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Grupo Elektra Announces Revenue of Ps.17,355 Million, and EBITDA of Ps.1,905 Million in 2Q13

—Strong increase in consolidated gross portfolio, grows 27% to Ps.77,085 million—

—The number of credit accounts increases 37% to 18.8 million—

—Current costs and expenses related to the expansion of the credit business will translate into future yields—

MEXICO CITY, July 19, 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 second quarter, and first half of 2013.

Consolidated first quarter results

Consolidated revenue was Ps.17,355 million, up 2% from Ps.17,046 million for the last year. Costs and operating expenses were Ps.15,451 million, from Ps.14,233 million in the same period of 2012.

Grupo Elektra reported EBITDA of Ps.1,905 million, compared to Ps.2,813 million for the previous year; EBITDA margin was 11% this quarter. The company reported a net loss of Ps.1,124 million, from a loss of Ps.19,188 million a year ago.

2Q 2012 2Q 2013 Change
Ps. %
Consolidated revenue $ 17,046 $ 17,355 $ 310 2%
EBITDA $ 2,813 $ 1,905 $ (908) -32%
Net result $ (19,188) $ (1,124) $ 18,064 94%
Net result per share $ (80.86) $ (4.74) $ 76.12 94%
Figures in millions of pesos
*As of June 30, 2012, Elektra outstanding shares were 237.3 million and as of June 30, 2013, were 237.2 million.

Revenue

Consolidated revenue grew 2%, as a result of an increase of 9% in financial revenue and a 13% reduction in commercial sales.

Financial revenue grew to Ps.12,298 million, from Ps.11,260 million last year. The dynamism of Banco Azteca Mexico income significantly contributed to the growth of the financial business. Banco Azteca revenue increased 5%, to Ps.8,403 million from Ps.7,993 million, mainly as a result of an expansion of personal loans, and Presta Prenda credits.

Advance America — the largest non-bank provider of cash advance services in the US— acquired by the company during the second quarter of the previous year, and which consolidates its results in Grupo Elektra's financial statements, also contributed to the increase, with Ps.268 in revenue.

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 66% a year ago.

The decrease in commercial revenue is in the context of removal of low margin products, as well as 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 8% to Ps.6,901 million, from Ps.7,490 million from the previous year. The change mainly derives from a 2% increase in financial cost —to Ps.3,403 million compared to Ps.3,347 million a year ago— and a 16% 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.

Consolidated operating expenses were Ps.8,550 million, compared to Ps.6,743 million for the same quarter of the previous year; the growth is due mainly to increases in operations and personnel 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 will translate into a larger credit portfolio that generates solid benefits in the future.

Grupo Elektra currently has 6,517 points of sale, 11% above the 5,871 from a year ago. This change is mainly due to the opening of 658 new financial services branches— as part of the company's strategy to further strengthen this business segment.

The increase in points of sale, and the further specialization of the sales force resulted in a 12% increase in the number of employees, to 77,473 at the end of the quarter, compared to 69,397 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.1,905 million, compared to Ps.2,813 million a year ago; the EBITDA margin for the quarter was 11%. The major expenses associated to the growth of the credit portfolio contribute to the reduction of EBITDA this quarter, however we anticipate solid returns of that growth of portfolio in the future.

The most significant change below EBITDA was a positive variation of Ps.26,052 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.1,124 million, from net loss of Ps.19,188 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 June 30, 2013, was Ps.77,085 million, 27% higher than the Ps.60,524 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 8.1% at the end of the period.

It is expected that the solid growth of the portfolio will result in significant financial revenues for Grupo Elektra in the future.

The most significant driver of the consolidated gross portfolio was a 24% growth in the gross portfolio of Banco Azteca Mexico, to Ps.62,892 million from Ps.50,626 million.

The delinquency rate of Banco Azteca Mexico at the end of the quarter was 7.9%. The non-performing loan portfolio is reserved 1.3 times.

At the end of the quarter, the bank had a total of 18.8 million active credit accounts, 37% above the 13.7 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 second quarter.

Banco Azteca Mexico deposits were Ps.70,756 million, 21% higher than last year. The total number of active savings and deposit accounts of the bank was 17.7 million, an increase of 20% compared to 14.8 million at the end of the same period a year ago.

As of June 30, 2013, the capitalization index of Banco Azteca Mexico was 14.1%. The company considers the index to be at a level that optimizes equity profitability.

Debt

As of June 30, 2013, consolidated total debt with cost was Ps.22,535 million, of which Ps.18,103 million correspond to the commercial business, and Ps.4,432 million to the financial business.

