Grupo Elektra Announces 7% Increase in EBITDA to Ps.2,298 Million in 4Q14


—Consolidated revenue increases 9% to Ps.20,510 million, supported by a 29% solid expansion of the commercial business—

—19% growth in consolidated deposits to Ps.93,147 million generates solid perspectives in the financial business—

—Grupo Elektra surpasses 7,000 points of sale milestone in eight countries—

MEXICO CITY, Feb. 24, 2015 (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 fourth quarter, and 2014.

Consolidated fourth quarter results

Consolidated revenue totaled Ps.20,510 million, 9% higher than the Ps.18,881 million of the same period last year. Costs and operating expenses were Ps.18,212 million, from Ps.16,732 million for the same period of 2013.

As a result, Grupo Elektra reported EBITDA of Ps.2,298 million, 7% higher than the Ps.2,150 million of the previous year's quarter; EBITDA margin was 11% this period, same as the previous year.

The company reported net income of Ps.6,785 million, from net income of Ps.1,863 million a year ago.

 
   4Q 2013  4Q 2014  Change
      Ps. %
         
Consolidated revenue $18,881 $20,510 $1,629 9%
         
EBITDA $2,150 $2,298 $149  7%
         
Net result $1,863 $6,785 $4,923 --
         
Net result per share $7.85 $28.7 $20.83 --
 
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of December 31, 2013, Elektra outstanding shares were 237.2 million and as of December 31, 2014, were 236.4 million.

Revenue

Consolidated revenue grew 9%, as a result of an increase of 29% in commercial sales, together with largely unchanged financial revenues. 

Commercial sales —of Ps.7,285 million from Ps.5,627 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 by a highly trained sales force under the most competitive market conditions, as well as solid marketing campaigns for the higher seasonal demand towards year-end.

Financial revenues, of Ps.13,225 million in the quarter, were stable compared to previous year, mainly as a combined result of  higher revenue from Advance America —the largest non-bank provider of cash advance services in the US— and a decrease in revenue from Banco Azteca Mexico.

Costs and expenses

Consolidated costs for the quarter increased 13% to Ps.9,993 million, from Ps.8,856 million from the previous year. The change mainly derives from a 31% increase in commercial cost —in line with the performance of commercial sales— and a 3% reduction in financial cost, resulting from lower interests paid.

Sales, administration and promotion expenses grew 4% to Ps.8,219 million. The increase was below the growth of consolidated revenues due to the implementation of strategies that generated operating efficiencies in the quarter.

EBITDA and net result

Consolidated EBITDA was Ps.2,298 million, compared to Ps.2,150 million a year ago.

The most significant change below EBITDA was a positive variation of Ps.5,899 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.

The other expense line grew Ps.529 million this quarter, due mainly to non-recurring charges coming from assets deterioration.

Grupo Elektra reported net income of Ps.6,785 million, compared to net income of Ps.1,863 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 December 31, 2014, was Ps.75,901 million, compared to Ps.77,103 million from the previous year. Consolidated delinquency rate was 9% at the end of the period.

The gross portfolio of Banco Azteca Mexico was Ps.60,120 million, compared to Ps.62,281 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 9.3%. The non-performing loan portfolio is reserved 1.32 times. The average term of the credit portfolio for principal credit lines —consumer, personal loans and Tarjeta Azteca— was 54 weeks at the end of the fourth quarter.

The Advance America loan portfolio was Ps.5,002 million, 20% higher than the Ps.4,174 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 19%, to Ps.93,147 million, compared to Ps.78,559 million a year ago. Deposits of Banco Azteca Mexico were Ps.87,574 million, 18% higher than the Ps.73,968 million a year ago. Financial products that satisfy clients in the best way, with world class service, resulted in the increase in deposits. The higher deposit base sets a strong foundation for future financial business growth.

As of December 31, 2014, the capitalization index of Banco Azteca Mexico was 14.9%. The company considers the index to be at a level that optimizes equity profitability.

