Grupo Elektra Announces 8% Increase in EBITDA to Ps.2,635 Million in 3Q15

    —Operating profit increases 15% to Ps.1,984 million in the period—

—Continued dynamism in sales from the commercial business;
21% increase to Ps.6,549 million—

—14% growth in consolidated deposits to Ps.98,598 million
generates solid perspectives in the financial business—

MEXICO CITY, Oct. 28, 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 third quarter and first nine months of 2015.

Consolidated third quarter results

Consolidated revenue increased 2% to Ps.18,501 million, from Ps.18,177 million for the same period last year. Costs and operating expenses were Ps.15,866 million, compared to Ps.15,744 million for the same period of 2014.

As a result, Grupo Elektra reported EBITDA of Ps.2,635 million, 8% higher when compared to Ps.2,433 million from the previous year’s quarter; EBITDA margin was 14% this period, one percentage point above the previous year. Operating profit increased 15%, to Ps.1,984 million, from Ps.1,713 million a year ago.

The company reported net loss of Ps.1,220 million, from a net income of Ps.1,836 million a year ago.

Revenue

Consolidated revenue grew 2%, as a result of increases of 21% in commercial sales, which partly offset a 7% decrease in financial revenue.

The increase in commercial sales —of Ps.6,549 million from Ps.5,393 million last year— increased as a result of strategies that generate growing customer satisfaction through an optimal mix of merchandise on the sales floor, offered by a highly trained sales force under the most competitive market conditions.

The decrease in financial revenue —to Ps.11,952 million from Ps.12,785 million from the previous year— results mainly from a 11% reduction in revenue from Banco Azteca Mexico, to Ps.7,462 million, compared to Ps.8,412 million from the previous year.

Costs and expenses

Consolidated costs for the quarter decreased 4% to Ps.7,689 million, from Ps.8,026 million for  the previous year. The change is mainly due to a 24% reduction in financial cost —largely driven by a reduction in provisions for loan losses, along with the strength in asset quality— and a 21% increase in commercial costs, in line with the performance of commercial revenue.

Sales, administration and promotion expenses increased 6% to Ps.8,177 million, as a result of higher operating expenses.

EBITDA and net result

Consolidated EBITDA increased 8% to Ps.2,635 million this quarter.

The most significant change below EBITDA was a negative variation of Ps.4,295 million in the other financial results, as a consequence of a reduction in the market value of the underlying assets of financial instruments owned by the company –which does not imply cash flow– compared to increase last year.

Grupo Elektra reported a net loss of Ps.1,220 million, compared to a net gain of Ps.1,836 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 September 30, 2015, was Ps.67,646 million, compared to Ps.76,494 million from the previous year. Consolidated delinquency rate was 7.7% at the end of the period, from an 8% from the previous year.

The gross portfolio increased 3% from Ps.65,745 million as of June 30, 2015, as a result of strategies that strengthen the growth in credit, with solid quality.

The gross portfolio of Banco Azteca Mexico was Ps.52,273 million, compared to Ps.61,657 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 7.1%, compared to 8% a year ago. The non-performing loan portfolio is reserved 1.64 times, reflecting loan loss reserves of Ps. 6,093 million, compared with a non-performing loan balance of Ps.3,718 million as of September 30, 2015. 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 third quarter.

The Advance America loan portfolio was Ps.5,309 million, 15% higher than the Ps.4,598 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 14%, to Ps.98,598 million, compared to Ps.86,701 million a year ago. Deposits of Banco Azteca Mexico were Ps.91,927 million, 14% higher than the Ps.80,802 million a year ago.  Financial products that satisfy clients 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 September 30, 2015, the estimated capitalization index of Banco Azteca Mexico was 17.2%.

Debt

Consolidated debt with cost as of September 30, 2015, was Ps.19,812 million, from Ps.19,798 million for the prior year.

Consolidated debt was comprised of Ps.17,871 million for the commercial business, and Ps.1,940 million for the financial business.  The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.22,113 million at the end of the period; as a result, the net cash commercial balance —excluding debt with cost— is favorable in Ps.4,242 million.

Infrastructure

Grupo Elektra currently has 8,069 points of contact, compared to 9,252 a year ago. The reduction results from strategies that focus on maximizing the profitability of the units.

Grupo Elektra has 4,932 points of sale in Mexico, 2,364 in the United States, and 773 in Central and South America. The extensive distribution network allows the company to maintain close contact with clients; granting superior market positioning in the countries where it operates.

Nine months consolidated results

Total consolidated revenue in the first nine months of the year was Ps.55,705 million, 4% higher than the Ps.53,572 million for the same period of 2014, boosted mainly by a 20% growth in the commercial business.

EBITDA was Ps.7,883 million, 10% higher than the Ps.7,186 million for the same period a year ago; the EBITDA margin in the first nine months of 2015 was 14%, one percentage point above the prior year.  The company registered a consolidated net loss of Ps.5,922 million, compared to a gain of Ps.547 million a year ago, mainly due a larger decrease in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to the prior year.

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 8,000 points of contact 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 TV 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.