Grupo Elektra Announces Revenues of Ps.28,154 Million and EBITDA of Ps.2,547 Million in 2Q20


—29% growth in deposits of Banco Azteca Mexico to Ps.177,335 million, generates solid prospects for the financial business—

—Ratio of deposits to gross portfolio of 1.9 times, is outstanding in the sector, and consolidates firm growth expectation for the Bank, with optimal funding cost—

 —Capitalization index of Banco Azteca of 15.32%, shows remarkable financial strength—

MEXICO CITY, July 23, 2020 (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, today announced second quarter 2020 financial results.

Second Quarter Results

Consolidated revenue was Ps.28,154 million in the period, in comparison with Ps.28,762 million for the same quarter of the previous year. Costs and operating expenses were Ps.25,608 million, from Ps.24,749 million for the same period of 2019.

As a result, EBITDA was Ps.2,547 million, in comparison with Ps.4,014 million of the previous year’s quarter. Operating profit was Ps.438 million this quarter, from Ps.2,255 million in the same period of 2019.

The company reported a net loss of Ps.3,538 million, compared to a net income of Ps.5,697 million a year ago.

   2Q 2019  2Q 2020  Change
   Ps.%
     
Consolidated revenue$28,762$28,154
 
$(608)
-2%
     
EBITDA  $4,014$2,547
 
$(1,467)
-37%
     
Operating result
$2,255
$438
$(1,817)
-81%
     
Net result   $5,697$(3,538)$(9,234)----
     
Net result per share$24.94$(15.46)
$(40.4)
----
     

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.       
As of June 30, 2019, Elektra* outstanding shares were 228.4 million and as of June 30, 2020, were 228.8 million.

Revenue

Consolidated revenue decreased 2%, as a result of a 6% reduction in financial revenues, partially compensated with a 4% increase in commercial sales.

The decrease in financial revenue — to Ps.16,931 million, from Ps.17,934 million the previous year —reflects lower interest earned in the period, in the context of deterioration in economic performance indicators due to the health emergency.

The increase in commercial division sales — to Ps.11,223 million, up from Ps.10,828 million from last year — results largely from an increase in sales of telephony and computing, as well as white appliances and mattresses, which effectively meet the needs of thousands of families and are commercialized in the most competitive market conditions.

The commercial business sales have added additional momentum with the launch of new stores with a larger exhibition space that includes an extensive merchandise and services selection to satisfy an increasing number of customers.  Similarly, Omnichannel operations, with the online store www.elektra.com.mx, which sells thousands of products at unparalleled prices from any device and at any time, further strengthens the performance of the division.

Costs and expenses

Consolidated costs for the quarter were Ps.12,890 million, from Ps.11,980 million the previous year. The growth in costs is explained by an increase in the financial cost, to Ps.5,739 million this period compared to Ps.4,716 million a year ago, largely derived from the creation of loan loss reserves, which was partially offset by lower interest paid, in line with declining market rates.

Commercial business costs decreased 2%, to Ps.7,151 million, from Ps.7,263 million, derived from superior efficiency in the supply chain of merchandise inventories.

Selling, administrative and marketing expenses were reduced marginally, to Ps.12,718 million, mainly as a result of lower advertising and operating expenses — within the framework of firm strategies that promote operating efficiencies — partially offset by higher personnel expenses.

EBITDA and net result

EBITDA was Ps.2,547 million, from Ps.4,014 million the previous year. The company reported an operating profit of Ps.438 million, compared to Ps.2,255 million in the same quarter of 2019.

The most significant changes below EBITDA were the following:

A negative variation of Ps.11,045 million in the other financial results line, which reflects a depreciation of 10% this quarter in the market value of underlying assets of financial instruments held by the company — and does not imply cash flow — in comparison to a 20% gain a year ago.

Congruent with the operating results for the quarter, there was a reduction of Ps.3,929 million in the tax provision in the period.

Grupo Elektra reported net loss of Ps.3,538 million, compared to a net income of Ps.5,697 million a year ago.

Unconsolidated Balance Sheet

In order to allow the visualization of the non-consolidated financial situation, a pro forma exercise of the balance sheet of Grupo Elektra is presented, excluding the net assets of the financial business, whose investment is valued under the equity method, in this case.

