Grupo Elektra Announces Revenue of Ps.17,257 Million and EBITDA of Ps.2,562 Million in 1Q14

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| Source: Grupo Elektra SAB de CV

—Solid dynamism in consolidated bank deposits; growing 15% to Ps.82,363 million—

—Continued increase of gross loan portfolio; 5% expansion to Ps.76,828 million—

—Strategies to further strengthen financial and commercial businesses are expected to translate into future yields—

MEXICO CITY, April 29, 2014 (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 2014.

Consolidated first quarter results

Consolidated revenue was Ps.17,257 million, compared to Ps.17,453 million for the same period last year. Costs and operating expenses were Ps.14,695 million from Ps.14,399 million for the same period of 2013.

Grupo Elektra reported EBITDA of Ps.2,562 million, compared to Ps.3,054 million for the previous year's quarter; EBITDA margin was 15% this quarter. The company reported a net loss of Ps.175 million, from a net loss of Ps.582 million a year ago.

 
   1Q 2013  1Q 2014  Change
      Ps. %
         
Consolidated revenue $17,453 $17,257 $(196) -1%
         
EBITDA $3,054 $2,562 $(492)  -16%
         
Net result  $(582) $(175) $407 70%
         
Net result per share $(2.45) $(0.74) $1.71 70%
 

Figures in millions of pesos

As of March 31, 2013, Elektra outstanding shares were 237.2 million and as of March 31, 2014, were 237.3 million.

Revenue

Consolidated revenue fell 1%, as a result of a reduction of 2% in financial revenue and a 1% increase in commercial sales.

Financial revenue grew to Ps.12,103 million, from Ps.12,364 million last year, in line with the performance of Banco Azteca Mexico income that totaled Ps.8,251 million from Ps.8,262 million in the same quarter a year ago.

The increase in commercial revenue comes from growing customer satisfaction, through an optimal mix of merchandise on the sales floor, which is offered in the most competitive market conditions. This, together with actions to further strengthen service in the store, will drive additional merchandise business.

Costs and expenses

Consolidated costs for the quarter increased 5% to Ps.7,060 million, from Ps.6,750 million from the previous year. The change mainly derives from a 14% increase in financial cost —to Ps.3,598 million compared to Ps.3,153 million a year ago— and a 4% reduction in commercial cost.

The change in financial cost mainly resulted from the creation of loan loss reserves—in the context of growth of the consolidated portfolio; as well as more interest paid to savers, as a result of a strong increase in traditional deposits.

Consolidated operating expenses were Ps.7,635 million, practically without change when compared to Ps.7,649 million for the same quarter of the previous year.

EBITDA and net result

Consolidated EBITDA was Ps.2,562 million, compared to Ps.3,054 million a year ago; the EBITDA margin for the quarter was 15%.

The most significant change below EBITDA was a positive Ps.613 million in other financial results, as a consequence of a lesser decrease 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 loss of Ps.175 million, from net loss of Ps.582 million a year ago.

Consolidated balance sheet

Loan portfolio and deposits

Banco Azteca Mexico, Advance America —the largest non-bank provider of cash advance services in the US— and Banco Azteca Latin America's consolidated gross portfolio as of March 31, 2014, was Ps.76,828 million, 5% higher than the Ps.73,400 million the previous year, a result of the preference of customers for our credit products, which directly improve quality of life. Consolidated delinquency rate was 8.3% at the end of the period, from 8.4% a year ago.

The gross portfolio of Banco Azteca Mexico was Ps.62,961 million, compared to Ps.62,273 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 8.5%. The non-performing loan portfolio is reserved 1.3 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 first quarter.

The Advance America loan portfolio was Ps.3,310 million, 8% higher than the Ps.3,060 million a year ago. More dynamism in the operations of the company is expected with the successful launch of title loans in a growing number of points of sale in the U.S.

Grupo Elektra consolidated deposits grew 15%, to Ps.82,363 million, compared to Ps.71,717 million a year ago. Deposits of Banco Azteca Mexico were Ps.76,405 million, 8% higher from Ps.70,594 million a year ago.

Financial products that satisfy clients in the best way, with world class service, resulted in the increase in deposits and credit portfolios, which anticipate strong future yields.

As of March 31, 2014, the capitalization index of Banco Azteca Mexico was 13.4%. The company considers the index to be at a level that optimizes equity profitability.

