Grupo Elektra Reports 8% Decrease in EBITDA, to Ps.3,050 Million


—Firm expansion of credit business generates immediate costs and expenses, setting the stage for future profitability—

—The company surpasses 6,500 points of sale in Mexico, the United States, Central and South America—

—Firm increase of consolidated gross portfolio, grows 49%, to Ps.73,400 million—

MEXICO CITY, April 23, 2013 (GLOBE NEWSWIRE) -- Grupo Elektra, S.A.B. de C.V. (BMV:ELEKTRA*) (Latibex:XEKT), Latin America's leading financial services company and specialty retailer and the largest non-bank provider of cash advance services in the United States, reported today its financial results for the first quarter of 2013 .

Consolidated first quarter results

Consolidated income was Ps.17,572 million, up 16% from Ps.15,108 million for the last year. Costs and operating expenses were Ps.14,522 million, from Ps.11,800 million in the same period of 2012.

Grupo Elektra reported EBITDA of Ps.3,050 million, compared to Ps.3,308 million for the previous year; EBITDA margin was 17% this quarter. The company reported a net loss of Ps.582 million, from a loss of Ps.3,832 million a year ago.

 
   1Q 2012  1Q 2013  Change
      Ps. %
         
Consolidated revenue $15,108 $17,572 $2,463 16%
         
EBITDA $3,308 $3,050 $(258)  -8%
         
Net result $(3,832) $(582) $3,250 85%
         
Net result per share $(15.84) $(2.45) $13.39 85%
 
Figures in millions of pesos
*As of March 31, 2012, Elektra outstanding shares were 241.9 million and as of March 31, 2013, were 237.2 million.

Income

Consolidated income grew 16%, as a result of a solid increase of 37% in financial income and a 15% reduction in commercial sales.  

Financial income grew to Ps.12,468 million, from Ps.9,076 million last year. Advance America contributed to this increase with Ps.2,071 million; as previously announced, Grupo Elektra acquired Advance America —the largest non-bank provider of cash advance services in the US— in April of 2012, and consolidates the company's results in Grupo Elektra's financial statements. 

The dynamism of Banco Azteca Mexico income also contributed with the growth of the financial business. Banco Azteca income increased 8%, to Ps.8,262 million from Ps.7,650 million, mainly as a result of an expansion of personal loans, and Presta Prenda credits.

The continuous growth of the financial business translates into a robust proportion of financial income in the consolidated revenue, representing 71% in the quarter, compared to 60% a year ago.

The decrease in commercial income is in the context of reorganization in the commercialization of products, seeking to provide superior customer attention, as well as specialized service on the sales floor; building the basis for future sales growth.  

Costs and expenses

Consolidated costs for the quarter decreased 3% to Ps.6,779 million, from Ps.6,980 million from the previous year. The change mainly derives from a 21% increase in financial cost — to Ps.3,166 million compared to Ps.2,608 million a year ago — and  a 17% reduction in commercial cost, in line with the performance of the revenue.

The change in financial cost mainly resulted from the creation of loan loss reserves—in the context of significant growth of the consolidated portfolio—as well as from the registration of the costs of Advance America, which added Ps.217 million this period.

Consolidated operating expenses were Ps.7,743 million, compared to Ps.4,820 million for the same quarter of the previous year; the growth is due mainly to increases in personnel and operating expenses derived from the expansion of the financial business — in the context of a higher number of Elektra Dinero financial services branches.  This expansion has related expenses; nevertheless they are expected to generate solid benefits in the future. The increase in expenses also reflects the consolidation of the expenses of Advance America for the period.

Grupo Elektra currently has 6,580 points of sale, compared to 2,989 a year ago. This change is mainly due to the acquisition of Advance America, which added 2,507 points of sale to the company this period. Additionally, 1,084 financial services branches were opened, mainly Elektra Dinero –as part of the company's strategy to further strengthen this business segment.

The increase in points of sale represents a 36% growth in the exhibition area of Grupo Elektra, which together with the further specialization of the sales force resulted in a 35% increase in the number of employees, to 78,236 at the end of the quarter, compared to 58,093 a year ago. This generates more proximity to the clients, as well as superior attention, which can be anticipated will result in outstanding dynamism in the commercialization of financial services and goods in the future.

EBITDA and net result

Consolidated EBITDA was Ps.3,050 million, compared to Ps.3,308 million a year ago; the EBITDA margin for the quarter was 17%.