This presentation shows the debt of the company without considering Banco Azteca’s immediate and term deposits, which do not constitute debt with cost for Grupo Elektra. The pro forma balance sheet also does not include the bank's gross loan portfolio.

This proforma exercise provides greater clarity regarding the businesses that make up the company and allows financial market participants to estimate the value of the company, considering only the relevant debt for such calculations.

Congruent with this, the debt with cost was Ps.25,852 million as of June 30, 2020, compared to Ps.24,702 million the previous year. The balance of cash and cash equivalents was Ps.6,124 million, from Ps.5,420 million the previous year.

The company's equity increased 6% to Ps.97,944 million, while the ratio of stockholders' equity to total liabilities was 1.5 times at the close of the quarter.

 As of
June 30,
2019
As of
June 30,
2020
Change
Ps.%
     
     
Cash and cash equivalents$5,420$6,124 704 13%
Marketable financial instruments 40,226 38,468 (1,758)(4%)
Inventories 9,914 12,091 2,178 22%
Accounts receivables 44,283 47,300 3,017 7%
Other current assets 2,868 3,585 717 25%
Investments in shares 34,601 38,164 3,563 10%
Fixed assets 7,446 8,017 571 8%
Right of use assets 8,652 8,604 (48)(1%)
Other assets 2,029 1,836 (193)(9%)
     
Total assets$155,439$164,191$8,751 6%
     
Short-term debt$3,834$11,444$  7,610 198%
Suppliers 7,175 6,578 (597)(8%)
Other short-term liabilities 11,141 13,645 2,504 22%
Long-term debt 20,868 14,408 (6,459)(31%)
Differed taxes 10,585 10,368 (217)(2%)
Other long-term debt 9,655 9,804 149 2%
     
Total liabilities$  63,257$66,247$  2,990 5%
     
Stakeholder´s equity$  92,182$97,944$5,762 6%
     
Liabilities and equity$155,439$164,191$8,751 6%
Figures in millions of pesos.     

Consolidated Balance Sheet

Loan Portfolio and Deposits

Banco Azteca Mexico, Purpose Financial and Banco Azteca Latin America’s consolidated gross portfolio as of June 30, 2020 grew 6% to Ps.113,174 million, from Ps.106,957 million for the previous year. The consolidated delinquency rate was 5% at the end of the period, compared to 3.6% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 3% to Ps.93,595 million, from Ps.90,860 million a year ago. The default rate for the bank at the end of the quarter was 5.3%, in comparison with 3% for the previous year, in the context in which a large number of customers from the Bank chose not to resort to official support plans to differ payments, offered by the sector.

The average term of the credit portfolio for principal credit lines — consumer, personal loans, and Tarjeta Azteca — was 63 weeks at the end of the second quarter.

Grupo Elektra’s consolidated deposits were Ps.183,746 million, 31% higher than the Ps.140,603 million a year ago. Deposits of Banco Azteca Mexico were Ps.177,335 million, 29% higher than the Ps.137,891 million a year ago. 

The ratio of deposits to gross portfolio of 1.9 times, consolidates the solid growth prospects of the Bank, with optimal funding cost.

The Bank's liquidity coverage ratio — total of eligible liquid assets / total net cash out — was 642%, an outstanding figure in the Mexican banking sector.

The estimated capitalization index of Banco Azteca Mexico was 15.32%, level that shows the remarkable financial strength of the institution.

Infrastructure

Grupo Elektra currently has 7,047 storefronts, compared to 7,157 units a year ago.

During the last twelve months, 35 new Elektra stores were opened at strategic locations throughout Mexico, with larger exhibition areas; which increase the offering of products and services and maximize customer shopping experiences.

The company has 4,762 storefronts in Mexico at the end of the quarter, 1,601 in the United States, and 684 in Central and South America. The extensive distribution network allows the company to maintain close contact with customers and grants a superior market positioning in the countries where it operates.

Mauro Aguirre is appointed CFO

Grupo Elektra announced today it appointed Mauro Aguirre Regis as CFO of the company.