Debt

As of March 31, 2014, consolidated total debt with cost was Ps.22,444 million, of which Ps.18,060 million correspond to the commercial business, and Ps.4,384 million to the financial business.

The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.15,446 million at the end of the period; as a result, net debt for the commercial business was Ps.2,614 million.

Expansion

Grupo Elektra currently has 6,849 points of sale, 4% more than 6,580 from a year ago; the change comes from the addition of 327 Blockbuster stores during the period. 

As previously announced, the company acquired 100% of the shares of Blockbuster Mexico on January 2014, which added points of sale to the distribution network of Grupo Elektra. The Blockbuster stores are located in 108 cities throughout the country, mainly located in the B and C demographic areas, which will expand the customer base of the company. In the new locations, Grupo Elektra plans to offer commercial products, in addition to strengthening its current financial services platform, and promote the transformation of the digital entertainment distribution network.

Grupo Elektra has 3,781 points of sale in Mexico, 2,446 in the United States, and 622 in Central and South America. The wide distribution network allows the company to keep its proximity and closeness to clients; granting superior market positioning in the countries where it operates.

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
             
  1Q13 1Q14 Change
             
Financial income  12,364 71%  12,103 70%  (261) -2%
Commercial income  5,088 29%  5,154 30%  65 1%
Income  17,453 100%  17,257 100%  (196) -1%
             
Financial cost  3,153 18%  3,598 21%  445 14%
Commercial cost  3,597 21%  3,463 20%  (134) -4%
Costs  6,750 39%  7,060 41%  310 5%
             
Gross income  10,703 61%  10,197 59%  (506) -5%
             
Sales, administration and promotion expenses  7,649 44%  7,635 44%  (14) 0%
Depreciation and amortization  656 4%  656 4%  (0) 0%
Operating expenses  8,304 48%  8,290 48%  (14) 0%
             
Operating income  2,398 14%  1,906 11%  (492) -21%
             
EBITDA   3,054 17%  2,562 15%  (492) -16%
             
Comprehensive financial result:            
Interest income  49 0%  128 1%  79 --
Interest expense  (420) -2%  (378) -2%  42 10%
Foreign exchange (loss) gain, net  (368) -2%  83 0%  451 --
Other financial results, net  (2,601) -15%  (1,988) -12%  613 24%
   (3,340) -19%  (2,155) -12%  1,185 35%
             
Other income (expense), net  9 0%  (6) 0%  (16) --
             
Participation in the net income of            
CASA and other associated companies  (2) 0%  (37) 0%  (35) --
             
Loss before income tax  (934) -5%  (291) -2%  643 69%
             
Income tax  363 2%  116 1%  (247) -68%
             
Loss before discontinued operations  (571) -3%  (175) -1%  396 69%
             
Loss from discontinued operations   (11) 0%  --  0%  11 --
             
Consolidated net loss  (582) -3%  (175) -1%  407 70%
             
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, 2013 At March 31, 2014  
                 
Cash and cash equivalents  3,819  15,475  19,294  2,983  18,069  21,052  1,758 9%
Marketable financial instruments  23,154  13,002  36,156  12,463  20,870  33,333  (2,823) -8%
                 
Performing loan portfolio  224  49,675  49,898  --   50,277  50,277  378 1%
Total past-due loans  263  5,353  5,616  --   6,194  6,194  578 10%
Gross loan portfolio  487  55,028  55,515  --   56,471  56,471  956 2%
                 
Allowance for credit risks  264  8,055  8,319  --   8,735  8,735  416 5%
                 
Loan portfolio, net  223  46,973  47,196  --   47,737  47,737  540 1%
                 
Inventories  7,071    7,071  6,139    6,139  (931) -13%
                 
Other current assets   9,299  8,295  17,593  3,358  8,166  11,524  (6,069) -34%
                 
Total current assets  43,565  83,745  127,310  24,943  94,841  119,785  (7,526) -6%
                 
Financial instruments  --   --   --   10,507  200  10,708  10,708 --
                 
Performing loan portfolio  236  17,128  17,364    20,142  20,142  2,778 16%
Total past-due loans  1  520  521    215  215  (306) -59%
Loan portfolio  237  17,648  17,885  --   20,357  20,357  2,472 14%
                 
