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Grupo Elektra Announces 87% Growth in Operating Profit to Ps.2,904 Million in 2Q16

—EBITDA increases 64% to Ps.3,518 million in the period—

—Solid performance from both the commercial and financial divisions generate an increase of 8% in consolidated revenue to Ps.19,517 million—

—Notable reduction in the delinquency rate of Banco Azteca Mexico;
decreases more than six percentage points to 2.9%—

MEXICO CITY, July 21, 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 second quarter of 2016.

Consolidated second quarter results

Consolidated revenue was Ps.19,517 million, 8% above the Ps.18,027 million for the same quarter of last year. Costs and operating expenses increased 1% to Ps.15,998 million, compared to Ps.15,878 million for the same period of 2015.

As a result, Grupo Elektra reported EBITDA of Ps.3,518 million, 64% higher than the Ps.2,149 million of the previous year’s quarter; EBITDA margin was 18% this period, six percentage point above the previous year.

Operating profit grew 87% to Ps.2,904 million during the quarter, from Ps.1,550 million in same period of 2015.

The company reported a net loss of Ps.79 million, compared to a net loss of Ps.1,423 million a year ago.

2Q 2015 2Q 2016 Change
Ps.%
Consolidated revenue$18,027 $19,517 $1,489 8%
EBITDA $2,149 $3,518 $1,369 64%
Operating profit$1,550 $2,904 $ 1,354 87 %
Net result$(1,423)$(79)$1,344 94%
Net result per share$(6.05)$(0.33)$5.72 94%

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of June 30, 2015, Elektra outstanding shares were 235.1 million and as of June 30, 2016, were 237.9 million.

Revenue

Consolidated revenue increased 8%, as a result of growth of 14% and 5% in commercial sales and financial revenues, respectively.

The increase in sales from the commercial division — of Ps.7,344 million from Ps.6,435 million last year — reflects strategies that give millions of families access to world-class products and services under the most competitive market conditions with optimal client service.

The increase in financial revenue — to Ps.12,172 million from Ps.11,593 million from the previous year — results mainly from a 16% growth in revenue of Advance America, to Ps.2,780 million, in comparison to Ps.2,393 million a year ago.

Costs and expenses

Consolidated costs for the quarter decreased 8% to Ps.7,457 million, from Ps.8,091 million in the previous year, resulting from a 27% decrease in 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 10% to Ps.8,541 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 64% to Ps.3,518 million this quarter.

Operating income increased 87%, to Ps.2,904 million, from Ps.1,550 million for the same quarter of 2015.

The most significant change below EBITDA was a positive variation of Ps.270 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 loss of Ps.79 million, compared to a net loss of Ps.1,423 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 grew 4% to Ps.68,440 million, from Ps.65,745 million from the previous year. Consolidated delinquency rate was 3.7% at the end of the period, from 9% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 7% to Ps.54,515 million, from Ps.51,174 million a year ago.

The delinquency rate of the bank at the end of the quarter was 2.9%, more than six percentage points lower than the 9.2% from the previous year. The average term of the credit portfolio for principal credit lines – consumer, personal loans and Tarjeta Azteca – was 55 weeks at the end of the second quarter.

The Advance America loan portfolio was Ps.5,111 million, 13% higher than the Ps.4,527 million a year ago.

Grupo Elektra consolidated deposits increased 6% to Ps.103,496 million, from Ps.97,843 million a year ago. Deposits of Banco Azteca Mexico were Ps.97,588 million, 7% higher than the Ps.91,633 million a year ago.

As of June 30, 2016, the estimated capitalization index of Banco Azteca Mexico was 17.9%.

Debt

Consolidated debt with cost as of June 30, 2016, was Ps.18,303 million, from Ps.18,589 million for the prior year.

Consolidated debt was comprised of Ps.15,983 million for the commercial business, and Ps.2,321 million for the financial business. The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.23,482 million at the end of the period; as a result, the net cash commercial balance —excluding debt with cost— is favorable at Ps.7,499 million.

Infrastructure

Grupo Elektra currently has 7,492 points of sale, compared to 8,647 units a year ago. The reduction results from strategies that focus on maximizing the profitability of the units.

The company has 4,555 points of sale in Mexico, 2,208 in the United States, and 729 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.

Six months consolidated results

Total consolidated revenue in the first six months of the year grew 2% to Ps.37,958 million, from Ps.37,034 million for the same period of 2015, boosted mainly by 11% growth in the commercial business.

