Solid Progress in the Construction of Red Dorsal Nacional de Perú, Which Will Cover Close to 80% of the Country, With 13,400 Kilometers of Fiber Optics
Colombian Operations Have Associated Costs But Will Generate Solid Yields in the Future
MEXICO CITY, July 23, 2015 (GLOBE NEWSWIRE) -- TV Azteca, S.A.B. de C.V. (BMV:AZTECA) (Latibex:XTZA), one of the two largest producers of Spanish-language television programming in the world, announced today financial results for the second quarter and first half of 2015.
Second quarter results
Net sales for the quarter were Ps.2,982 million compared to Ps.3,253 million for the same quarter of last year. Total costs and expenses were Ps.2,576 million, from Ps.2,341 million for the same period last year.
As a result, Azteca reported EBITDA of Ps.406 million, compared to Ps.912 million from last year; EBITDA margin for the quarter was 14%. The company registered a net loss of Ps.630 million, compared to a net profit of Ps.276 million for the same quarter of 2014.
| 2Q 2014 | 2Q 2015 | Change | ||
| Ps. | % | |||
| Net sales | $3,253 | $2,982 | $(271) | -8% |
| EBITDA | $912 | $406 | $(506) | -56% |
| Net result | $276 | $(630) | $(906) | -- |
| Net result per CPO | $0.09 | $(0.21) | $(0.30) | -- |
Figures in millions of pesos.
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
The number of CPOs outstanding as of June 30, 2014 was 2,986 million and as of June 30, 2015 was 2,985 million.
Net sales
Domestic ad sales were Ps.2,496 million, compared to Ps.3,007 million from the previous year. The reduction results mainly from extraordinary revenues a year ago related to the World Cup soccer tournament in Brazil.
In addition, the company registered sales from Azteca America—the company's wholly-owned broadcast television network focused on the U.S. Hispanic market—of Ps.261 million this quarter, a 31% increase compared to Ps.199 million a year ago.
Content sales to other countries were Ps.44 million in the quarter, from Ps.17 million from the previous year. The revenue was directly related to the export of programs Caminos de Guanajuato and Así en el barrio como en el cielo in Central and South America, as well as from the sale of Azteca's pay TV channels to the rest of the world.
Revenues from Azteca Guatemala and Azteca Honduras were Ps.11 million, compared to Ps.9 million from the previous year.
Sales from Azteca Comunicaciones Colombia –derived from telecommunications revenues through the fiber-optic network operating in that country– were Ps.170 million, from Ps.21 million a year ago.
Costs and expenses
Costs and expenses increased 10% as a result of an 11% growth in production, programming, transmission and telecommunication service costs —to Ps.2,171 million, from Ps.1,947 million in the same period a year ago— and a 3% increase in selling and administrative expenses —to Ps.405 million, compared to Ps.394 million in the same quarter of 2014.
The increase in costs during the period is due mainly to the company´s telecommunication operations in Colombia. Costs related to those operations were Ps.303 million in the quarter, compared to Ps.34 million of the previous year, and include paid rents for transmitting towers and spaces to operate telecommunications nodes, as well as installation, maintenance and operation of the network. The company expects the Colombian operations to generate solid yields in the future.
The increase in selling and administrative expenses reflects bigger advisory expenses in the quarter.
EBITDA and net result
EBITDA was Ps.406 million, in comparison to Ps.912 million in the same period of the prior year.
The most significant change below EBITDA was a Ps.363 million increase in the comprehensive financing result, mainly derived from a foreign exchange loss for the period compared to a gain in the same quarter a year ago.
The company registered a net loss of Ps.630 million for the quarter, compared to a net gain of Ps.276 million for the same period a year ago.
Debt
As of June 30, 2015, Azteca's outstanding debt —excluding Ps.1,439 million debt due in 2069—was Ps.13,534 million. The cash balance of the company was Ps.5,304 million. As a result, net debt was Ps.8,230 million at the end of the quarter.
Fiber-optic network in Peru
During the quarter, Azteca Comunicaciones Peru —a subsidiary of Azteca— has concluded 2,321 kilometers of fiber optics, of a total of 13,400 kilometers that will be deployed in the Red Dorsal Nacional de Fibra Óptica of the country.