Debt

Consolidated debt with cost as of December 31, 2014, was Ps.18,940 million, 16% below the Ps.22,673 million of the prior year, mainly as a consequence of debt prepayments of Ps.2,772 million for Banco Azteca Mexico this period.

Consolidated debt at the end of December 2014 was comprised of Ps.17,442 million for the commercial business, and Ps.1,498 million for the financial business. The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.19,743 million at the end of the period; as a result, that division has a positive net cash balance —excluding the debt with cost amount— of Ps.2,301 million.

Expansion

Grupo Elektra currently has 7,034 points of sale, 9% more than the 6,479 from a year ago; the change comes mainly from the addition of 293 Blockbuster stores in the period.

As previously announced, the company acquired in January 2014, 100% of the shares of Blockbuster Mexico, increasing the points of sale of Grupo Elektra's distribution network. 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 Blockbuster stores, Grupo Elektra plans to offer commercial products, in addition to strengthening its current financial services platform, and promote the transformation of the entertainment distribution network. The transition to the new formats has begun, which means costs and expenses, but will generate significant yields in the future.

Grupo Elektra has 3,987 points of sale in Mexico, 2,414 in the United States, and 633 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.

Appointment in Banco Azteca

In January, the appointment of Alejandro Valenzuela was announced as CEO of Banco Azteca. Mr. Valenzuela has over 20 years of experience in the financial industry in Mexico, both in the public and private sectors. He was CEO of Grupo Financiero Banorte, and previously, he was Director of International Relations at Banco de Mexico and held strategic positions in the Finance Ministry.

Mr. Valenzuela plans to offer more and better world-class financial services and generate important synergies with the commercial division of Grupo Elektra, which will further drive the continued well-being of millions of families and the progress of businesses in more market segments in Mexico and Latin America.

Alejandro Valenzuela replaces Luis Niño de Rivera, who will become Vice Chairman of Banco Azteca.

Twelve months consolidated results

Total consolidated revenue in 2014 was Ps.74,082 million, 5% higher than the Ps.70,423 million for 2013, as a result of a 17% and 1% growth in the commercial and financial divisions, respectively.

EBITDA was Ps.9,484 million, compared to Ps.9,882 million for the previous year; the EBITDA margin for the year was 13%. The company registered net income of Ps.7,333 million, compared to a net result of Ps.829 million in 2013, mainly due to 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.

 
  2013 2014  Change
      Ps. %
         
Consolidated revenue $70,423 $74,082 $3,659 5%
         
EBITDA $9,882 $9,484 $(398) -4%
         
Net result $829 $7,333 $6,504 --
         
Net result per share $3.49 $31.02 $27.53 --
 
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of December 31, 2013, Elektra outstanding shares were 237.2 million and as of December 31, 2014, were 236.4 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), Totalplay (www.totalplay.com.mx) and Enlace TPE (www.enlacetpe.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
             
  4Q13 4Q14 Change
             
Financial income  13,254 70%  13,225 64%  (30) 0%
Commercial income  5,627 30%  7,285 36%  1,658 29%
Income  18,881 100%  20,510 100%  1,629 9%
             
Financial cost  4,802 25%  4,681 23%  (121) -3%
Commercial cost  4,054 21%  5,312 26%  1,257 31%
Costs  8,856 47%  9,993 49%  1,137 13%
             
Gross income  10,025 53%  10,517 51%  492 5%
             
Sales, administration and promotion expenses  7,876 42%  8,219 40%  343 4%
Depreciation and amortization  875 5%  800 4%  (75) -9%
Operating expenses  8,750 46%  9,018 44%  268 3%
             
EBITDA   2,150 11%  2,298 11%  149 7%
             
Other expense, net  (42) 0%  (572) -3%  (529) --
             
Operating income  1,233 7%  927 5%  (305) -25%
             
Comprehensive financial result:            
 Interest income  173 1%  176 1%  3 2%
 Interest expense  (365) -2%  (391) -2%  (25) -7%
 Foreign exchange gain, net  49 0%  353 2%  304 --
 Other financial results, net  1,472 8%  7,371 36%  5,899 --
   1,329 7%  7,510 37%  6,181 --
             
