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Grupo Elektra Reports 8% Decrease in EBITDA, to Ps.3,050 Million

—Firm expansion of credit business generates immediate costs and expenses, setting the stage for future profitability—

—The company surpasses 6,500 points of sale in Mexico, the United States, Central and South America—

—Firm increase of consolidated gross portfolio, grows 49%, to Ps.73,400 million—

MEXICO CITY, April 23, 2013 (GLOBE NEWSWIRE) -- Grupo Elektra, S.A.B. de C.V. (BMV:ELEKTRA*) (Latibex:XEKT), Latin America's leading financial services company and specialty retailer and the largest non-bank provider of cash advance services in the United States, reported today its financial results for the first quarter of 2013 .

Consolidated first quarter results

Consolidated income was Ps.17,572 million, up 16% from Ps.15,108 million for the last year. Costs and operating expenses were Ps.14,522 million, from Ps.11,800 million in the same period of 2012.

Grupo Elektra reported EBITDA of Ps.3,050 million, compared to Ps.3,308 million for the previous year; EBITDA margin was 17% this quarter. The company reported a net loss of Ps.582 million, from a loss of Ps.3,832 million a year ago.

1Q 2012 1Q 2013 Change
Ps. %
Consolidated revenue $15,108 $17,572 $2,463 16%
EBITDA $3,308 $3,050 $(258) -8%
Net result $(3,832) $(582) $3,250 85%
Net result per share $(15.84) $(2.45) $13.39 85%
Figures in millions of pesos
*As of March 31, 2012, Elektra outstanding shares were 241.9 million and as of March 31, 2013, were 237.2 million.

Income

Consolidated income grew 16%, as a result of a solid increase of 37% in financial income and a 15% reduction in commercial sales.

Financial income grew to Ps.12,468 million, from Ps.9,076 million last year. Advance America contributed to this increase with Ps.2,071 million; as previously announced, Grupo Elektra acquired Advance America —the largest non-bank provider of cash advance services in the US— in April of 2012, and consolidates the company's results in Grupo Elektra's financial statements.

The dynamism of Banco Azteca Mexico income also contributed with the growth of the financial business. Banco Azteca income increased 8%, to Ps.8,262 million from Ps.7,650 million, mainly as a result of an expansion of personal loans, and Presta Prenda credits.

The continuous growth of the financial business translates into a robust proportion of financial income in the consolidated revenue, representing 71% in the quarter, compared to 60% a year ago.

The decrease in commercial income is in the context of reorganization in the commercialization of products, seeking to provide superior customer attention, as well as specialized service on the sales floor; building the basis for future sales growth.

Costs and expenses

Consolidated costs for the quarter decreased 3% to Ps.6,779 million, from Ps.6,980 million from the previous year. The change mainly derives from a 21% increase in financial cost — to Ps.3,166 million compared to Ps.2,608 million a year ago — and a 17% reduction in commercial cost, in line with the performance of the revenue.

The change in financial cost mainly resulted from the creation of loan loss reserves—in the context of significant growth of the consolidated portfolio—as well as from the registration of the costs of Advance America, which added Ps.217 million this period.

Consolidated operating expenses were Ps.7,743 million, compared to Ps.4,820 million for the same quarter of the previous year; the growth is due mainly to increases in personnel and operating expenses derived from the expansion of the financial business — in the context of a higher number of Elektra Dinero financial services branches. This expansion has related expenses; nevertheless they are expected to generate solid benefits in the future. The increase in expenses also reflects the consolidation of the expenses of Advance America for the period.

Grupo Elektra currently has 6,580 points of sale, compared to 2,989 a year ago. This change is mainly due to the acquisition of Advance America, which added 2,507 points of sale to the company this period. Additionally, 1,084 financial services branches were opened, mainly Elektra Dinero –as part of the company's strategy to further strengthen this business segment.

The increase in points of sale represents a 36% growth in the exhibition area of Grupo Elektra, which together with the further specialization of the sales force resulted in a 35% increase in the number of employees, to 78,236 at the end of the quarter, compared to 58,093 a year ago. This generates more proximity to the clients, as well as superior attention, which can be anticipated will result in outstanding dynamism in the commercialization of financial services and goods in the future.

EBITDA and net result

Consolidated EBITDA was Ps.3,050 million, compared to Ps.3,308 million a year ago; the EBITDA margin for the quarter was 17%.

The most significant change below EBITDA was a positive variation of Ps.4,983 million in other financial results, as a consequence of the valuation of financial instruments owned by the company – which does not imply cash flow – that was more favorable for this quarter, compared to last year.

