Grupo Elektra Announces 87% Growth in Operating Profit to

—EBITDA increases 64% to Ps.3,518 million in the period—

—Solid performance from both the commercial and financial divisions generate an increase of 8% in consolidated revenue to Ps.19,517 million—

—Notable reduction in the delinquency rate of Banco Azteca Mexico;
decreases more than six percentage points to 2.9%—

MEXICO CITY, July 21, 2016 (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 2016.

Consolidated second quarter results

Consolidated revenue was Ps.19,517 million, 8% above the Ps.18,027 million for the same quarter of last year. Costs and operating expenses increased 1% to Ps.15,998 million, compared to Ps.15,878 million for the same period of 2015.

As a result, Grupo Elektra reported EBITDA of Ps.3,518 million, 64% higher than the Ps.2,149 million of the previous year’s quarter; EBITDA margin was 18% this period, six percentage point above the previous year.

Operating profit grew 87% to Ps.2,904 million during the quarter, from Ps.1,550 million in same period of 2015.

The company reported a net loss of Ps.79 million, compared to a net loss of Ps.1,423 million a year ago.

	2Q 2015					2Q 2016					Change
											Ps.			%

Consolidated revenue	$		18,027			$		19,517			$		1,489			8	%

EBITDA	$		2,149			$		3,518			$		1,369			64	%

Operating profit	$	1,550				$	2,904				$	1,354			87			%

Net result	$	(1,423			)	$	(79			)	$	1,344			94			%

Net result per share	$		(6.05	)		$		(0.33	)		$		5.72			94	%

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of June 30, 2015, Elektra outstanding shares were 235.1 million and as of June 30, 2016, were 237.9 million.

Revenue

Consolidated revenue increased 8%, as a result of growth of 14% and 5% in commercial sales and financial revenues, respectively.

The increase in sales from the commercial division — of Ps.7,344 million from Ps.6,435 million last year — reflects strategies that give millions of families access to world-class products and services under the most competitive market conditions with optimal client service.

The increase in financial revenue — to Ps.12,172 million from Ps.11,593 million from the previous year — results mainly from a 16% growth in revenue of Advance America, to Ps.2,780 million, in comparison to Ps.2,393 million a year ago.

Costs and expenses

Consolidated costs for the quarter decreased 8% to Ps.7,457 million, from Ps.8,091 million in the previous year, resulting from a 27% decrease in financial cost — largely driven by a reduction in provisions for loan losses, along with the strength in asset quality — and an 8% increase in commercial costs, in line with the performance of commercial revenue.

Sales, administration and promotion expenses increased 10% to Ps.8,541 million, as a result of higher personnel expenses — from higher compensation schemes that encourage productivity — as well as an increase in operating expenses.

EBITDA and net result

Consolidated EBITDA grew 64% to Ps.3,518 million this quarter.

Operating income increased 87%, to Ps.2,904 million, from Ps.1,550 million for the same quarter of 2015.

The most significant change below EBITDA was a positive variation of Ps.270 million in other financial results, as a consequence of a smaller reduction 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.79 million, compared to a net loss of Ps.1,423 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 grew 4% to Ps.68,440 million, from Ps.65,745 million from the previous year. Consolidated delinquency rate was 3.7% at the end of the period, from 9% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 7% to Ps.54,515 million, from Ps.51,174 million a year ago.

The delinquency rate of the bank at the end of the quarter was 2.9%, more than six percentage points lower than the 9.2% from the previous year. The average term of the credit portfolio for principal credit lines – consumer, personal loans and Tarjeta Azteca – was 55 weeks at the end of the second quarter.

The Advance America loan portfolio was Ps.5,111 million, 13% higher than the Ps.4,527 million a year ago.

Grupo Elektra consolidated deposits increased 6% to Ps.103,496 million, from Ps.97,843 million a year ago. Deposits of Banco Azteca Mexico were Ps.97,588 million, 7% higher than the Ps.91,633 million a year ago.

As of June 30, 2016, the estimated capitalization index of Banco Azteca Mexico was 17.9%.

Debt

Consolidated debt with cost as of June 30, 2016, was Ps.18,303 million, from Ps.18,589 million for the prior year.

Consolidated debt was comprised of Ps.15,983 million for the commercial business, and Ps.2,321 million for the financial business. The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.23,482 million at the end of the period; as a result, the net cash commercial balance —excluding debt with cost— is favorable at Ps.7,499 million.

Infrastructure

Grupo Elektra currently has 7,492 points of sale, compared to 8,647 units a year ago. The reduction results from strategies that focus on maximizing the profitability of the units.

The company has 4,555 points of sale in Mexico, 2,208 in the United States, and 729 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.

Six months consolidated results

Total consolidated revenue in the first six months of the year grew 2% to Ps.37,958 million, from Ps.37,034 million for the same period of 2015, boosted mainly by 11% growth in the commercial business.

EBITDA was Ps.6,855 million, 29% higher than the Ps.5,332 million for the same period a year ago; the EBITDA margin in the first six months of 2016 was 18%, four percentage point above the prior year. Operating profit grew 42% to Ps.5,834 million during the period.