EBITDA was Ps.6,855 million, 29% higher than the Ps.5,332 million for the same period a year ago; the EBITDA margin in the first six months of 2016 was 18%, four percentage point above the prior year. Operating profit grew 42% to Ps.5,834 million during the period.

The company registered consolidated net income of Ps.1,080 million, compared to a loss of Ps.4,703 million a year ago, mainly due a smaller reduction in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to the prior year.

6M 2015 6M 2016 Change
Ps.%
Consolidated revenue$37,034 $37,958 $924 2%
EBITDA $5,332 $6,855 $1,523 29%
Operating profit$4,099 $ 5,834 $ 1,735 42%
Net result$(4,703)$1,080 $5,782 ----
Net result per share$(20)$4.54 $24.54 ----

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of June 30, 2015, Elektra outstanding shares were 235.1 million and as of June 30, 2016, were 237.9 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.

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
2Q15 2Q16 Change
Financial income 11,593 64% 12,172 62% 580 5%
Commercial income 6,435 36% 7,344 38% 910 14%
Income 18,027 100% 19,517 100% 1,489 8%
Financial cost 3,667 20% 2,673 14% (995) -27%
Commercial cost 4,424 25% 4,784 25% 360 8%
Costs 8,091 45% 7,457 38% (635) -8%
Gross income 9,936 55% 12,060 62% 2,124 21%
Sales, administration and promotion expenses 7,787 43% 8,541 44% 754 10%
EBITDA 2,149 12% 3,518 18% 1,369 64%
Depreciation and amortization 629 3% 643 3% 14 2%
Other income, net (29) 0% (28) 0% 1 5%
Operating Income 1,550 9% 2,904 15% 1,354 87%
Comprehensive financial result:
Interest income 84 0% 162 1% 78 94%
Interest expense (389) -2% (334) -2% 55 14%
Foreign exchange gain, net 36 0% 116 1% 80 222%
Other financial results, net (3,066) -17% (2,796) -14% 270 9%
(3,335) -19% (2,852) -15% 484 14%
Participation in the net income of
CASA and other associated companies (131) -1% (145) -1% (14) -11%
(Loss) income before income tax (1,917) -11% (93) 0% 1,824 95%
Income tax 576 3% 14 0% (562) -98%
(Loss) income before discontinued operations (1,341) -7% (79) 0% 1,261 94%
Result from discontinued operations (82) 0% 1 0% 83 ----
Consolidated net (loss) income (1,423) -8% (79) 0% 1,344 94%


GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
6M15 6M16 Change
Financial income 24,384 66% 23,956 63% (428) -2%
Commercial income 12,650 34% 14,002 37% 1,352 11%
Income 37,034 100% 37,958 100% 924 2%
Financial cost 8,335 23% 4,968 13% (3,367) -40%
Commercial cost 8,616 23% 9,244 24% 628 7%
Costs 16,951 46% 14,212 37% (2,739) -16%
Gross income 20,083 54% 23,745 63% 3,662 18%
Sales, administration and promotion expenses 14,751 40% 16,891 44% 2,140 15%
EBITDA 5,332 14% 6,855 18% 1,523 29%
Depreciation and amortization 1,226 3% 1,188 3% (38) -3%
Other expense (income), net 7 0% (168) 0% (174)----
Operating Income 4,099 11% 5,834 15% 1,735 42%
Comprehensive financial result:
Interest income 198 1% 395 1% 197 100%
Interest expense (725) -2% (662) -2% 63 9%
Foreign exchange gain, net 78 0% 172 0% 94 120%
Other financial results, net (9,811) -26% (4,004) -11% 5,807 59%
(10,260) -28% (4,099) -11% 6,161 60%
Participation in the net income of
CASA and other associated companies (261) -1% (216) -1% 46 18%
(Loss) income before income tax (6,422) -17% 1,519 4% 7,941 ----
Income tax 1,842 5% (438) -1% (2,280)----
(Loss) income before discontinued operations (4,580) -12% 1,082 3% 5,661 ----
Result from discontinued operations (123) 0% (2) 0% 121 98%
Consolidated net (loss) income (4,703) -13% 1,080 3% 5,782 ----