The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.24,385 million at the end of the period; as a result, net cash for the commercial business –excluding debt with cost– was a positive Ps.6,282 million.

Six months results

Total consolidated revenue in the first six months of the year was Ps.34,927 million, 9% higher than the Ps.32,154 million for the same period of 2012. The company reported EBITDA of Ps.4,955 million, compared to Ps.6,121 million for the same period a year ago; the EBITDA margin in the first six months of 2013 was 14%. The company registered a consolidated net loss of Ps.1,706 million, compared to a loss of Ps.23,021 million a year ago, mainly due to a lower depreciation this period in the market value of underlying financial instruments that the company holds, which doesn't imply cash flow, compared to the prior year.

6M 2012 6M 2013 Change
Ps. %
Consolidated revenue $ 32,154 $ 34,927 $ 2,773 9%
EBITDA $ 6,121 $ 4,955 $ 1,167 -19%
Net result $ (23,021) $ (1,706) $ 21,315 93%
Net result per share $ (97.01) $ (7.19) $ 89.82 93%
Figures in million of pesos.
As of June 30, 2012, Elektra* outstanding shares were 237.3 million and the number of shares as of June 30, 2013 was 237.2 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
2Q12 2Q13 Change
Financial income 11,260 66% 12,298 71% 1,038 9%
Commercial income 5,786 34% 5,057 29% (728) -13%
Income 17,046 100% 17,355 100% 310 2%
Financial cost 3,347 20% 3,403 20% 57 2%
Commercial cost 4,143 24% 3,497 20% (646) -16%
Costs 7,490 44% 6,901 40% (589) -8%
Gross income 9,556 56% 10,455 60% 899 9%
Sales, administration and promotion expenses 6,743 40% 8,550 49% 1,807 27%
Depreciation and amortization 569 3% 656 4% 88 15%
Operating expenses 7,311 43% 9,206 53% 1,895 26%
Operating income 2,244 13% 1,249 7% (996) -44%
EBITDA 2,813 17% 1,905 11% (908) -32%
Comprehensive financial result:
Interest income 473 3% 212 1% (261) -55%
Interest expense (492) -3% (379) -2% 114 23%
Foreign exchange gain, net 43 0% 191 1% 148 ----
Other financial results, net (28,993) -170% (2,942) -17% 26,052 90%
(28,970) -170% (2,917) -17% 26,052 90%
Other income (expense), net 2 0% (3) 0% (5) ----
Participation in the net income of CASA and other associated companies 44 0% 57 0% 13 30%
Loss before income tax (26,680) -157% (1,615) -9% 25,065 94%
Income tax 7,492 44% 491 3% (7,000) -93%
Consolidated net loss (19,188) -113% (1,124) -6% 18,064 94%
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
6M12 6M13 Change
Financial income 20,336 63% 24,766 71% 4,430 22%
Commercial income 11,818 37% 10,161 29% (1,657) -14%
Income 32,154 100% 34,927 100% 2,773 9%
Financial cost 5,955 19% 6,570 19% 615 10%
Commercial cost 8,515 26% 7,110 20% (1,405) -17%
Costs 14,470 45% 13,679 39% (790) -5%
Gross income 17,684 55% 21,248 61% 3,563 20%
Sales, administration and promotion expenses 11,563 36% 16,293 47% 4,730 41%
Depreciation and amortization 1,042 3% 1,318 4% 276 26%
Operating expenses 12,605 39% 17,611 50% 5,006 40%
Operating Income 5,079 16% 3,637 10% (1,442) -28%
EBITDA 6,121 19% 4,955 14% (1,167) -19%
Comprehensive financial result:
Interest income 576 2% 261 1% (315) -55%
Interest expense (917) -3% (799) -2% 118 13%
Foreign exchange loss, net (299) -1% (177) -1% 122 41%
Other financial results, net (36,577) -114% (5,543) -16% 31,034 85%
(37,217) -116% (6,259) -18% 30,959 83%
Other income, net 1 0% 6 0% 5 ----
Participation in the net income expense of CASA and other associated companies 75 0% 55 0% (20) -26%
Loss before income tax (32,062) -100% (2,561) -7% 29,501 92%
Income tax 9,041 28% 855 2% (8,187) -91%
Consolidated net loss (23,021) -72% (1,706) -5% 21,315 93%
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, 2012 At June 30, 2013
