—Continued increase of Banco Azteca's gross loan portfolio; grows 12% to Ps.63,382 million—
—Solid dynamism in bank deposits; 15% expansion to Ps.70,434 million—
—Strategies to further strengthen financial and commercial businesses will translate into future yields—
MEXICO CITY, Oct. 22, 2013 (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 third quarter, and nine months of 2013.
Consolidated third quarter results
Consolidated revenue was Ps.17,067 million, compared to Ps.18,060 million for the last year. Costs and operating expenses were Ps.14,404 million, 2% below the Ps.14,769 million of the same period of 2012.
Grupo Elektra reported EBITDA of Ps.2,664 million, compared to Ps.3,290 million for the previous year; EBITDA margin was 16% this quarter. The company reported a net income of Ps.672 million, from Ps.1,543 million a year ago.
| 3Q 2012 | 3Q 2013 | Change | ||
| Ps. | % | |||
| Consolidated revenue | $18,060 | $17,067 | $ (992) | -5% |
| EBITDA | $3,290 | $2,664 | $ (627) | -19% |
| Net result | $1,543 | $672 | $ (871) | -56% |
| Net result per share | $6.51 | $2.83 | $ (3.68) | -56% |
| Figures in millions of pesos | ||||
| As of September 30, 2012, Elektra outstanding shares were 237.1 million and as of September 30, 2013, were 237.3 million. | ||||
Revenue
Consolidated revenue fell 5%, as a result of an increase of 6% in financial revenue and a 28% reduction in commercial sales.
Financial revenue grew to Ps.12,690 million, from Ps.11,967 million last year. The development of revenue from Banco Azteca Mexico contributed significantly to the growth of the financial business, increasing 6% to Ps.8,831 million, from Ps.8,300 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 74% in the quarter, compared to 66% a year ago.
The decrease in commercial revenue is in the context of the removal of low-margin products, as well as the reorganization of sales activities, 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.6,758 million, from Ps.6,997 million from the previous year. The change mainly derives from a 46% increase in financial cost —to Ps.3,731 million compared to Ps.2,562 million a year ago— and a 32% reduction in commercial cost, in line with revenue performance.
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 higher interest paid to savers, as a result of a firm increase in traditional deposits.
Consolidated operating expenses were Ps.7,646 million, 2% below the Ps.7,772 million for the same quarter of the previous year; as a result of high operational efficiency in the period.
EBITDA and net result
Consolidated EBITDA was Ps.2,664 million, compared to Ps.3,290 million a year ago; the EBITDA margin for the quarter was 16%.
The most significant change below EBITDA was a decrease of Ps.698 million in other financial results, as a consequence of a larger 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 net income of Ps.672 million, compared to net income of Ps.1,543 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 September 30, 2013, was Ps.77,576 million, 15% higher than the Ps.67,342 million from the previous year, as a result of the growing preference of customers for our credit products, which directly improve quality of life. Consolidated delinquency rate was 7.3% at the end of the period.
The most significant driver of the consolidated gross portfolio was a 12% growth in the gross portfolio of Banco Azteca Mexico, to Ps.63,382 million from Ps.56,730 million.
The delinquency rate of Banco Azteca Mexico at the end of the quarter was 7.2%. The non-performing loan portfolio is reserved 1.4 times. 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 third quarter.
Banco Azteca Mexico deposits were Ps.70,434 million, 15% higher than last year.
Financial products that satisfy client in the best way, with the best market conditions, and with world class service, resulted in strong increases in deposits and credit portfolios, which anticipate strong future yields.
As of September 30, 2013, the capitalization index of Banco Azteca Mexico was 14.3%. The company considers the index to be at a level that optimizes equity profitability.
Debt
As of September 30, 2013, consolidated total debt with cost was Ps.22,543 million, of which Ps.18,513 million correspond to the commercial business, and Ps.4,029 million to the financial business.
The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.25,216 million at the end of the period; as a result, net cash for the commercial business –excluding debt with cost– was a positive Ps.6,703 million.
Expansion
Grupo Elektra currently has 6,460 points of sale, 5% more than the 6,142 from a year ago. The change derives mainly from increases in the number of points of sales for financial services, as part of the company's actions to strengthen this business segment.