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 June 30, 2015 At June 30, 2016
Cash and cash equivalents 2,685 20,350 23,035 2,011 18,899 20,911 (2,125) -9%
Marketable financial instruments 11,749 52,301 64,050 21,471 53,849 75,321 11,270 18%
Performing loan portfolio - 43,753 43,753 - 48,196 48,196 4,443 10%
Total past-due loans - 5,606 5,606 - 2,473 2,473 (3,134) -56%
Gross loan portfolio - 49,359 49,359 - 50,669 50,669 1,310 3%
Allowance for credit risks - 8,691 8,691 - 6,426 6,426 (2,265) -26%
Loan portfolio, net - 40,668 40,668 - 44,243 44,243 3,575 9%
Inventories 6,261 - 6,261 7,059 - 7,059 798 13%
Other current assets 2,108 6,248 8,356 5,801 9,160 14,962 6,606 79%
Total current assets 22,803 119,567 142,370 36,343 126,151 162,494 20,124 14%
Financial instruments 11,504 251 11,755 8,390 292 8,682 (3,072) -26%
Performing loan portfolio - 16,083 16,083 - 17,686 17,686 1,602 10%
Total past-due loans - 303 303 - 85 85 (217) -72%
Loan portfolio - 16,386 16,386 - 17,771 17,771 1,385 8%
Other non-current assets 1 912 913 - 764 764 (149) -16%
Investment in shares 3,975 - 3,975 3,036 - 3,036 (939) -24%
Property, furniture, equipment and
investment in stores, net 4,106 2,850 6,956 3,674 2,753 6,427 (530) -8%
Intangible assets 547 7,605 8,152 605 5,625 6,229 (1,922) -24%
Other assets 1,112 410 1,521 1,116 571 1,687 165 11%
TOTAL ASSETS 44,048 147,980 192,029 53,163 153,927 207,090 15,062 8%
Demand and term deposits - 97,843 97,843 - 103,496 103,496 5,653 6%
Creditors from repurchase agreements - 3,963 3,963 - 2,818 2,818 (1,145) -29%
Short-term debt 7,634 253 7,887 66 534 599 (7,287) -92%
Short-term liabilities with cost 7,634 102,059 109,693 66 106,848 106,914 (2,779) -3%
Suppliers and other short-term liabilities 7,291 8,210 15,501 16,148 7,150 23,298 7,797 50%
Short-term liabilities without cost 7,291 8,210 15,501 16,148 7,150 23,298 7,797 50%
Total short-term liabilities 14,925 110,269 125,194 16,214 113,998 130,211 5,017 4%
Long-term debt 9,572 1,129 10,702 15,917 1,787 17,704 7,002 65%
Long-term liabilities with cost 9,572 1,129 10,702 15,917 1,787 17,704 7,002 65%
Long-term liabilities without cost 3,319 2,887 6,206 2,028 3,851 5,879 (327) -5%
Total long-term liabilities 12,891 4,016 16,908 17,945 5,639 23,583 6,675 39%
TOTAL LIABILITIES 27,816 114,286 142,102 34,158 119,636 153,794 11,693 8%
TOTAL STOCKHOLDERS' EQUITY 16,232 33,695 49,927 19,005 34,291 53,296 3,369 7%
LIABILITIES + EQUITY 44,048 147,980 192,029 53,163 153,927 207,090 15,062 8%


INFRASTRUCTURE
2Q15 2Q16 Change
Points of sale in Mexico
Elektra 1,017 12% 969 13% (48) -5%
Salinas y Rocha 53 1% 51 1% (2) -4%
Banco Azteca 1,272 15% 1,221 16% (51) -4%
Freestanding branches 2,868 33% 2,314 31% (554) -19%
B-Store 263 3% - 0% (263) -100%
Total 5,473 63% 4,555 61% (918) -17%
Points of sale in Central and South America
Elektra 197 2% 193 3% (4) -2%
Banco Azteca 197 2% 193 3% (4) -2%
Freestanding branches 408 5% 343 5% (65) -16%
Total 802 9% 729 10% (73) -9%
Points of sale in North America
Advance America 2,372 27% 2,208 29% (164) -7%
Total 2,372 27% 2,208 29% (164) -7%
TOTAL 8,647 100% 7,492 100% (1,155) -13%
Floor space (m²) 1,645 100% 1,483 100% (162) -10%
Employees
Mexico 51,577 75% 47,415 76% (4,162) -8%
Central and South America 10,062 15% 8,576 14% (1,486) -15%
North America 6,822 10% 6,219 10% (603) -9%
Total employees 68,461 100% 62,210 100% (6,251) -9%


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