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.

Costs and expenses

Consolidated costs for the quarter decreased 24% to Ps.6,755 million, from Ps.8,859 million for the previous year, resulting from a 51% decrease in financial cost —largely driven by a reduction in provisions for loan losses, along with the strength in asset quality—and a 6% increase in commercial costs, in line with the performance of commercial revenue.

Sales, administration and promotion expenses increased 20% to Ps.8,349 million, as a result of higher personnel expenses —from higher compensation schemes that encourage productivity— as well as an increase in operating expenses.

EBITDA and net result

Consolidated EBITDA grew 5% to Ps.3,336 million this quarter.

Operating income was Ps.2,930 million, 15% higher than the Ps.2,550 million from the same quarter of 2015.

The most significant change below EBITDA was a positive variation of Ps.5,525 million in other financial results, as a consequence of a smaller reduction 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 a net result of Ps.1,158 million, compared to a net loss of Ps.3,280 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 March 31, 2016 was Ps.63,707 million, compared to Ps.69,817 million from the previous year. Consolidated delinquency rate was 4.7% at the end of the period, from 9.6% for the previous year.

The gross portfolio of Banco Azteca Mexico was Ps.50,499 million, compared to Ps.53,276 million a year ago.

The delinquency rate of the bank at the end of the quarter was 3.9%, more than six percentage points lower than the 10.5% from the previous year. The non-performing loan portfolio is reserved 2.62 times, reflecting loan loss reserves of Ps.5,094 million, compared with a non-performing loan balance of Ps.1,946 million as of March 31, 2016. 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.4,303 million, 11% higher than the Ps.3,871 million a year ago.

Grupo Elektra consolidated deposits were Ps.101,223 million, compared to Ps.101,386 million a year ago. Deposits of Banco Azteca Mexico were Ps.96,470 million, from Ps.97,023 million a year ago.

As of March 31, 2016, the estimated capitalization index of Banco Azteca Mexico was 18.32%.

Debt

Consolidated debt with cost as of March 31, 2016, was Ps.17,276 million,12% less than the Ps.19,640 million for the prior year.

During the quarter, Grupo Elektra amortized Ps.2,575 million in Certificados Bursatiles with the company’s own funds, generated from solid financial performance.

Consolidated debt was comprised of Ps.15,515 million for the commercial business, and Ps.1,761 million for the financial business. The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.23,573 million at the end of the period; as a result, the net cash commercial balance —excluding debt with cost— is favorable at Ps.8,058 million.

Infrastructure

Grupo Elektra currently has 7,671 points of sale, compared to 9,214 units a year ago. The reduction results from strategies that focus on maximizing the profitability of the units.

The company has 4,743 points of sale in Mexico, 2,250 in the United States, and 678 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.

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.

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
1Q15 1Q16 Change
Financial income 12,791 67% 11,783 64% (1,008) -8%
Commercial income 6,215 33% 6,658 36% 443 7%
Income 19,006 100% 18,441 100% (565) -3%
Financial cost 4,667 25% 2,295 12% (2,372) -51%
Commercial cost 4,192 22% 4,460 24% 268 6%
Costs 8,859 47% 6,755 37% (2,104) -24%
Gross income 10,147 53% 11,686 63% 1,539 15%
Sales, administration and promotion expenses 6,964 37% 8,349 45% 1,385 20%
EBITDA 3,183 17% 3,336 18% 154 5%
Depreciation and amortization 597 3% 546 3% (51) -9%
Other expense (income), net 36 0% (140) -1% (176) -100%
Operating Income 2,550 13% 2,930 16% 381 15%
Comprehensive financial result:
Interest income 103 1% 234 1% 131 100%
Interest expense (336) -2% (328) -2% 8 2%
Foreign exchange gain, net 42 0% 56 0% 14 33%
Other financial results, net (6,733) -35% (1,208) -7% 5,525 82%
(6,925) -36% (1,247) -7% 5,677 82%
Participation in the net income of
CASA and other associated companies (130) -1% (71) 0% 60 46%
(Loss) income before income tax (4,505) -24% 1,612 9% 6,117 100%
Income tax 1,266 7% (451) -2% (1,718) -100%
(Loss) income before discontinued operations (3,239) -17% 1,161 6% 4,400 100%
Result from discontinued operations (41) 0% (3) 0% 38 93%
Consolidated net (loss) income (3,280) -17% 1,158 6% 4,438 100%