Grupo Elektra reported net loss of Ps.582 million, from net loss of Ps.3,832 million a year ago.

Consolidated balance sheet

Loan portfolio and deposits

Banco Azteca Mexico, Advance America and Banco Azteca and Elektrafin Latin America's consolidated gross portfolio as of March 31, 2013, was Ps.73,400 million, 49% higher than the Ps. 49,287 million the previous year, a result of the growing preference of customers for our credit products, which directly improve quality of life. Consolidated delinquency rate was 8.4% at the end of the period.

The most significant driver of the consolidated gross portfolio was a 45% growth in the gross portfolio of Banco Azteca Mexico, to Ps.62,273 million from Ps.43,023 million. The gross portfolio of Advance America as of March 31, 2013, totaled Ps.3,060 million.

The delinquency rate of Banco Azteca Mexico at the end of the quarter was 8.2%. The non-performing loan portfolio is reserved 1.3 times.

At the end of the quarter, the bank had a total of 18.6 million active credit accounts, 35% above of 13.8 million from the previous year. The large customer base is an important strength of the bank that further reduces credit risk. The average term of the credit portfolio for principal credit lines – consumer, personal loans and Tarjeta Azteca – was 60 weeks at the end of the first quarter.

Banco Azteca Mexico deposits were Ps.70,594 million, 21% higher than last year. The total number of active savings and deposit accounts of the bank was 17 million, an increase of 27% compared to 13.4 million at the end of the same period a year ago.

As of March 31, 2013, the capitalization index of Banco Azteca Mexico was 13.9%. The company considers the index to be at a level that optimizes equity profitability.

Debt

As of March 31, 2013, consolidated total debt with cost was Ps.23,781 million, of which Ps.19,796 million correspond to the commercial business, and Ps.3,984 million to the financial business.

The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.26,973 million at the end of the period; as a result, net cash for the commercial business –excluding debt with cost– was a positive Ps.7,177 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 6,000 points of sale in Mexico, USA, Brazil, Guatemala, Honduras, Peru, Panama, El Salvador and Argentina.

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 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) and Grupo Iusacell (www.iusacell.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.

