Grupo Elektra Announces 12% Increase in EBITDA to Ps.2,104 Million in 2Q14

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| Source: Grupo Elektra SAB de CV

—Operating Income grows 16% to Ps.1,427 million in the quarter—

—Consolidated revenue increases 6% to Ps.18,265 million, supported by an 11% expansion of the commercial business—

MEXICO CITY, July 24, 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 second quarter of 2014.

Consolidated second quarter results

Consolidated revenue totaled Ps.18,265 million, 6% higher than the Ps.17,249 million of the same period last year. Costs and operating expenses were Ps.16,161 million from Ps.15,372 million for the same period of 2013.

Grupo Elektra reported EBITDA of Ps.2,104 million, 12% above the Ps.1,876 million of the previous year's quarter; EBITDA margin was 12% this period, a percentage point above the second quarter of 2013. Operating income grew 16%, to Ps.1,427 million this period.

The company reported a net loss of Ps.1,114 million, from a net loss of Ps.1,124 million a year ago.

 
  2Q 2013 2Q 2014 Change
      Ps. %
         
Consolidated revenue  $ 17,249  $ 18,265  $ 1,017 6%
         
EBITDA  $ 1,876  $ 2,104  $ 228 12%
         
Net result  $ (1,124)  $ (1,114)  $ 10 1%
         
Net result per share  $ (4.74)  $ (4.72)  $ (0.02) 1%
 
Figures in millions of pesos 
As of June 30, 2013, Elektra outstanding shares were 237.2 million and as of June 30, 2014, were 235.8 million.

Revenue

Consolidated revenue grew 6%, as a result of increases of 11% in commercial sales and 4% in financial revenues.

Commercial sales, of Ps.5,597 million from Ps.5,045 million last year, increased as a result of strategies that generate growing customer satisfaction through an optimal mix of merchandise on the sales floor, which is offered in the most competitive market conditions by a professional sales force.

The growth of 4% in financial revenues to Ps.12,668 million, compared to Ps.12,204 million last year, is explained mainly by a 5% increase of Banco Azteca Mexico income to Ps.8,830 million, from Ps.8,403 million in the same quarter a year ago.

Costs and expenses

Consolidated costs for the quarter grew 13% to Ps.7,783 million, from Ps.6,880 million the previous year. The change derives from individual increases of 13% in both commercial and financial costs.

The commercial cost grew in line with the performance of revenues of the business. Meanwhile, the increase in financial cost resulted from the creation of loan loss reserves, as well as more interest paid to savers as a result of a strong increase in traditional deposits.

Consolidated operating expenses decreased 1% to Ps.8,378 million in the period, as a result of strategies that generate operating efficiencies during the quarter.

EBITDA and net result

Consolidated EBITDA grew 12% to Ps.2,104 million, compared to Ps.1,876 million a year ago; EBITDA margin for the quarter was 12%, above the 11% of the same period last year.

Operating income was Ps.1,427 million, 16% higher than the Ps.1,225 million of the previous year.

The most significant change below EBITDA was a positive variation of Ps.381 million in other financial results, as a consequence of an improvement 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 a net loss of Ps.1,114 million, from a net loss of Ps.1,124 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 June 30, 2014, was Ps.77,204 million, compared to Ps.77,085 million from the previous year. Consolidated delinquency rate was 8.1% at the end of the period, the same as a year ago.

The gross portfolio of Banco Azteca Mexico was Ps.63,382 million, compared to Ps.62,892 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 7.9%. The non-performing loan portfolio is reserved 1.35 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 second quarter.

The Advance America loan portfolio was Ps.4,035 million, 11% higher than the Ps.3,638 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 11%, to Ps.85,027 million, compared to Ps.76,803 million a year ago. Deposits of Banco Azteca Mexico were Ps.79,800 million, 13% higher than the Ps.70,756 million a year ago. Financial products that satisfy clients in the best way, with world class service, resulted in the increase in deposits.

As of June 30, 2014, 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

Consolidated debt with cost as of June 30, 2014, was Ps.19,173 million, 15% below Ps.22,535 million of the prior year, mainly as a consequence of debt prepayments of Ps.2,172 million of Banco Azteca Mexico this quarter.

Consolidated debt at the close of July 2014 was comprised of Ps.17,273 million of the commercial business, and Ps.1,901 million of the financial business. The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.14,783 million at the end of the period; as a result, net debt for the commercial business was Ps.2,490 million.

Expansion

Grupo Elektra currently has 6,872 points of sale, 5% more than the 6,517 from a year ago; the change comes from the addition of 326 Blockbuster stores at the beginning of 2014. 

As previously announced, the company acquired 100% of the shares of Blockbuster Mexico in January, which added points of sale to the distribution network of Grupo Elektra. The Blockbuster stores are located in 108 cities throughout the country, mainly 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 3,804 points of sale in Mexico, 2,440 in the United States, and 628 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.