Participation in the net income of            
CASA and other associated companies  258 1%  53 0%  (204) -79%
             
Income before income tax  2,819 15%  8,490 41%  5,671 201%
             
Income tax  (866) -5%  (1,496) -7%  (630) -73%
             
Income before discontinued operations  1,953 10%  6,994 34%  5,041 --
             
Result from discontinued operations   (90) 0%  (208) -1%  (118) -131%
             
Consolidated net income  1,863 10%  6,785 33%  4,923 --
 
 
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
             
  12M13 12M14 Change
             
Financial income  50,512 72%  50,781 69%  269 1%
Commercial income  19,911 28%  23,300 31%  3,390 17%
Income  70,423 100%  74,082 100%  3,659 5%
             
Financial cost  15,082 21%  16,635 22%  1,553 10%
Commercial cost  13,968 20%  16,109 22%  2,141 15%
Costs  29,050 41%  32,744 44%  3,694 13%
             
Gross income  41,373 59%  41,337 56%  (35) 0%
             
Sales, administration and promotion expenses  31,490 45%  31,853 43%  362 1%
Depreciation and amortization  2,894 4%  2,829 4%  (65) -2%
Operating expenses  34,385 49%  34,682 47%  297 1%
             
EBITDA   9,882 14%  9,484 13%  (398) -4%
             
Other expense, net  (37) 0%  (867) -1%  (830) --
             
Operating Income  6,951 10%  5,789 8%  (1,162) -17%
             
Comprehensive financial result:            
 Interest income  451 1%  481 1%  29 7%
 Interest expense  (1,625) -2%  (1,497) -2%  128 8%
 Foreign exchange (loss) gain, net  (194) 0%  397 1%  591 --
 Other financial results, net  (5,114) -7%  3,966 5%  9,080 178%
   (6,481) -9%  3,347 5%  9,828 152%
             
Participation in the net income expense of            
CASA and other associated companies  289 0%  126 0%  (163) -56%
             
Income before income tax  759 1%  9,262 13%  8,503 --
             
Income tax  (70) 0%  (1,616) -2%  (1,545) --
             
Income before discontinued operations  689 1%  7,647 10%  6,958 --
             
Result from discontinued operations   140 0%  (314) 0%  (454) --
             
Consolidated net income  829 1%  7,333 10%  6,504 --
 
 
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 December 31, 2013 At December 31, 2014  
                 
Cash and cash equivalents  3,302  16,508  19,810  3,810  19,306  23,116  3,306 17%
                 
Marketable financial instruments  13,813  20,564  34,377  15,933  32,915  48,848  14,471 42%
                 
Performing loan portfolio  --  51,568  51,568  --  52,298  52,298  730 1%
Total past-due loans  --  6,027  6,027  --  6,647  6,647  620 10%
Gross loan portfolio  --  57,595  57,595  --  58,945  58,945  1,350 2%
                 
Allowance for credit risks  --  8,643  8,643  --  9,283  9,283  640 7%
                 
Loan portfolio, net  --  48,952  48,952  --  49,662  49,662  710 1%
                 
Inventories  6,043  --  6,043  5,906  --  5,906  (137) -2%
                 
Other current assets   899  8,025  8,924  130  11,039  11,170  2,245 25%
                 
Total current assets  24,058  94,050  118,107  25,779  112,923  138,702  20,595 17%
                 
Financial instruments  10,522  214  10,736  10,647  323  10,970  234 2%
                 
Performing loan portfolio  --  19,293  19,293  --  16,769  16,769  (2,524) -13%
Total past-due loans  --  215  215  --  187  187  (28) -13%
Loan portfolio --  19,508  19,508  --  16,956  16,956  (2,552) -13%
                 