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, 2015 At March 31, 2016
Cash and cash equivalents5,55825,74531,303 1,78121,21022,991 (8,312) -27%
Marketable financial instruments13,40342,41155,814 21,79253,24575,037 19,223 34%
Performing loan portfolio-47,22647,226 -44,98944,989 (2,237) -5%
Total past-due loans-6,3716,371 -2,9272,927 (3,444) -54%
Gross loan portfolio-53,59753,597 -47,91747,917 (5,681) -11%
Allowance for credit risks-9,5569,556 -6,6986,698 (2,858) -30%
Loan portfolio, net-44,04144,041 -41,21941,219 (2,822) -6%
Inventories6,090-6,090 6,571-6,571 481 8%
Other current assets2,2266,7819,007 4,0949,35113,444 4,438 49%
Total current assets 27,277 118,978 146,255 34,237 125,025 159,262 13,007 9%
Financial instruments11,28624011,526 7,4982697,767 (3,759) -33%
Performing loan portfolio-15,86715,867 -15,70415,704 (162) -1%
Total past-due loans-354354 -8585 (268) -76%
Loan portfolio-16,22016,220 -15,79015,790 (431) -3%
Other non-current assets1,6039192,521 142765906 (1,615) -64%
Investment in shares4,173-4,173 3,138-3,138 (1,035) -25%
Property, furniture, equipment and
investment in stores, net4,2842,9037,187 3,5822,8026,384 (803) -11%
Intangible assets5567,4107,966 5915,2595,850 (2,116) -27%
Other assets9916751,666 1,2504031,653 (13) -1%
TOTAL ASSETS 50,170 147,344 197,514 50,437 150,312 200,749 3,235 2%
Demand and term deposits-101,386101,386 -101,223101,223 (163) 0%
Creditors from repurchase agreements-3,1293,129 -4,0534,053 924 30%
Short-term debt7,6277848,411 87313400 (8,010) -95%
Short-term liabilities with cost7,627105,299112,926 87105,590105,677 (7,249) -6%
Suppliers and other short-term liabilities8,7036,19314,896 12,0217,27419,295 4,399 30%
Short-term liabilities without cost8,7036,19314,896 12,0217,27419,295 4,399 30%
Total short-term liabilities 16,330 111,492 127,822 12,107 112,864 124,972 (2,850) -2%
Long-term debt10,0901,13811,229 15,4281,44816,876 5,647 50%
Long-term liabilities with cost10,0901,13811,229 15,4281,44816,876 5,647 50%
Long-term liabilities without cost4,6922,8697,561 3,0672,9105,978 (1,583) -21%
Total long-term liabilities 14,782 4,007 18,789 18,495 4,358 22,853 4,064 22%
TOTAL LIABILITIES 31,112 115,499 146,612 30,603 117,222 147,825 1,214 1%
TOTAL STOCKHOLDERS' EQUITY 19,058 31,844 50,902 19,834 33,090 52,924 2,022 4%
LIABILITIES + EQUITY 50,170 147,344 197,514 50,437 150,312 200,749 3,235 2%

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
INFRASTRUCTURE
1Q15 1Q16 Change
Points of sale in Mexico
Elektra1,019 11% 968 13% (51) -5%
Salinas y Rocha54 1% 51 1% (3) -6%
Banco Azteca1,345 15% 1,222 16% (123) -9%
Freestanding branches3,269 35% 2,359 31% (910) -28%
B-Store293 3% 143 2% (150) -51%
Total 5,980 65% 4,743 62% (1,237) -21%
Points of sale in Central and South America
Elektra197 2% 169 2% (28) -14%
Banco Azteca197 2% 169 2% (28) -14%
Freestanding branches446 5% 340 4% (106) -24%
Total 840 9% 678 9% (162) -19%
Points of sale in North America
Advance America2,394 26% 2,250 29% (144) -6%
Total 2,394 26% 2,250 29% (144) -6%
TOTAL 9,214 100% 7,671 100% (1,543) -17%
Floor space (m²) 1,691 100% 1,516 100% (175) -10%
Employees
Mexico54,730 75% 47,591 76% (7,139) -13%
Central and South America10,993 15% 8,626 14% (2,367) -22%
North America7,050 10% 6,382 10% (668) -9%
Total employees 72,773 100% 62,599 100% (10,174) -14%

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

Source: Grupo Elektra SAB de CV