The most significant change below EBITDA was a positive variation of Ps.4,983 million in other financial results, as a consequence of the valuation of financial instruments owned by the company – which does not imply cash flow – that was more favorable for this quarter, compared to last year. 

Grupo Elektra reported net loss of Ps.582 million, from net loss of Ps.3,832 million a year ago.

Consolidated balance sheet

Loan portfolio and deposits

Banco Azteca Mexico, Advance America and Banco Azteca and Elektrafin Latin America's consolidated gross portfolio as of March 31, 2013, was Ps.73,400 million, 49% higher than the Ps. 49,287 million the previous year, a result of the growing preference of customers for our credit products, which directly improve quality of life. Consolidated delinquency rate was 8.4% at the end of the period.

The most significant driver of the consolidated gross portfolio was a 45% growth in the gross portfolio of Banco Azteca Mexico, to Ps.62,273 million from Ps.43,023 million. The gross portfolio of Advance America as of March 31, 2013, totaled Ps.3,060 million.

The delinquency rate of Banco Azteca Mexico at the end of the quarter was 8.2%. The non-performing loan portfolio is reserved 1.3 times.

At the end of the quarter, the bank had a total of 18.6 million active credit accounts, 35% above of 13.8 million from the previous year. The large customer base is an important strength of the bank that further reduces credit risk. The average term of the credit portfolio for principal credit lines – consumer, personal loans and Tarjeta Azteca – was 60 weeks at the end of the first quarter.

Banco Azteca Mexico deposits were Ps.70,594 million, 21% higher than last year. The total number of active savings and deposit accounts of the bank was 17 million, an increase of 27% compared to 13.4 million at the end of the same period a year ago.

As of March 31, 2013, the capitalization index of Banco Azteca Mexico was 13.9%. The company considers the index to be at a level that optimizes equity profitability.

Debt

As of March 31, 2013, consolidated total debt with cost was Ps.23,781 million, of which Ps.19,796 million correspond to the commercial business, and Ps.3,984 million to the financial business.

The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.26,973 million at the end of the period; as a result, net cash for the commercial business –excluding debt with cost– was a positive Ps.7,177 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, El Salvador and Argentina.

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) and Grupo Iusacell (www.iusacell.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
             
  1Q12 1Q13 Change
             
Financial income  9,076 60%  12,468 71%  3,392 37%
Commercial income  6,033 40%  5,104 29%  (929) -15%
Income  15,108 100%  17,572 100%  2,463 16%
             
Financial cost  2,608 17%  3,166 18%  558 21%
Commercial cost  4,372 29%  3,612 21%  (759) -17%
Costs  6,980 46%  6,779 39%  (201) -3%
             
Gross income  8,128 54%  10,793 61%  2,664 33%
             
Sales, administration and promotion expenses  4,820 32%  7,743 44%  2,923 61%
Depreciation and amortization  474 3%  662 4%  188 40%
Operating expenses  5,294 35%  8,405 48%  3,111 59%
             
Operating income  2,835 19%  2,388 14%  (447) -16%
             
EBITDA   3,308 22%  3,050 17%  (258) -8%
             
Comprehensive financial result:            
Interest income  103 1%  49 0%  (55) -53%
Interest expense  (425) -3%  (421) -2%  4 1%
Foreign exchange loss, net  (342) -2%  (368) -2%  (26) -7%
Other financial results, net  (7,584) -50%  (2,601) -15%  4,983 66%
   (8,247) -55%  (3,341) -19%  4,906 59%
             
Other (expense) income, net  (0) 0%  9 0%  9 --
             
Participation in the net income of CASA and other associated companies  31 0%  (2) 0%  (33) --
             
Loss before income tax  (5,382) -36%  (946) -5%  4,436 82%
             
Income tax  1,550 10%  363 2%  (1,186) -77%
             
Consolidated net loss   (3,832) -25%  (582) -3%  3,250 85%
 
 
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 March 31, 2012 At March 31, 2013  
                 
Cash and cash equivalents  1,805  14,288  16,093  3,819  15,475  19,294  3,201 20%
                 
Marketable financial instruments  19,789  17,047  36,836  23,154  13,002  36,156  (680) -2%
                 
Performing loan portfolio  356  34,026  34,383  224  49,675  49,898  15,516 45%
Total past-due loans  222  2,173  2,394  263  5,353  5,616  3,222 135%
Gross loan portfolio  578  36,199  36,777  487  55,028  55,515  18,738 51%
                 