Other non-current assets   6,001  2  6,003  8,398  --  8,398  2,395 40%
                 
Investment in shares  4,317  --  4,317  4,348  --  4,348  31 1%
Property, furniture, equipment and                
 investment in stores, net  4,676  2,958  7,634  4,459  2,916  7,375  (259) -3%
Intangible assets  624  6,687  7,311  565  7,174  7,738  427 6%
Other assets  671  486  1,158  1,002  408  1,411  253 22%
TOTAL ASSETS  50,869  123,905  174,774  55,197  140,701  195,898  21,124 12%
                 
Demand and term deposits  --  78,559  78,559  --  93,147  93,147  14,588 19%
Creditors from repurchase agreements  --  4,170  4,170  --  4,788  4,788  617 15%
Short-term debt  3,341  738  4,079  1,600  207  1,807  (2,272) -56%
Short-term liabilities with cost  3,341  83,467  86,808  1,600  98,142  99,742  12,934 15%
                 
Suppliers and other short-term liabilities  7,680  8,101  15,781  8,213  7,378  15,591  (189) -1%
Short-term liabilities without cost  7,680  8,101  15,781  8,213  7,378  15,591  (189) -1%
                 
Total short-term liabilities  11,021  91,568  102,589  9,813  105,520  115,333  12,744 12%
                 
Long-term debt  14,723  3,871  18,594  15,842  1,291  17,133  (1,462) -8%
Long-term liabilities with cost  14,723  3,871  18,594  15,842  1,291  17,133  (1,462) -8%
                 
Long-term liabilities without cost  6,428  1,262  7,691  6,293  2,391  8,684  993 13%
                 
Total long-term liabilities  21,152  5,133  26,285  22,135  3,682  25,816  (469) -2%
                 
TOTAL LIABILITIES  32,173  96,701  128,874  31,947  109,202  141,149  12,276 10%
                 
TOTAL STOCKHOLDERS' EQUITY  18,696  27,204  45,900  23,250  31,499  54,748  8,848 19%
                 
LIABILITIES + EQUITY  50,869  123,905  174,774  55,197  140,701  195,898  21,124 12%
 
 
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
INFRASTRUCTURE
             
  4Q13 4Q14 Change
             
Points of sale in Mexico            
Elektra (1)  977 15%  990 14%  13 1%
Salinas y Rocha (1)  55 1%  55 1%  -- 0%
Freestanding branches  2,372 37%  2,649 38%  277 12%
Blockbuster --  0%  293 4%  293 100%
Total  3,404 53%  3,987 57%  583 17%
             
Points of sale in Central and South America            
Elektra (1)  205 3%  199 3%  (6) -3%
Freestanding branches  416 6%  434 6%  18 4%
Total  621 10%  633 9%  12 2%
             
Points of sale in North America            
Advance America  2,454 38%  2,414 34%  (40) -2%
Total  2,454 38%  2,414 34%  (40) -2%
             
TOTAL  6,479 100%  7,034 100%  555 9%
             
(1) Each store has a Banco Azteca branch.             
 
             
Floor space (m²)            
Elektra Mexico  841,100 52%  848,600 50%  7,500 1%
Elektra Central and South America  150,162 9%  148,350 9%  (1,812) -1%
Salinas y Rocha  58,995 4%  58,995 3%  -- 0%
Freestanding branches  241,243 15%  243,150 14%  1,906 1%
Advance America  338,000 21%  330,718 19%  (7,282) -2%
Blockbuster --  0%  82,000 5%  82,000 100%
TOTAL  1,629,500 100%  1,711,812 100%  82,312 5%
 
             
Employees            
Mexico  65,460 78%  59,618 77%  (5,842) -9%
Central and South America  12,166 14%  11,100 14%  (1,066) -9%
North America  6,708 8%  7,084 9%  376 6%
Total employees  84,334 100%  77,802 100%  (6,532) -8%


            

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