Six months results

Total consolidated revenue in the first six months of the year was Ps.35,523 million, 2% higher than the Ps.34,701 million for the same period of 2013, boosted by a 6% growth from the commercial business.

EBITDA was Ps.4,666 million, compared to Ps.4,930 million for the same period a year ago; the EBITDA margin in the first six months of 2014 was 13%. The company registered a consolidated net loss of Ps.1,289 million, compared to a loss of Ps.1,706 million a year ago, mainly due an improvement 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 2013  6M 2014  Change
      Ps. %
         
Consolidated revenue  $ 34,701  $ 35,523 $821 2%
         
EBITDA  $ 4,930  $ 4,666 ($264) -5%
         
Net result  $ (1,706)  $ (1,289) $417 24%
         
Net result per share  $ (7.19)  $ (5.47) $1.72 24%
 
Figures in millions of pesos 
As of June 30, 2013, Elektra outstanding shares were 237.2 million and as of June 30, 2014, were 235.8 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
             
  2Q13 2Q14 Change
             
Financial income  12,204 71%  12,668 69%  465 4%
Commercial income  5,045 29%  5,597 31%  552 11%
Income  17,249 100%  18,265 100%  1,017 6%
             
Financial cost  3,396 20%  3,855 21%  458 13%
Commercial cost  3,484 20%  3,928 22%  444 13%
Costs  6,880 40%  7,783 43%  903 13%
             
Gross income  10,368 60%  10,483 57%  114 1%
             
Sales, administration and promotion expenses  8,492 49%  8,378 46%  (114) -1%
Depreciation and amortization  651 4%  677 4%  27 4%
Operating expenses  9,143 53%  9,056 50%  (87) -1%
             
Operating income  1,225 7%  1,427 8%  202 16%
             
EBITDA  1,876 11%  2,104 12%  228 12%
             
Comprehensive financial result:            
Interest income  212 1%  88 0%  (125) -59%
Interest expense  (380) -2%  (387) -2%  (7) -2%
Foreign exchange gain, net  191 1%  33 0%  (157) -83%
Other financial results, net  (2,942) -17%  (2,560) -14%  381 13%
   (2,918) -17%  (2,826) -15%  92 3%
             
Other expense, net  (3) 0%  (269) -1%  (266) ----
             
Participation in the net income of            
CASA and other associated companies  57 0%  48 0%  (9) -16%
             
Loss before income tax  (1,639) -10%  (1,620) -9%  19 1%
             
Income tax  491 3%  507 3%  15 3%
             
Loss before discontinued operations  (1,148) -7%  (1,114) -6%  34 3%
             
Loss from discontinued operations  24 0% 0%  (24) ----
             
Consolidated net loss  (1,124) -7%  (1,114) -6%  10 1%
             
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
             
  6M13 6M14 Change
             
Financial income  24,568 71%  24,772 70%  204 1%
Commercial income  10,133 29%  10,751 30%  618 6%
Income  34,701 100%  35,523 100%  821 2%
             
Financial cost  6,549 19%  7,452 21%  903 14%
Commercial cost  7,081 20%  7,391 21%  310 4%
Costs  13,630 39%  14,843 42%  1,213 9%
             
Gross income  21,071 61%  20,679 58%  (392) -2%
             
Sales, administration and promotion expenses  16,141 47%  16,013 45%  (128) -1%
Depreciation and amortization  1,307 4%  1,333 4%  27 2%
Operating expenses  17,448 50%  17,346 49%  (101) -1%
             
Operating Income  3,624 10%  3,333 9%  (290) -8%
             
EBITDA  4,930 14%  4,666 13%  (264) -5%
             
Comprehensive financial result:            
Interest income  261 1%  216 1%  (45) -17%
Interest expense  (799) -2%  (765) -2%  35 4%
Foreign exchange (loss) gain, net  (177) -1%  117 0%  294 ----
Other financial results, net  (5,543) -16%  (4,548) -13%  995 18%
   (6,259) -18%  (4,981) -14%  1,278 20%
             
Other income (expense), net  6 0%  (275) -1%  (281) ----
             
Participation in the net income expense of            
CASA and other associated companies  55 0%  11 0%  (44) -80%
             
Loss before income tax  (2,574) -7%  (1,912) -5%  662 26%
             
Income tax  855 2%  623 2%  (232) -27%
             
Loss before discontinued operations  (1,719) -5%  (1,289) -4%  431 25%
             
Loss from discontinued operations  13 0%  -  0%  (13) ----
             
Consolidated net loss  (1,706) -5%  (1,289) -4%  417 24%
                 
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, 2013 At June 30, 2014    
                 
Cash and cash equivalents  2,317  16,300  18,617  2,785  15,644  18,429  (188) -1%
                 
Marketable financial instruments  22,068  14,983  37,051  11,998  24,351  36,349  (703) -2%
                 
