×

Grupo Elektra Announces 21% Growth in Operating Profit to Ps.3,595 Million in 1Q17

EBITDA increases 18% to Ps.4,134 million during the period—

—Notable performance in both commercial and financial businesses generates increase of 21% in consolidated revenues, to Ps.22,006 million—

Gross portfolio of Banco Azteca Mexico grew 32%, to Ps.66,530 million—

—Deliquency rate of Banco Azteca Mexico
decreases more than one percentage point, to 2.5%—

MEXICO CITY, May 02, 2017 (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 2017.

Consolidated first quarter results

Consolidated revenue was Ps.22,006 million, 21% above the Ps.18,254 million for the same quarter of last year. Costs and operating expenses were Ps.17,872 million, compared to Ps.14,750 million for the same period of 2016.

As a result, Grupo Elektra reported EBITDA of Ps.4,134 million, 18% higher than the Ps.3,504 million of the previous year’s quarter; EBITDA margin was 19% this period, similar to that of the previous year.

Operating profit grew 21% to Ps.3,595 million during the quarter, from Ps.2,978 million in same period of 2016.

The company reported net income of Ps.4,501 million, compared to net income of Ps.1,158 million a year ago.

1Q 20161Q 2017 Change
Ps.%
Consolidated revenue$18,254$22,006$3,75321%
EBITDA $3,504$4,134$630 18%
Operating profit$2,978$ 3,595$61721%
Net result$1,158$4,501$3,342----
Net result per share$4.86$19.4$14.54----
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of March 31, 2016, Elektra* outstanding shares were 238.4 million and as of March 31, 2017, were 232 million.

Revenue

Consolidated revenue increased 21%, as a result of growth of 22% and 18% in financial revenues and commercial sales, respectively.

The increase in commercial division sales ̶ to Ps.7,637 million compared to Ps.6,470 million last year ̶ reflects 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 increase in financial revenue ̶ to Ps.14,369 million from Ps.11,783 million from the previous year ̶ results mainly from a 24% growth in revenue of Banco Azteca Mexico and a 9% increase in revenue from Advance America.

Costs and expenses

Consolidated costs for the quarter increased 19% to Ps.7,758 million, from Ps.6,523 million in the previous year, as a result of a 21% increase in commercial costs, in line with the performance of commercial revenue, and a 13% growth in financial cost. The increase in financial cost is less than the increase in financial revenue, which reflects a moderate growth in provisions for loan losses, in line with greater strength in asset quality.

Sales, administration and promotion expenses increased 23% to Ps.10,114 million, as a result of higher personnel expenses due to higher compensation plans that encourage productivity; an increase in advertising, which achieves a better positioning of Grupo Elektra brands, and an increase in operating expenses.

EBITDA and net result

Consolidated EBITDA grew 18% to Ps.4,134 million this quarter. Operating income increased 21% to Ps.3,595 million, from Ps.2,978 million for the same quarter of 2016.

The most significant change below EBITDA was a positive variation of Ps.5,071 million in other financial results, as a consequence of a gain this period in the market value of the underlying assets of financial instruments owned by the company –which does not imply cash flow– compared to a reduction of the previous year.

Grupo Elektra reported a net result of Ps.4,501 million, compared to a net result of Ps.1,158 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, 2017 grew 28% to Ps.81,247 million, from Ps.63,707 million for the previous year. Consolidated delinquency rate was 3.2% at the end of the period, compared to 4.7% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 32% to Ps.66,530 million, from Ps.50,499 million a year ago.

The delinquency rate for the bank at the end of the quarter was 2.5%, more than one percentage point lower than the 3.9% from the previous year. The average term of the credit portfolio for principal credit lines – consumer, personal loans and Tarjeta Azteca – was 62 weeks at the end of the first quarter.

The Advance America loan portfolio was Ps.4,401 million, 2% higher than the Ps.4,302 million a year ago.

Grupo Elektra consolidated deposits increased 4% to Ps.105,703 million, from Ps.101,223 million a year ago. Deposits of Banco Azteca Mexico were Ps.102,509 million, 6% higher than the Ps.96,470 million a year ago.

As of March 31, 2017, the capitalization index of Banco Azteca Mexico was 17.3%.

Debt

Consolidated debt with cost as of March 31, 2017, was Ps.13,026 million, 25% less in comparison to Ps.17,276 million for the prior year.

Consolidated debt was comprised of Ps.11,035 million for the commercial business, and Ps.1,991 million for the financial business. The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.10,845 million at the end of the period; as a result, net debt is Ps.190 million.

As previously announced, during the period, Grupo Elektra paid in advance its senior notes of US$550 million due in 2018.

To cover the payments, Grupo Elektra issued three certificates in local currency for a total of Ps.6,000 million and used cash generated by the company, within the framework of solid financial performance.

These debt transactions reflect Grupo Elektra's firm strategy to further strengthen its strong capital structure; through these transactions, the company no longer holds US dollar denominated bonds.

Infrastructure

Grupo Elektra currently has 7,391 points of contact, compared to 7,671 units a year ago. The reduction is a result of strategies to focus on maximizing profitability of units.