There are 3,367 points of sale in Mexico, 2,465 in USA, and 628 in Central and South America. The wide distribution network allows the company to keep its proximity and closeness of clients service; granting superior market positioning in the countries where it operates.
Nine months results
Total consolidated revenue in the first nine months of the year was Ps.51,769 million, 4% higher than the Ps.49,868 million for the same period of 2012. The company reported EBITDA of Ps.7,594 million, compared to Ps.9,426 million for the same period a year ago; the EBITDA margin in the first nine months of 2013 was 15%.
The company registered a consolidated net loss of Ps.1,034 million, compared to a loss of Ps.21,478 million a year ago, mainly due to 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.
| 9M 2012 | 9M 2013 | Change | ||
| Ps. | % | |||
| Consolidated revenue | $49,868 | $51,769 | $1,901 | 4% |
| EBITDA | $9,426 | $7,594 | $ (1,832) | -19% |
| Net result | $ (21,478) | $ (1,034) | $20,444 | 95% |
| Net result per share | $ (90.59) | $ (4.36) | $86.23 | 95% |
| Figures in million of pesos. | ||||
| As of September 30, 2012, Elektra* outstanding shares were 237.1 million and the number of shares as of September 30, 2013 was 237.3 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, 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 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 | ||||||
| 3Q12 | 3Q13 | Change | ||||
| Financial income | 11,967 | 66% | 12,690 | 74% | 723 | 6% |
| Commercial income | 6,093 | 34% | 4,378 | 26% | (1,715) | -28% |
| Income | 18,060 | 100% | 17,067 | 100% | (992) | -5% |
| Financial cost | 2,562 | 14% | 3,731 | 22% | 1,169 | 46% |
| Commercial cost | 4,436 | 25% | 3,027 | 18% | (1,409) | -32% |
| Costs | 6,997 | 39% | 6,758 | 40% | (239) | -3% |
| Gross income | 11,062 | 61% | 10,309 | 60% | (753) | -7% |
| Sales, administration and promotion expenses | 7,772 | 43% | 7,646 | 45% | (126) | -2% |
| Depreciation and amortization | 569 | 3% | 737 | 4% | 168 | 30% |
| Operating expenses | 8,341 | 46% | 8,383 | 49% | 42 | 0% |
| Operating income | 2,721 | 15% | 1,927 | 11% | (794) | -29% |
| EBITDA | 3,290 | 18% | 2,664 | 16% | (627) | -19% |
| Comprehensive financial result: | ||||||
| Interest income | 82 | 0% | 17 | 0% | (65) | -79% |
| Interest expense | (480) | -3% | (460) | -3% | 19 | 4% |
| Foreign exchange loss, net | (2) | 0% | (65) | 0% | (63) | ---- |
| Other financial results, net | (344) | -2% | (1,043) | -6% | (698) | ---- |
| (745) | -4% | (1,552) | -9% | (807) | ---- | |
| Other (expense) income, net | (15) | 0% | 9 | 0% | 25 | ---- |
| Participation in the net income of | ||||||
| CASA and other associated companies | 8 | 0% | (23) | 0% | (32) | ---- |
| Income before income tax | 1,969 | 11% | 361 | 2% | (1,608) | -82% |
| Income tax | (405) | -2% | (63) | 0% | 342 | 84% |
| Income before discontinued operations | 1,564 | 9% | 298 | 2% | (1,266) | -81% |
| (Loss) profit from discontinued operations | (22) | 0% | 374 | 2% | 396 | ---- |
| Consolidated net income | 1,543 | 9% | 672 | 4% | (871) | -56% |
| GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES | ||||||
| CONSOLIDATED INCOME STATEMENTS | ||||||
| MILLIONS OF MEXICAN PESOS | ||||||