As previously announced, in December 2013 Azteca won a tender to construct and operate a fiber-optic network that will offer telecommunications services in approximately 80% of Peruvian territory. Construction of the network started last December, and has an estimated time of 18 months. Azteca will commercialize the telecommunications services in 339 communities, through a 20-year concession.
Azteca offers world-class telecommunications, effectively driving the wellbeing of the population and productivity in business. The company also successfully built and operates the largest fiber optic network in Latin America, in Colombia.
Six months results
Net sales for the first six months of 2015 were Ps.5,527 million, 5% less than the Ps.5,793 million for the same period of 2014. Total costs and expenses were Ps.4,740 million, from Ps.4,354 million for the same period of the previous year. The increase in costs mainly derives from the start of the operating stage of Azteca Comunicaciones Colombia.
Azteca reported EBITDA of Ps.788 million, compared to Ps.1,439 million for the first half a year ago; EBITDA margin was 14% for the six-month period. The company recorded a net loss of Ps.1,306 million, compared to net profit of Ps.99 million for the same period of 2014.
| 6M 2014 | 6M 2015 | Change | ||
| Ps. | % | |||
| Net sales | $5,793 | $5,527 | $(266) | -5% |
| EBITDA | $1,439 | $788 | $(652) | -45% |
| Net results | $99 | $(1,306) | $(1,405) | -- |
| Net results per CPO | $0.03 | $(0.44) | $(0.47) | -- |
Figures in millions of pesos.
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
The number of CPOs outstanding as of June 30, 2014 was 2,986 million and as of June 30, 2015 was 2,985 million.
Company Profile
Azteca is one of the two largest producers of Spanish-language television programming in the world, operating two national television networks in Mexico, El trece and Azteca 7, through more than 300 owned and operated stations across the country. Azteca affiliates include Azteca US, a broadcast television network focused on the rapidly growing U.S. Hispanic market, and Azteca Web, an Internet company for North American Spanish speakers.
Azteca 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, 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 Azteca and its subsidiaries are identified in documents sent to securities authorities.
| TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES | |||||||||
| CONSOLIDATED RESULTS OF OPERATIONS | |||||||||
| (Millions of Mexican pesos of June 30 of 2014 and 2015 ) | |||||||||
| Second Quarter of : | |||||||||
| 2014 | 2015 | ||||||||
| Change | |||||||||
| Net revenue | Ps | 3,253 | 100% | Ps | 2,982 | 100% | Ps | (271) | -8% |
| Programming, production and transmission costs | 1,947 | 60% | 2,171 | 73% | 224 | 11% | |||
| Selling and administrative expenses | 394 | 12% | 405 | 14% | 11 | 3% | |||
| Total costs and expenses | 2,341 | 72% | 2,576 | 86% | 235 | 10% | |||
| EBITDA | 912 | 28% | 406 | 14% | (506) | -56% | |||
| Depreciation and amortization | 177 | 169 | (8) | ||||||
| Other expense -Net | 111 | 151 | 41 | ||||||
| Operating profit | 624 | 19% | 85 | 3% | (539) | -86% | |||
| Equity in income from affiliates | (3) | 9 | 12 | ||||||
| Comprehensive financing result: | |||||||||
| Interest expense | (243) | (306) | (63) | ||||||
| Other financing expense | (17) | (25) | (7) | ||||||
| Interest income | 46 | 31 | (16) | ||||||
| Exchange loss -Net | 58 | (218) | (277) | ||||||
| (155) | (518) | (363) | |||||||
| Income before the following provision | 466 | 14% | (424) | -14% | (890) | -191% | |||