The company has 4,612 points of contact in Mexico, 2,100 in the United States, and 679 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 more than 7,000 points of contact in Mexico, the United States, 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 building 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 America (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
1Q16 1Q17 Change
Financial income11,783 65% 14,369 65% 2,585 22%
Commercial income6,470 35% 7,637 35% 1,167 18%
Income 18,254 100% 22,006 100% 3,753 21%
Financial cost2,295 13% 2,601 12% 306 13%
Commercial cost4,228 23% 5,157 23% 929 22%
Costs 6,523 36% 7,758 35% 1,235 19%
Gross income 11,731 64% 14,248 65% 2,517 21%
Sales, administration and promotion expenses 8,227 45% 10,114 46% 1,887 23%
EBITDA 3,504 19% 4,134 19% 630 18%
Depreciation and amortization540 3% 537 2% (4)-1%
Other (income) expense, net(15)0% 2 0% 17 ----
Operating income 2,978 16% 3,595 16% 617 21%
Comprehensive financial result:
Interest income234 1% 148 1% (86)-37%
Interest expense (328)-2% (468)-2% (140)-43%
Foreign exchange gain (loss), net 56 0% (936)-4% (992)----
Other financial results, net(1,208)-7% 3,863 18% 5,071 ----
(1,247)-7% 2,606 12% 3,853 ----
Participation in the net income of
CASA and other associated companies(71)0% 66 0% 136 ----
Income before income tax 1,661 9% 6,267 28% 4,606 277%
Income tax(451)-2% (1,760)-8% (1,309)-290%
Income before discontinued operations 1,209 7% 4,507 20% 3,297 273%
Result from discontinued operations(51)0% 2 0% 53 ----
Impairment of intangible assets- 0% (8)0% (8)----
Consolidated net income 1,158 6% 4,501 20% 3,342 289%

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, 2016 At March 31, 2017
Cash and cash equivalents1,78121,21022,991 2,19920,757 22,956 (35)0%
Marketable financial instruments21,79253,24575,037 8,64645,829 54,474 (20,563)-27%
Performing loan portfolio-44,98944,989 -53,866 53,866 8,877 20%
Total past-due loans-2,9272,927 -2,474 2,474 (453)-15%
Gross loan portfolio-47,91747,917 -56,341 56,341 8,424 18%
Allowance for credit risks-6,6986,698 -6,732 6,732 34 1%
Loan portfolio, net-41,21941,219 -49,609 49,609 8,390 20%
Inventories6,571-6,571 7,389- 7,389 818 12%
Other current assets 6,0367,40813,444 8,6828,606 17,287 3,843 29%
Total current assets 36,179 123,082 159,262 26,916 124,800 151,715 (7,547)-5%
Financial instruments7,4982697,767 16,806302 17,109 9,342 120%
Performing loan portfolio-15,70415,704 -24,793 24,793 9,088 58%
Total past-due loans-8585 -113 113 28 33%
Loan portfolio-15,79015,790 -24,906 24,906 9,116 58%
Other non-current assets 142765906 102673 774 (132)-15%
Investment in shares3,138-3,138 2,796(0)2,796 (341)-11%
Property, furniture, equipment and
investment in stores, net3,6642,7206,384 3,7232,793 6,515 131 2%
Intangible assets6005,2505,850 6626,330 6,992 1,142 20%
Other assets1,2504031,653 1,019403 1,422 (231)-14%
TOTAL ASSETS 52,471 148,279 200,749 52,024 160,206 212,230 11,481 6%
Demand and term deposits-101,223101,223 -105,703 105,703 4,479 4%
Creditors from repurchase agreements-4,0534,053 -3,555 3,555 (498)-12%
Short-term debt84317400 3,2841,022 4,306 3,906 976%
Short-term liabilities with cost84105,593105,677 3,284110,280 113,564 7,887 7%
Suppliers and other short-term liabilities12,4366,85919,295 12,1989,614 21,812 2,517 13%
Short-term liabilities without cost12,4366,85919,295 12,1989,614 21,812 2,517 13%
Total short-term liabilities 12,519 112,453 124,972 15,482 119,894 135,376 10,404 8%
Long-term debt15,4311,44516,876 7,751969 8,720 (8,156)-48%
Long-term liabilities with cost15,4311,44516,876 7,751969 8,720 (8,156)-48%
Long-term liabilities without cost3,0232,9545,978 3,7593,724 7,483 1,506 25%
Total long-term liabilities 18,454 4,399 22,853 11,510 4,693 16,203 (6,650)-29%
TOTAL LIABILITIES 30,974 116,852 147,825 26,992 124,587 151,579 3,754 3%
TOTAL STOCKHOLDERS' EQUITY 21,497 31,427 52,924 25,032 35,619 60,651 7,727 15%
LIABILITIES + EQUITY 52,471 148,279 200,749 52,024 160,206 212,230 11,481 6%

INFRASTRUCTURE
1Q16 1Q17 Change
Points of sale in Mexico
Elektra 96813% 1,00014% 32 3%
Salinas y Rocha 511% 491% (2)-4%
Banco Azteca 1,22216% 1,24417% 22 2%
Freestanding branches 2,35931% 2,31931% (40)-2%
B-Store 1432% - 0% (143)-100%
Total 4,743 62% 4,612 62% (131)-3%
Points of sale in Central and South America
Elektra 1692% 1642% (5)-3%
Banco Azteca 1692% 1642% (5)-3%
Freestanding branches 3404% 3515% 11 3%
Total 678 9% 679 9% 1 0%
Points of sale in North America
Advance America 2,25029% 2,10028% (150)-7%
Total 2,250 29% 2,100 28% (150)-7%
TOTAL 7,671 100% 7,391 100% (280)-4%
Floor space (m²) 1,516 100% 1,502 100% (14)-1%
Employees
Mexico 47,59176% 50,32178% 2,730 6%
Central and South America 8,62614% 8,62413% (2)0%
North America 6,38210% 5,9219% (461)-7%
Total employees 62,599 100% 64,866 100% 2,267 4%

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@elektra.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