| 9M12 | 9M13 | Change | ||||
| Financial income | 32,102 | 64% | 37,258 | 72% | 5,156 | 16% |
| Commercial income | 17,766 | 36% | 14,511 | 28% | (3,255) | -18% |
| Income | 49,868 | 100% | 51,769 | 100% | 1,901 | 4% |
| Financial cost | 8,460 | 17% | 10,280 | 20% | 1,820 | 22% |
| Commercial cost | 12,847 | 26% | 10,108 | 20% | (2,739) | -21% |
| Costs | 21,307 | 43% | 20,388 | 39% | (918) | -4% |
| Gross income | 28,561 | 57% | 31,381 | 61% | 2,819 | 10% |
| Sales, administration and promotion expenses | 19,135 | 38% | 23,787 | 46% | 4,652 | 24% |
| Depreciation and amortization | 1,592 | 3% | 2,044 | 4% | 452 | 28% |
| Operating expenses | 20,727 | 42% | 25,830 | 50% | 5,103 | 25% |
| Operating Income | 7,834 | 16% | 5,550 | 11% | (2,284) | -29% |
| EBITDA | 9,426 | 19% | 7,594 | 15% | (1,832) | -19% |
| Comprehensive financial result: | ||||||
| Interest income | 658 | 1% | 278 | 1% | (380) | -58% |
| Interest expense | (1,396) | -3% | (1,260) | -2% | 136 | 10% |
| Foreign exchange loss, net | (302) | -1% | (243) | 0% | 59 | 20% |
| Other financial results, net | (36,922) | -74% | (6,586) | -13% | 30,336 | 82% |
| (37,961) | -76% | (7,810) | -15% | 30,151 | 79% | |
| Other (expense) income, net | (14) | 0% | 15 | 0% | 29 | ---- |
| Participation in the net income expense of | ||||||
| CASA and other associated companies | 83 | 0% | 32 | 0% | (51) | -62% |
| Loss before income tax | (30,058) | -60% | (2,213) | -4% | 27,845 | 93% |
| Income tax | 8,649 | 17% | 795 | 2% | (7,854) | -91% |
| Loss before discontinued operations | (21,408) | -43% | (1,417) | -3% | 19,991 | 93% |
| (Loss) profit from discontinued operations | (69) | 0% | 383 | 1% | 453 | ---- |
| Consolidated net loss | (21,478) | -43% | (1,034) | -2% | 20,444 | 95% |
| 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 September 30, 2012 | At September 30, 2013 | |||||||
| Cash and cash equivalents | 1,148 | 15,589 | 16,737 | 1,667 | 15,754 | 17,421 | 684 | 4% |
| Marketable financial instruments | 23,351 | 8,773 | 32,125 | 23,549 | 15,891 | 39,440 | 7,316 | 23% |
| Performing loan portfolio | 390 | 47,695 | 48,085 | -- | 52,330 | 52,330 | 4,245 | 9% |
| Total past-due loans | 264 | 3,278 | 3,542 | -- | 5,453 | 5,453 | 1,911 | 54% |
| Gross loan portfolio | 653 | 50,974 | 51,627 | -- | 57,783 | 57,783 | 6,156 | 12% |
| Allowance for credit risks | 266 | 6,048 | 6,314 | -- | 8,128 | 8,128 | 1,814 | 29% |
| Loan portfolio, net | 387 | 44,926 | 45,313 | -- | 49,655 | 49,655 | 4,342 | 10% |
| Inventories | 6,527 | 6,527 | 5,901 | 5,901 | (626) | -10% | ||
| Other current assets | 13,597 | 5,249 | 18,846 | 4,026 | 6,190 | 10,216 | (8,630) | -46% |
| Total current assets | 45,010 | 74,537 | 119,548 | 35,142 | 87,491 | 122,634 | 3,086 | 3% |
| Financial instruments | 111 | 111 | -- | (111) | ---- | |||
| Performing loan portfolio | 51 | 15,213 | 15,264 | 19,605 | 19,605 | 4,341 | 28% | |
| Total past-due loans | 2 | 449 | 451 | 188 | 188 | (263) | -58% | |
| Loan portfolio | 53 | 15,662 | 15,715 | -- | 19,793 | 19,793 | 4,078 | 26% |
| Other non-current assets | 810 | 810 | 4,728 | 2 | 4,730 | 3,920 | ---- | |
| Investment in shares | 2,553 | 2,553 | 3,923 | 3,923 | 1,370 | 54% | ||