Other non-current assets   844  168  1,013  4,385  2  4,387  3,374 --
                 
Investment in shares  3,893  --   3,893  4,240    4,240  347 9%
Property, furniture, equipment and                
 investment in stores, net  4,087  2,862  6,949  4,765  2,897  7,662  713 10%
Intangible assets  544  6,295  6,839  623  6,615  7,239  399 6%
Other assets  760  387  1,148  1,024  614  1,637  489 43%
TOTAL ASSETS  53,932  111,105  165,037  50,488  125,526  176,014  10,977 7%
                 
Demand and term deposits    71,717  71,717    82,363  82,363  10,646 15%
Creditors from repurchase agreements    2,709  2,709    3,490  3,490  782 29%
Short-term debt  9,163  2,872  12,036  4,150  518  4,668  (7,367) -61%
Short-term liabilities with cost  9,163  77,299  86,462  4,150  86,372  90,522  4,060 5%
                 
Suppliers and other short-term liabilities  6,798  6,124  12,922  8,578  6,637  15,215  2,293 18%
Short-term liabilities without cost  6,798  6,124  12,922  8,578  6,637  15,215  2,293 18%
                 
Total short-term liabilities  15,961  83,422  99,384  12,728  93,009  105,737  6,353 6%
                 
Long-term debt  10,633  1,112  11,745  13,910  3,866  17,776  6,031 51%
Long-term liabilities with cost  10,633  1,112  11,745  13,910  3,866  17,776  6,031 51%
                 
Long-term liabilities without cost  8,562  949  9,511  5,757  1,259  7,016  (2,495) -26%
                 
Total long-term liabilities  19,196  2,060  21,256  19,667  5,124  24,791  3,536 17%
                 
TOTAL LIABILITIES  35,157  85,482  120,640  32,395  98,133  130,528  9,889 8%
                 
TOTAL STOCKHOLDERS' EQUITY  18,775  25,623  44,397  18,093  27,393  45,486  1,088 2%
                 
LIABILITIES + EQUITY  53,932  111,105  165,037  50,488  125,526  176,014  10,977 7%
                 
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
INFRASTRUCTURE
             
  1Q13 1Q14 Change
             
Points of sale in Mexico            
Elektra (1)  967 15%  988 14%  21 2%
Salinas y Rocha (1)  55 1%  55 1%  -- 0%
Freestanding branches  2,387 36%  2,411 35%  24 1%
Blockbuster  --  0%  327 5%  327 100%
Total  3,409 52%  3,781 55%  372 11%
             
Points of sale in Central and South America            
Elektra (1)  217 3%  215 3%  (2) -1%
Freestanding branches  447 7%  407 6%  (40) -9%
Total  664 10%  622 9%  (42) -6%
             
Points of sale in North America            
Advance America  2,507 38%  2,446 36%  (61) -2%
Total  2,507 38%  2,446 36%  (61) -2%
             
TOTAL  6,580 100%  6,849 100%  269 4%
             
(1) Each store has a Banco Azteca branch.             
 
             
Floor space (m²)            
Elektra Mexico  836,259 51%  843,900 48%  7,640 1%
Elektra Central and South America  156,125 10%  151,891 9%  (4,234) -3%
Salinas y Rocha  58,995 4%  58,995 3%  -- 0%
Freestanding branches  246,437 15%  241,389 14%  (5,048) -2%
Advance America  343,500 21%  335,142 19%  (8,358) -2%
Blockbuster  --  0%  110,000 6%  110,000 100%
TOTAL  1,641,316 100%  1,741,316 100%  100,000 6%
 
             
Employees            
Mexico  59,278 76%  67,516 79%  8,238 14%
Central and South America  12,610 16%  11,327 13%  (1,283) -10%
North America  6,348 8%  6,666 8%  318 5%
Total employees  78,236 100%  85,509 100%  7,273 9%
             
Investor Relations
Bruno Rangel
Grupo Salinas
Tel. +52 (55) 1720-9167


Rolando Villarreal
Grupo Elektra S.A.B. de C.V.
Tel. +52 (55) 1720-9167


Press Relations
Luciano Pascoe
Grupo Salinas
Tel. +52 (55) 1720 1313 ext. 36553


Daniel McCosh
Grupo Salinas
Tel. +52 (55) 1720-0059