The company registered consolidated net income of Ps.1,080 million, compared to a loss of Ps.4,703 million a year ago, mainly due a smaller reduction in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to the prior year.

	6M 2015					6M 2016			Change
									Ps.			%

Consolidated revenue	$		37,034			$		37,958	$		924			2	%

EBITDA	$		5,332			$		6,855	$		1,523			29	%

Operating profit	$	4,099				$	5,834		$	1,735			42			%

Net result	$	(4,703			)	$	1,080		$	5,782		----

Net result per share	$		(20	)		$		4.54	$		24.54	----

Company Profile:

Grupo Elektra 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 close to 8,000 points of contact in Mexico, USA, 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.tvazteca.com; www.irtvazteca.com), Azteca US (us.azteca.com), Grupo Elektra (www.elektra.com.mx: 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 TP (enlacetp.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

		2Q15					2Q16					Change

	Financial income		11,593		64	%		12,172		62	%		580			5	%
	Commercial income		6,435		36	%		7,344		38	%		910			14	%
	Income		18,027		100	%		19,517		100	%		1,489			8	%

	Financial cost		3,667		20	%		2,673		14	%		(995	)		-27	%
	Commercial cost		4,424		25	%		4,784		25	%		360			8	%
	Costs		8,091		45	%		7,457		38	%		(635	)		-8	%

	Gross income		9,936		55	%		12,060		62	%		2,124			21	%

	Sales, administration and promotion expenses		7,787		43	%		8,541		44	%		754			10	%

	EBITDA		2,149		12	%		3,518		18	%		1,369			64	%

	Depreciation and amortization		629		3	%		643		3	%		14			2	%

	Other income, net		(29	)	0	%		(28	)	0	%		1			5	%

	Operating Income		1,550		9	%		2,904		15	%		1,354			87	%

	Comprehensive financial result:
	Interest income		84		0	%		162		1	%		78			94	%
	Interest expense		(389	)	-2	%		(334	)	-2	%		55			14	%
	Foreign exchange gain, net		36		0	%		116		1	%		80			222	%
	Other financial results, net		(3,066	)	-17	%		(2,796	)	-14	%		270			9	%
			(3,335	)	-19	%		(2,852	)	-15	%		484			14	%

	Participation in the net income of
	CASA and other associated companies		(131	)	-1	%		(145	)	-1	%		(14	)		-11	%

	(Loss) income before income tax		(1,917	)	-11	%		(93	)	0	%		1,824			95	%

	Income tax		576		3	%		14		0	%		(562	)		-98	%

	(Loss) income before discontinued operations		(1,341	)	-7	%		(79	)	0	%		1,261			94	%

	Result from discontinued operations		(82	)	0	%		1		0	%		83		----

	Consolidated net (loss) income		(1,423	)	-8	%		(79	)	0	%		1,344			94	%


GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS

		6M15					6M16					Change

	Financial income		24,384		66	%		23,956		63	%		(428	)		-2	%
	Commercial income		12,650		34	%		14,002		37	%		1,352			11	%
	Income		37,034		100	%		37,958		100	%		924			2	%

	Financial cost		8,335		23	%		4,968		13	%		(3,367	)		-40	%
	Commercial cost		8,616		23	%		9,244		24	%		628			7	%
	Costs		16,951		46	%		14,212		37	%		(2,739	)		-16	%

	Gross income		20,083		54	%		23,745		63	%		3,662			18	%

	Sales, administration and promotion expenses		14,751		40	%		16,891		44	%		2,140			15	%

	EBITDA		5,332		14	%		6,855		18	%		1,523			29	%

	Depreciation and amortization		1,226		3	%		1,188		3	%		(38	)		-3	%

	Other expense (income), net		7		0	%		(168	)	0	%		(174	)	----

	Operating Income		4,099		11	%		5,834		15	%		1,735			42	%

	Comprehensive financial result:
	Interest income		198		1	%		395		1	%		197			100	%
	Interest expense		(725	)	-2	%		(662	)	-2	%		63			9	%
	Foreign exchange gain, net		78		0	%		172		0	%		94			120	%
	Other financial results, net		(9,811	)	-26	%		(4,004	)	-11	%		5,807			59	%
			(10,260	)	-28	%		(4,099	)	-11	%		6,161			60	%

	Participation in the net income of
	CASA and other associated companies		(261	)	-1	%		(216	)	-1	%		46			18	%

	(Loss) income before income tax		(6,422	)	-17	%		1,519		4	%		7,941		----

	Income tax		1,842		5	%		(438	)	-1	%		(2,280	)	----

	(Loss) income before discontinued operations		(4,580	)	-12	%		1,082		3	%		5,661		----

	Result from discontinued operations		(123	)	0	%		(2	)	0	%		121			98	%

	Consolidated net (loss) income		(4,703	)	-13	%		1,080		3	%		5,782		----


	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, 2015*			*At June 30, 2016*

Cash and cash equivalents	2,685	20,350	23,035	2,011	18,899	20,911		(2,125	)	-9	%

Marketable financial instruments	11,749	52,301	64,050	21,471	53,849	75,321		11,270		18	%