| Provision for income tax | (193) | (211) | (18) | ||||||
| Net income | Ps | 273 | Ps | (635) | Ps | (908) | |||
| Non-controlling share in net profit | Ps | (4) | Ps | (6) | Ps | (2) | |||
| Controlling share in net profit | Ps | 276 | 8% | Ps | (630) | -21% | Ps | (906) | |
| TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES | |||||||||
| CONSOLIDATED RESULTS OF OPERATIONS | |||||||||
| (Millions of Mexican pesos of June 30 of 2014 and 2015 ) | |||||||||
| Period ended June 30, | |||||||||
| 2014 | 2015 | ||||||||
| Change | |||||||||
| Net revenue | Ps | 5,793 | 100% | Ps | 5,527 | 100% | Ps | (266) | -5% |
| Programming, production and transmission costs | 3,569 | 62% | 3,952 | 72% | 383 | 11% | |||
| Selling and administrative expenses | 785 | 14% | 787 | 14% | 2 | 0% | |||
| Total costs and expenses | 4,354 | 75% | 4,740 | 86% | 386 | 9% | |||
| EBITDA | 1,439 | 25% | 788 | 14% | (652) | -45% | |||
| Depreciation and amortization | 347 | 347 | 0 | ||||||
| Other expense -Net | 172 | 245 | 73 | ||||||
| Operating profit | 920 | 16% | 195 | 4% | (725) | -79% | |||
| Equity in income from affiliates | 9 | 14 | 4 | ||||||
| Comprehensive financing result: | |||||||||
| Interest expense | (496) | (603) | (106) | ||||||
| Other financing expense | (39) | (38) | 1 | ||||||
| Interest income | 82 | 64 | (19) | ||||||
| Exchange Gain -Net | 54 | (479) | (532) | ||||||
| (399) | (1,056) | (657) | |||||||
| Income before the following provision | 530 | 9% | (847) | -15% | (1,377) | -260% | |||
| Provision for income tax | (439) | (470) | (30) | ||||||
| Net income | Ps | 91 | Ps | (1,316) | Ps | (1,407) | |||
| Non-controlling share in net profit | Ps | (8) | Ps | (11) | Ps | (3) | |||
| Controlling share in net profit | Ps | 99 | 2% | Ps | (1,306) | -24% | Ps | (1,404) | |
| TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||
| (Millions of Mexican pesos of June 30 of 2014 and 2015) | |||||||||
| At June 30 | |||||||||
| 2014 | 2015 | ||||||||
| Change | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | Ps | 5,792 | Ps | 5,304 | Ps | (488) | |||
| Accounts receivable | 6,164 | 6,762 | 598 | ||||||
| Other current assets | 3,329 | 3,855 | 526 | ||||||
| Total current assets | 15,285 | 15,921 | 636 | 4% | |||||
| Accounts receivable | 136 | 497 | 361 | ||||||
| Exhibition rights | 2,268 | 2,338 | 70 | ||||||
| Property, plant and equipment-Net | 3,582 | 4,201 | 619 | ||||||
| Television concessions-Net | 7,763 | 9,538 | 1,775 | ||||||
| Other assets | 4,045 | 3,664 | (381) | ||||||
| Deferred income tax asset | 3,128 | 2,680 | (448) | ||||||
| Total long term assets | 20,922 | 22,918 | 1,996 | 10% | |||||
| Total assets | Ps | 36,207 | Ps | 38,839 | Ps | 2,632 | 7% | ||
| Current liabilities: | |||||||||
| Short-term debt | Ps | -- | Ps | 1,176 | Ps | 1,176 | |||
| Other current liabilities | 3,723 | 3,915 | 192 | ||||||
| Total current liabilities | 3,723 | 5,091 | 1,368 | 37% | |||||
| Long-term debt: | |||||||||
| Long-term debt | 10,143 | 12,358 | 2,215 | ||||||
| Total long-term debt | 10,143 | 12,358 | 2,215 | ||||||
| Other long term liabilities: | |||||||||
| Advertising advances | 7,188 | 8,032 | 844 | ||||||
| American Tower Corporation (due 2069) | 1,190 | 1,439 | 249 | ||||||
| Deferred income tax asset | 1,741 | 1,128 | (613) | ||||||
| Total other long-term liabilities | 10,119 | 10,599 | 480 | 5% | |||||
| Total liabilities | 23,985 | 28,048 | 4,063 | 17% | |||||
| Total stockholders' equity | 12,222 | 10,791 | (1,431) | -12% | |||||
| Total liabilities and equity | Ps | 36,207 | Ps | 38,839 | Ps | 2,632 | 7% | ||