Allowance for credit risks  228  4,067  4,294  264  8,055  8,319  4,024 94%
                 
Loan portfolio, net  350  32,133  32,483  223  46,973  47,196  14,713 45%
                 
Inventories  7,053    7,053  7,071    7,071  17 0%
                 
Other current assets   3,649  6,685  10,334  9,299  8,295  17,593  7,259 70%
                 
Total current assets  32,645  70,154  102,799  43,565  83,745  127,310  24,511 24%
                 
Financial instruments  13,300    13,300      --   (13,300) -100%
                 
Performing loan portfolio    12,484  12,484  236  17,128  17,364  4,880 39%
Total past-due loans    158  158  1  520  521  363 230%
Loan portfolio  --   12,510  12,510  237  17,648  17,885  5,375 43%
                 
Other non-current assets   36,069  32  36,100  844  168  1,013  (35,088) -97%
                 
Investment in shares  2,599  14  2,613  3,893    3,893  1,280 49%
Property, furniture, equipment and investment in stores, net  4,123  1,563  5,686  4,087  2,862  6,949  1,264 22%
Intangible assets  653  --   653  544  6,295  6,839  6,186 947%
Other assets  385  104  489  760  387  1,148  659 135%
TOTAL ASSETS  89,774  84,375  174,149  53,932  111,105  165,037  (9,112) -5%
                 
                 
Demand and term deposits    55,291  55,291    71,717  71,717  16,427 30%
Creditors from repurchase agreements    9,385  9,385    2,709  2,709  (6,676) -71%
Short-term debt  3,442  --   3,442  9,163  2,872  12,036  8,594 250%
Short-term liabilities with cost  3,442  64,676  68,118  9,163  77,299  86,462  18,344 27%
                 
Suppliers and other short-term liabilities  7,130  6,098  13,228  6,798  6,124  12,922  (306) -2%
Short-term liabilities without cost  7,130  6,098  13,228  6,798  6,124  12,922  (306) -2%
                 
Total short-term liabilities  10,572  70,774  81,346  15,961  83,422  99,384  18,038 22%
                 
Long-term debt  10,484  1,097  11,581  10,633  1,112  11,745  164 --
Long-term liabilities with cost  10,484  1,097  11,581  10,633  1,112  11,745  164 --
                 
Long-term liabilities without cost  16,295  683  16,978  8,562  949  9,511  (7,467) --
                 
Total long-term liabilities  26,779  1,780  28,559  19,196  2,060  21,256  (7,303) --
                 
TOTAL LIABILITIES  37,351  72,554  109,905  35,157  85,482  120,640  10,734 10%
                 
TOTAL STOCKHOLDERS' EQUITY  52,423  11,821  64,244  18,775  25,623  44,397  (19,847) -31%
                 
LIABILITIES + EQUITY  89,774  84,375  174,149  53,932  111,105  165,037  (9,112) -5%
 
 
INFRASTRUCTURE
             
  1Q12 1Q13 Change
             
Points of sale in Mexico            
Elektra (1)  952 32%  967 15%  15 2%
Salinas y Rocha (1)  55 2%  55 1%  -- 0%
Freestanding branches (2)  1,450 49%  2,387 36%  937 65%
Total  2,457 82%  3,409 52%  952 39%
             
Points of sale in Central and South America            
Elektra (3)  232 8%  217 3%  (15) -6%
Freestanding branches  300 10%  447 7%  147 49%
Total  532 18%  664 10%  132 25%
             
Points of sale in North America            
Advance America  --  --  2,507 38%  2,507 --
Total  --  --  2,507 38%  2,507 --
             
TOTAL  2,989 100%  6,580 100%  3,591 --
             
(1) Each store has a Banco Azteca branch. 
(2) In 1Q13, includes 45 Bodegas de Remate that continues operating only financial services. 
(3) In 1Q13, only 206 Central and South America Elektra's store have a Banco Azteca branch. 
 
             
Floor space (m²)            
Elektra Mexico  824,390 69%  836,259 51%  11,869 1%
Elektra Central and South America  163,755 14%  156,125 10%  (7,630) -5%
Salinas y Rocha  58,995 5%  58,995 4%  -- 0%
Freestanding branches  156,247 13%  246,437 15%  90,189 58%
Advance America  --  0%  343,500 21%  343,500 --
TOTAL  1,203,387 100%  1,641,316 100%  437,929 36%
 
             
Employees            
Mexico  48,644 84%  59,278 76%  10,634 22%
Central and South America  9,449 16%  12,610 16%  3,161 33%
North America  --  --  6,348 8%  6,348 --
Total employees  58,093 100%  78,236 100%  20,143 35%


            

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