Grupo Elektra Announces 14% Growth in Operating Profit to Ps.2,311 Million in 3Q16

—EBITDA increases 11% to Ps.2,975 million in the period—

—Continued dynamism in both commercial and financial businesses generates 8% increase in consolidated revenues to Ps.19,971 million—

—Notable reduction in the delinquency rate of Banco Azteca Mexico; decreases more than four percentage points to 2.7%—

MEXICO CITY, Oct. 27, 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 third quarter of 2016.

Consolidated third quarter results

Consolidated revenue was Ps.19,971 million, 8% above the Ps.18,470 million for the same quarter of last year. Costs and operating expenses were Ps.16,996 million, compared to Ps.15,798 million for the same period of 2015.

As a result, Grupo Elektra reported EBITDA of Ps.2,975 million, 11% higher than the Ps.2,672 million of the previous year’s quarter; EBITDA margin was 15% this period, one percentage point above the previous year.

Operating profit grew 14% to Ps.2,311 million during the quarter, from Ps.2,030 million in same period of 2015.

The company reported net income of Ps.1,330 million, compared to a net loss of Ps.1,220 million a year ago.

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of September 30, 2015, Elektra outstanding shares were 234.9 million and as of September 30, 2016, were 237.1 million.

Revenue

Consolidated revenue increased 8%, as a result of growth of 13% and 5% in commercial sales and financial revenues, respectively.

The increase in sales from the commercial division — to Ps.7,426 million compared to Ps.6,549 million last year — reflects 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 increase in financial revenue — to Ps.12,545 million from Ps.11,921 million from the previous year — results mainly from a 7% growth in revenue of Advance America, together with a 2% increase in revenue from Banco Azteca Mexico during the period.

Costs and expenses

Consolidated costs for the quarter decreased 3% to Ps.7,410 million, from Ps.6,624 million in  the previous year, as a result of a 22% decrease in financial cost — largely driven by a reduction in provisions for loan losses, along with increased strength in asset quality — and an 12% increase in commercial costs, in line with the performance of commercial revenue.

Sales, administration and promotion expenses increased 17% to Ps.9,586 million, as a result of higher personnel expenses—from higher compensation schemes that encourage productivity—increase in advertising—which achieves a better positioning of Grupo Elektra´s brands—and an increase in operating expenses.

EBITDA and net result

Consolidated EBITDA grew 11% to Ps.2,975 million this quarter.

Operating income increased 14% to Ps.2,311 million, from Ps.2,030 million for the same quarter of 2015.

The most significant change below EBITDA was a positive variation of Ps.3,335 million in other financial results, as a consequence of a gain in the market value of the underlying assets of financial instruments owned by the company – which does not imply cash flow – compared with a reduction in value of previous year.

Grupo Elektra reported a net income of Ps.1,330 million, compared to a net loss of Ps.1,220 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, 2016 grew 10% to Ps.74,341 million, from Ps.67,646 million from the previous year. Consolidated delinquency rate was 3.7% at the end of the period, compared to 7.7% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 15% to Ps.59,903 million, from Ps.52,273 million a year ago.

The delinquency rate of the bank at the end of the quarter was 2.7%, more than four percentage points lower than the 7.1% from the previous year. 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.5,391 million, 2% higher than the Ps.5,309 million a year ago.

Grupo Elektra consolidated deposits increased 5% to Ps.103,236 million, from Ps.98,598 million a year ago. Deposits of Banco Azteca Mexico were Ps.97,984 million, 7% higher than the Ps.91,927 million a year ago. 

As of September 30, 2016, the estimated capitalization index of Banco Azteca Mexico was 16.56%.

Debt

Consolidated debt with cost as of September 30, 2016, was Ps.18,730 million, from Ps.19,812 million for the prior year.

Consolidated debt was comprised of Ps.16,274 million for the commercial business, and Ps.2,456 million for the financial business. The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.15,208 million at the end of the period; as a result, the net cash commercial balance — excluding debt with cost — is favorable at Ps.1,066 million.

Infrastructure

Grupo Elektra currently has 7,391 points of sale, compared to 8,339 units a year ago. The reduction results from strategies that focus on maximizing the profitability of the units.

The company has 4,546 points of sale in Mexico, 2,165 in the United States, and 680 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 grew 4% to Ps.57,928 million, from Ps.55,503 million for the same period of 2015, boosted mainly by 12% growth in  the commercial business.

EBITDA was Ps.9,830 million, 23% higher than the Ps.8,004 million for the same period a year ago; the EBITDA margin in the first nine months of 2016 was 17%, three percentage points above the prior year. Operating profit grew 33% to Ps.8,145 million during the period.

The company registered consolidated net income of Ps.2,410 million, compared to a loss of Ps.5,922 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.

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of September 30, 2015, Elektra outstanding shares were 234.9 million and as of September 30, 2016, were 237.1 million.

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 more than 7,000 points of contact in Mexico, the United States, 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.