Performing loan portfolio	-	43,753	43,753	-	48,196	48,196		4,443		10	%
Total past-due loans	-	5,606	5,606	-	2,473	2,473		(3,134	)	-56	%
Gross loan portfolio	-	49,359	49,359	-	50,669	50,669		1,310		3	%

Allowance for credit risks	-	8,691	8,691	-	6,426	6,426		(2,265	)	-26	%

Loan portfolio, net	-	40,668	40,668	-	44,243	44,243		3,575		9	%

Inventories	6,261	-	6,261	7,059	-	7,059		798		13	%

Other current assets	2,108	6,248	8,356	5,801	9,160	14,962		6,606		79	%

Total current assets	22,803	119,567	142,370	36,343	126,151	162,494		20,124		14	%

Financial instruments	11,504	251	11,755	8,390	292	8,682		(3,072	)	-26	%

Performing loan portfolio	-	16,083	16,083	-	17,686	17,686		1,602		10	%
Total past-due loans	-	303	303	-	85	85		(217	)	-72	%
Loan portfolio	-	16,386	16,386	-	17,771	17,771		1,385		8	%

Other non-current assets	1	912	913	-	764	764		(149	)	-16	%

Investment in shares	3,975	-	3,975	3,036	-	3,036		(939	)	-24	%
Property, furniture, equipment and
investment in stores, net	4,106	2,850	6,956	3,674	2,753	6,427		(530	)	-8	%
Intangible assets	547	7,605	8,152	605	5,625	6,229		(1,922	)	-24	%
Other assets	1,112	410	1,521	1,116	571	1,687		165		11	%
TOTAL ASSETS	44,048	147,980	192,029	53,163	153,927	207,090		15,062		8	%

Demand and term deposits	-	97,843	97,843	-	103,496	103,496		5,653		6	%
Creditors from repurchase agreements	-	3,963	3,963	-	2,818	2,818		(1,145	)	-29	%
Short-term debt	7,634	253	7,887	66	534	599		(7,287	)	-92	%
Short-term liabilities with cost	7,634	102,059	109,693	66	106,848	106,914		(2,779	)	-3	%

Suppliers and other short-term liabilities	7,291	8,210	15,501	16,148	7,150	23,298		7,797		50	%
Short-term liabilities without cost	7,291	8,210	15,501	16,148	7,150	23,298		7,797		50	%

Total short-term liabilities	14,925	110,269	125,194	16,214	113,998	130,211		5,017		4	%

Long-term debt	9,572	1,129	10,702	15,917	1,787	17,704		7,002		65	%
Long-term liabilities with cost	9,572	1,129	10,702	15,917	1,787	17,704		7,002		65	%

Long-term liabilities without cost	3,319	2,887	6,206	2,028	3,851	5,879		(327	)	-5	%

Total long-term liabilities	12,891	4,016	16,908	17,945	5,639	23,583		6,675		39	%

TOTAL LIABILITIES	27,816	114,286	142,102	34,158	119,636	153,794		11,693		8	%

TOTAL STOCKHOLDERS' EQUITY	16,232	33,695	49,927	19,005	34,291	53,296		3,369		7	%

LIABILITIES + EQUITY	44,048	147,980	192,029	53,163	153,927	207,090		15,062		8	%

INFRASTRUCTURE

		2Q15			2Q16			Change

	Points of sale in Mexico
	Elektra	1,017	12	%	969	13	%		(48	)	-5	%
	Salinas y Rocha	53	1	%	51	1	%		(2	)	-4	%
	Banco Azteca	1,272	15	%	1,221	16	%		(51	)	-4	%
	Freestanding branches	2,868	33	%	2,314	31	%		(554	)	-19	%
	B-Store	263	3	%	-	0	%		(263	)	-100	%
	Total	5,473	63	%	4,555	61	%		(918	)	-17	%

	Points of sale in Central and South America
	Elektra	197	2	%	193	3	%		(4	)	-2	%
	Banco Azteca	197	2	%	193	3	%		(4	)	-2	%
	Freestanding branches	408	5	%	343	5	%		(65	)	-16	%
	Total	802	9	%	729	10	%		(73	)	-9	%

	Points of sale in North America
	Advance America	2,372	27	%	2,208	29	%		(164	)	-7	%
	Total	2,372	27	%	2,208	29	%		(164	)	-7	%

	TOTAL	8,647	100	%	7,492	100	%		(1,155	)	-13	%


	Floor space (m²)	1,645	100	%	1,483	100	%		(162	)	-10	%


	Employees
	Mexico	51,577	75	%	47,415	76	%		(4,162	)	-8	%
	Central and South America	10,062	15	%	8,576	14	%		(1,486	)	-15	%
	North America	6,822	10	%	6,219	10	%		(603	)	-9	%
	Total employees	68,461	100	%	62,210	100	%		(6,251	)	-9	%

Grupo Elektra Announces 87% Growth in Operating Profit to Ps.2,904 Million in 2Q16

Contact Data

Contact