Cash and cash equivalents 1,789 14,516 16,305 2,317 16,300 18,617 2,312 14%
Marketable financial instruments 12,464 13,449 25,913 22,068 14,983 37,051 11,138 43%
Performing loan portfolio 426 42,296 42,722 455 51,237 51,692 8,969 21%
Total past-due loans 267 2,757 3,023 273 5,340 5,613 2,590 86%
Gross loan portfolio 693 45,053 45,746 728 56,577 57,305 11,559 25%
Allowance for credit risks 267 5,515 5,781 273 7,917 8,190 2,409 42%
Loan portfolio, net 426 39,538 39,964 455 48,660 49,115 9,151 23%
Inventories 6,723 6,723 6,808 6,808 85 1%
Other current assets 5,885 5,322 11,207 7,721 8,405 16,126 4,919 44%
Total current assets 27,288 72,825 100,113 39,369 88,348 127,718 27,605 28%
Financial instruments 10,751 -- 10,751 -- -- -- (10,751) ----
Performing loan portfolio -- 14,248 14,248 -- 19,183 19,183 4,936 35%
Total past-due loans -- 531 531 -- 597 597 66 12%
Loan portfolio -- 14,778 14,778 -- 19,780 19,780 5,002 34%
Other non-current assets 8,086 -- 8,086 754 0 754 (7,332) ----
Investment in shares 2,547 2,547 3,950 -- 3,950 1,403 55%
Property, furniture, equipment and investment in stores, net 4,192 2,331 6,523 4,576 2,892 7,467 944 14%
Intangible assets 634 7,004 7,637 626 6,594 7,220 (418) -5%
Other assets 443 123 566 736 191 927 361 64%
TOTAL ASSETS 53,940 97,061 151,001 50,011 117,805 167,816 16,815 11%
Demand and term deposits 60,018 60,018 76,803 76,803 16,785 28%
Creditors from repurchase agreements 5,019 5,019 2,314 2,314 (2,704) -54%
Short-term debt 5,505 882 6,387 3,608 3,325 6,933 546 9%
Short-term liabilities with cost 5,505 65,918 71,424 3,608 82,442 86,050 14,627 20%
Suppliers and other short-term liabilities 7,247 5,050 12,298 6,487 7,194 13,681 1,384 11%
Short-term liabilities without cost 7,247 5,050 12,298 6,487 7,194 13,681 1,384 11%
Total short-term liabilities 12,753 70,969 83,721 10,095 89,637 99,732 16,010 19%
Long-term debt 13,778 1,129 14,907 14,495 1,107 15,602 695 5%
Long-term liabilities with cost 13,778 1,129 14,907 14,495 1,107 15,602 695 5%
Long-term liabilities without cost 8,338 1,756 10,095 7,771 1,245 9,016 (1,079) -11%
Total long-term liabilities 22,116 2,886 25,002 22,265 2,352 24,617 (384) -2%
TOTAL LIABILITIES 34,869 73,854 108,723 32,360 91,989 124,349 15,626 14%
TOTAL STOCKHOLDERS' EQUITY 19,071 23,207 42,278 17,651 25,816 43,467 1,189 3%
LIABILITIES + EQUITY 53,940 97,061 151,001 50,011 117,805 167,816 16,815 11%
INFRASTRUCTURE
2Q12 2Q13 Change
Points of sale in Mexico
Elektra (1) 961 16% 968 15% 7 1%
Salinas y Rocha (1) 55 1% 55 1% -- 0%
Freestanding branches (2) 1,825 31% 2,342 36% 517 28%
Total 2,841 48% 3,365 52% 524 18%
Points of sale in Central and South America
Elektra (3) 233 4% 214 3% (19) -8%
Freestanding branches 326 6% 452 7% 126 39%
Total 559 10% 666 10% 107 19%
Points of sale in North America
Advance America 2,471 42% 2,486 38% 15 1%
Total 2,471 42% 2,486 38% 15 1%
TOTAL 5,871 100% 6,517 100% 646 11%
(1) Each store has a Banco Azteca branch.
(2) In 2Q13, includes 46 Bodegas de Remate that continues operating only financial services.
(3) In 2Q13, only 204 Central and South America Elektra's store have a Banco Azteca branch.
Floor space (m²)
Elektra Mexico 831,862 53% 836,625 51% 4,762 1%
Elektra Central and South America 164,482 10% 154,619 9% (9,863) -6%
Salinas y Rocha 58,995 4% 58,995 4% -- 0%
Freestanding branches 188,825 12% 245,960 15% 57,136 30%
Advance America 338,500 21% 340,623 21% 2,123 1%
TOTAL 1,582,664 100% 1,636,821 100% 54,157 3%
Employees
Mexico 52,979 76% 58,578 76% 5,599 11%
Central and South America 10,275 15% 12,566 16% 2,291 22%
North America 6,143 9% 6,329 8% 186 3%
Total employees 69,397 100% 77,473 100% 8,076 12%

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