| Property, furniture, equipment and | ||||||||
| investment in stores, net | 4,230 | 2,530 | 6,759 | 4,544 | 2,873 | 7,418 | 659 | 10% |
| Intangible assets | 613 | 6,639 | 7,252 | 625 | 6,865 | 7,490 | 238 | 3% |
| Other assets | 665 | 121 | 786 | 696 | 209 | 904 | 119 | 15% |
| TOTAL ASSETS | 53,934 | 99,600 | 153,533 | 49,658 | 117,233 | 166,891 | 13,358 | 9% |
| Demand and term deposits | 62,140 | 62,140 | 76,240 | 76,240 | 14,100 | 23% | ||
| Creditors from repurchase agreements | 4,134 | 4,134 | 2,430 | 2,430 | (1,704) | -41% | ||
| Short-term debt | 5,534 | 685 | 6,219 | 3,725 | 2,325 | 6,051 | (168) | -3% |
| Short-term liabilities with cost | 5,534 | 66,960 | 72,494 | 3,725 | 80,996 | 84,721 | 12,227 | 17% |
| Suppliers and other short-term liabilities | 7,395 | 6,070 | 13,465 | 6,062 | 6,389 | 12,451 | (1,014) | -8% |
| Short-term liabilities without cost | 7,395 | 6,070 | 13,465 | 6,062 | 6,389 | 12,451 | (1,014) | -8% |
| Total short-term liabilities | 12,929 | 73,029 | 85,959 | 9,787 | 87,385 | 97,172 | 11,214 | 13% |
| Long-term debt | 13,481 | 1,123 | 14,604 | 14,788 | 1,704 | 16,492 | 1,888 | 13% |
| Long-term liabilities with cost | 13,481 | 1,123 | 14,604 | 14,788 | 1,704 | 16,492 | 1,888 | 13% |
| Long-term liabilities without cost | 8,288 | 1,577 | 9,865 | 7,684 | 1,378 | 9,062 | (803) | -8% |
| Total long-term liabilities | 21,769 | 2,700 | 24,469 | 22,472 | 3,082 | 25,554 | 1,085 | 4% |
| TOTAL LIABILITIES | 34,699 | 75,729 | 110,428 | 32,259 | 90,467 | 122,726 | 12,299 | 11% |
| TOTAL STOCKHOLDERS' EQUITY | 19,235 | 23,871 | 43,106 | 17,399 | 26,766 | 44,165 | 1,059 | 2% |
| LIABILITIES + EQUITY | 53,934 | 99,600 | 153,533 | 49,658 | 117,233 | 166,891 | 13,358 | 9% |
| GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES | ||||||
| INFRASTRUCTURE | ||||||
| 3Q12 | 3Q13 | Change | ||||
| Points of sale in Mexico | ||||||
| Elektra (1) | 968 | 16% | 968 | 15% | -- | 0% |
| Salinas y Rocha (1) | 55 | 1% | 55 | 1% | -- | 0% |
| Freestanding branches | 2,108 | 34% | 2,344 | 36% | 236 | 11% |
| Total | 3,131 | 51% | 3,367 | 52% | 236 | 8% |
| Points of sale in Central and South America | ||||||
| Elektra (1) | 230 | 4% | 202 | 3% | (28) | -12% |
| Freestanding branches | 372 | 6% | 426 | 7% | 54 | 15% |
| Total | 602 | 10% | 628 | 10% | 26 | 4% |
| Points of sale in North America | ||||||
| Advance America | 2,409 | 39% | 2,465 | 38% | 56 | 2% |
| Total | 2,409 | 39% | 2,465 | 38% | 56 | 2% |
| TOTAL | 6,142 | 100% | 6,460 | 100% | 318 | 5% |
| (1) Each store has a Banco Azteca branch. | ||||||
| Floor space (m²) | ||||||
| Elektra Mexico | 834,904 | 52% | 836,625 | 52% | 1,720 | 0% |
| Elektra Central and South America | 162,346 | 10% | 148,632 | 9% | (13,714) | -8% |
| Salinas y Rocha | 58,995 | 4% | 58,995 | 4% | -- | 0% |
| Freestanding branches | 213,820 | 13% | 241,272 | 15% | 27,451 | 13% |
| Advance America | 330,007 | 21% | 337,745 | 21% | 7,739 | 2% |
| TOTAL | 1,600,073 | 100% | 1,623,268 | 100% | 23,196 | 1% |
| Employees | ||||||
| Mexico | 58,597 | 78% | 61,064 | 77% | 2,467 | 4% |
| Central and South America | 10,648 | 14% | 12,071 | 15% | 1,423 | 13% |
| North America | 6,056 | 8% | 6,522 | 8% | 466 | 8% |
| Total employees | 75,301 | 100% | 79,657 | 100% | 4,356 | 6% |