Performing loan portfolio  455  51,237  51,692  -   52,773  52,773  1,081 2%
Total past-due loans  273  5,340  5,613  -   5,875  5,875  262 5%
Gross loan portfolio  728  56,577  57,305  -   58,648  58,648  1,343 2%
                 
Allowance for credit risks  273  7,917  8,190  -   8,670  8,670  480 6%
                 
Loan portfolio, net  455  48,660  49,115  -   49,978  49,978  864 2%
                 
Inventories  6,808    6,808  6,390    6,390  (418) -6%
                 
Other current assets  7,721  8,405  16,126  3,654  6,459  10,113  (6,013) -37%
                 
Total current assets  39,369  88,348  127,718  24,828  96,432  121,260  (6,458) -5%
                 
Financial instruments  -   9,814  222  10,037  10,037 ----
                 
Performing loan portfolio  -   19,183  19,183    18,210  18,210  (973) -5%
Total past-due loans  -   597  597    345  345  (251) -42%
Loan portfolio  -   19,780  19,780  -   18,556  18,556  (1,224) -6%
                 
Other non-current assets  754  0  754  2,418  1  2,418  1,664 ----
                 
Investment in shares  3,950  -   3,950  4,420  -   4,420  470 12%
Property, furniture, equipment and            
investment in stores, net  4,576  2,890  7,466  4,816  2,839  7,654  188 3%
Intangible assets  626  6,595  7,221  629  6,537  7,166  (55) -1%
Other assets  736  191  927  659  682  1,341  413 45%
TOTAL ASSETS  50,011  117,805  167,816  47,584  125,268  172,852  5,036 3%
                 
                 
Demand and term deposits  76,803  76,803    85,027  85,027  8,225 11%
Creditors from repurchase agreements  2,314  2,314    2,792  2,792  478 21%
Short-term debt  3,608  3,325  6,933  3,783  493  4,275  (2,658) -38%
Short-term liabilities with cost  3,608  82,442  86,050  3,783  88,312  92,095  6,045 7%
                 
Suppliers and other short-term liabilities  6,487  7,194  13,681  9,751  6,130  15,881  2,200 16%
Short-term liabilities without cost  6,487  7,194  13,681  9,751  6,130  15,881  2,200 16%
                 
Total short-term liabilities  10,095  89,637  99,732  13,534  94,442  107,976  8,245 8%
                 
Long-term debt  14,495  1,107  15,602  13,490  1,408  14,898  (704) -5%
Long-term liabilities with cost  14,495  1,107  15,602  13,490  1,408  14,898  (704) -5%
                 
Long-term liabilities without cost  7,771  1,245  9,016  4,578  1,294  5,872  (3,144) -35%
                 
Total long-term liabilities  22,265  2,352  24,617  18,068  2,702  20,770  (3,848) -16%
                 
TOTAL LIABILITIES  32,360  91,989  124,349  31,602  97,144  128,746  4,397 4%
                 
TOTAL STOCKHOLDERS' EQUITY  17,651  25,816  43,467  15,982  28,124  44,106  639 1%
                 
LIABILITIES + EQUITY  50,011  117,805  167,816  47,584  125,268  172,852  5,036 3%
             
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
INFRASTRUCTURE
             
  2Q13 2Q14 Change
             
Points of sale in Mexico            
Elektra (1)  968 15%  993 14%  25 3%
Salinas y Rocha (1)  55 1%  55 1%  -- 0%
Freestanding branches  2,342 36%  2,430 35%  88 4%
Blockbuster  --  0%  326 5%  326 100%
Total  3,365 52%  3,804 55%  439 13%
             
Points of sale in Central and South America            
Elektra (1)  214 3%  215 3%  1 0%
Freestanding branches  452 7%  413 6%  (39) -9%
Total  666 10%  628 9%  (38) -6%
             
Points of sale in North America            
Advance America  2,486 38%  2,440 36%  (46) -2%
Total  2,486 38%  2,440 36%  (46) -2%
             
TOTAL  6,517 100%  6,872 100%  355 5%
             
(1) Each store has a Banco Azteca branch.            
 
             
Floor space (m²)            
Elektra Mexico  836,625 51%  845,412 49%  8,787 1%
Elektra Central and South America  154,619 9%  151,891 9%  (2,728) -2%
Salinas y Rocha  58,995 4%  58,995 3% - 0%
Freestanding branches  245,960 15%  240,234 14%  (5,727) -2%
Advance America  340,623 21%  334,320 19%  (6,303) -2%
Blockbuster 0%  109,664 6%  109,664 100%
TOTAL  1,636,821 100%  1,740,514 100%  103,693 6%
 
             
Employees            
Mexico  58,578 76%  62,242 77%  3,664 6%
Central and South America  12,566 16%  11,324 14%  (1,242) -10%
North America  6,329 8%  6,848 9%  519 8%
Total employees  77,473 100%  80,414 100%  2,941 4%
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