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
1Q12 1Q13 Change
Financial income 9,076 60% 12,468 71% 3,392 37%
Commercial income 6,033 40% 5,104 29% (929) -15%
Income 15,108 100% 17,572 100% 2,463 16%
Financial cost 2,608 17% 3,166 18% 558 21%
Commercial cost 4,372 29% 3,612 21% (759) -17%
Costs 6,980 46% 6,779 39% (201) -3%
Gross income 8,128 54% 10,793 61% 2,664 33%
Sales, administration and promotion expenses 4,820 32% 7,743 44% 2,923 61%
Depreciation and amortization 474 3% 662 4% 188 40%
Operating expenses 5,294 35% 8,405 48% 3,111 59%
Operating income 2,835 19% 2,388 14% (447) -16%
EBITDA 3,308 22% 3,050 17% (258) -8%
Comprehensive financial result:
Interest income 103 1% 49 0% (55) -53%
Interest expense (425) -3% (421) -2% 4 1%
Foreign exchange loss, net (342) -2% (368) -2% (26) -7%
Other financial results, net (7,584) -50% (2,601) -15% 4,983 66%
(8,247) -55% (3,341) -19% 4,906 59%
Other (expense) income, net (0) 0% 9 0% 9 --
Participation in the net income of CASA and other associated companies 31 0% (2) 0% (33) --
Loss before income tax (5,382) -36% (946) -5% 4,436 82%
Income tax 1,550 10% 363 2% (1,186) -77%
Consolidated net loss (3,832) -25% (582) -3% 3,250 85%
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, 2012 At March 31, 2013
Cash and cash equivalents 1,805 14,288 16,093 3,819 15,475 19,294 3,201 20%
Marketable financial instruments 19,789 17,047 36,836 23,154 13,002 36,156 (680) -2%
Performing loan portfolio 356 34,026 34,383 224 49,675 49,898 15,516 45%
Total past-due loans 222 2,173 2,394 263 5,353 5,616 3,222 135%
Gross loan portfolio 578 36,199 36,777 487 55,028 55,515 18,738 51%
Allowance for credit risks 228 4,067 4,294 264 8,055 8,319 4,024 94%
Loan portfolio, net 350 32,133 32,483 223 46,973 47,196 14,713 45%
Inventories 7,053 7,053 7,071 7,071 17 0%
Other current assets 3,649 6,685 10,334 9,299 8,295 17,593 7,259 70%
Total current assets 32,645 70,154 102,799 43,565 83,745 127,310 24,511 24%
Financial instruments 13,300 13,300 -- (13,300) -100%
Performing loan portfolio 12,484 12,484 236 17,128 17,364 4,880 39%
Total past-due loans 158 158 1 520 521 363 230%
Loan portfolio -- 12,510 12,510 237 17,648 17,885 5,375 43%
Other non-current assets 36,069 32 36,100 844 168 1,013 (35,088) -97%
Investment in shares 2,599 14 2,613 3,893 3,893 1,280 49%
Property, furniture, equipment and investment in stores, net 4,123 1,563 5,686 4,087 2,862 6,949 1,264 22%
Intangible assets 653 -- 653 544 6,295 6,839 6,186 947%
Other assets 385 104 489 760 387 1,148 659 135%
TOTAL ASSETS 89,774 84,375 174,149 53,932 111,105 165,037 (9,112) -5%
Demand and term deposits 55,291 55,291 71,717 71,717 16,427 30%
Creditors from repurchase agreements 9,385 9,385 2,709 2,709 (6,676) -71%
Short-term debt 3,442 -- 3,442 9,163 2,872 12,036 8,594 250%
Short-term liabilities with cost 3,442 64,676 68,118 9,163 77,299 86,462 18,344 27%
Suppliers and other short-term liabilities 7,130 6,098 13,228 6,798 6,124 12,922 (306) -2%
Short-term liabilities without cost 7,130 6,098 13,228 6,798 6,124 12,922 (306) -2%
Total short-term liabilities 10,572 70,774 81,346 15,961 83,422 99,384 18,038 22%
Long-term debt 10,484 1,097 11,581 10,633 1,112 11,745 164 --
Long-term liabilities with cost 10,484 1,097 11,581 10,633 1,112 11,745 164 --
Long-term liabilities without cost 16,295 683 16,978 8,562 949 9,511 (7,467) --
Total long-term liabilities 26,779 1,780 28,559 19,196 2,060 21,256 (7,303) --
TOTAL LIABILITIES 37,351 72,554 109,905 35,157 85,482 120,640 10,734 10%
TOTAL STOCKHOLDERS' EQUITY 52,423 11,821 64,244 18,775 25,623 44,397 (19,847) -31%
LIABILITIES + EQUITY 89,774 84,375 174,149 53,932 111,105 165,037 (9,112) -5%
INFRASTRUCTURE
1Q12 1Q13 Change
Points of sale in Mexico
Elektra (1) 952 32% 967 15% 15 2%
Salinas y Rocha (1) 55 2% 55 1% -- 0%
Freestanding branches (2) 1,450 49% 2,387 36% 937 65%
Total 2,457 82% 3,409 52% 952 39%
Points of sale in Central and South America
Elektra (3) 232 8% 217 3% (15) -6%
Freestanding branches 300 10% 447 7% 147 49%
Total 532 18% 664 10% 132 25%
Points of sale in North America
Advance America -- -- 2,507 38% 2,507 --
Total -- -- 2,507 38% 2,507 --
TOTAL ��2,989 100% 6,580 100% 3,591 --
(1) Each store has a Banco Azteca branch.
(2) In 1Q13, includes 45 Bodegas de Remate that continues operating only financial services.
(3) In 1Q13, only 206 Central and South America Elektra's store have a Banco Azteca branch.
Floor space (m²)
Elektra Mexico 824,390 69% 836,259 51% 11,869 1%
Elektra Central and South America 163,755 14% 156,125 10% (7,630) -5%
Salinas y Rocha 58,995 5% 58,995 4% -- 0%
Freestanding branches 156,247 13% 246,437 15% 90,189 58%
Advance America -- 0% 343,500 21% 343,500 --
TOTAL 1,203,387 100% 1,641,316 100% 437,929 36%
Employees
Mexico 48,644 84% 59,278 76% 10,634 22%
Central and South America 9,449 16% 12,610 16% 3,161 33%
North America -- -- 6,348 8% 6,348 --
Total employees 58,093 100% 78,236 100% 20,143 35%

CONTACT: 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 Jaime Ramos Grupo Salinas + 52 (55) 1720 1416 jramosr@tvazteca.com.mx Daniel McCosh Grupo Salinas Tel. +52 (55) 1720-0059 dmccosh@gruposalinas.com.mxSource:Grupo Elektra SAB de CV