—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% |