Mr. Aguirre has 24 years of experience in strategic positions in Grupo Elektra. He has been Director of Administration and Finance of both, Grupo Elektra and Banco Azteca, and had executive level responsibilities in financial planning and controlling for Mexico and Latin America, where he implemented successful strategies for budget control to maximize the efficient use of resources that positively affect profitability. Mr. Aguirre has also been instrumental in obtaining financial resources that result in a solid capital structure and financial cost optimization.

He previously held senior executive positions in Mexican and world-class multinationals. Mauro Aguirre holds a degree in Accounting from the Universidad Nacional Autónoma de México and holds an MBA in Finance from the Instituto Tecnológico y de Estudios Superiores de Monterrey.

Manuel Delgado Forey, who was the previous CFO of Grupo Elektra, has been appointed Director of Operations of Banco Azteca.

Acquisition of currency hedging

In the context of the recent volatility of the peso exchange rate to the US dollar, the company has acquired options which give it the right, but not the obligation, to purchase dollars at a peso exchange rate, for up to an additional US$170 million, which allow to cover, with a predetermined exchange rate, purchases of merchandise from abroad, as well as other liabilities denominated in foreign currency. Subsequently, as of July 21, the company has also contracted forwards for US$148 million. Depending on the volatility of the exchange rate and in a prudential way, the company could increase its exchange protection operations.

The currency hedging gives Grupo Elektra certainty about the amount in pesos of such operations, and allows the adequate supply of merchandise that effectively meets customers needs, in the best conditions.

Six months consolidated results

Total consolidated revenue in the first six months of the year grew 6% to Ps.59,318 million, from Ps.55,800 million for the same period of 2019, boosted by an 8% and a 5% growth in both commercial and financial businesses, respectively.

EBITDA was Ps.3,288 million, in comparison to Ps.9,571 million last year. The company reported operating loss of Ps.828 million from operating profit of Ps.6,162 million a year ago. During the first six months of 2020 a net loss of Ps.3,396 million was registered, compared with a net income of Ps.10,360 million a year ago.

   6M 2019  6M 2020  Change
   Ps.%
     
Consolidated revenue$55,800$59,318 $3,519
6%
     
EBITDA  $9,571$3,288
$(6,283)
 -66%
     
Operating result
$6,162
$(828)
$(6,991)
----
     
Net result $10,360$(3,396)$(13,755)----
     
Net result per share$45.36$(14.84)
$(60.20)
----
     

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.       
As of June 30, 2019, Elektra* outstanding shares were 228.4 million and as of June 30, 2020, were 228.8 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, Panama and Peru.

Grupo Elektra is a Grupo Salinas company (www.gruposalinas.com), a group of dynamic, fast growing, and technologically advanced companies focused on creating economic value through market innovation and goods and services that improve standards of living; social value to improve community wellbeing; and environmental value by reducing the negative impact of its business activities. 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. These companies include TV Azteca (www.TVazteca.com; www.irtvazteca.com), Grupo Elektra (www.grupoelektra.com.mx), Banco Azteca (www.bancoazteca.com.mx), Purpose Financial (havepurpose.com), Afore Azteca (www.aforeazteca.com.mx), Seguros Azteca (www.segurosazteca.com.mx), Punto Casa de Bolsa (www.puntocasadebolsa.mx), Totalplay (www.totalplay.com.mx) and Totalplay Empresarial (totalplayempresarial.com.mx). TV Azteca and Grupo Elektra trade shares on the Mexican Stock Market and in Spain’s' Latibex market. Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders. Grupo Salinas has no equity holdings. The group of companies shares 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 concepts about the future that involve risks and uncertainty that may cause actual results to differ materially from those projected. Other risks that may affect Grupo Elektra and its subsidiaries are presented in documents sent to the securities authorities.

Investor Relations:

Bruno Rangel
Grupo Salinas
Tel. +52 (55) 1720-9167
jrangelk@gruposalinas.com.mx

 
 Rolando Villarreal
Grupo Elektra, S.A.B. de C.V.
Tel. +52 (55) 1720-9167
rvillarreal@gruposalinas.com.mx

Press Relations:
Luciano Pascoe
Tel. +52 (55) 1720 1313 ext. 36553



           
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
           
           
  2Q19 2Q20 Change 
           
 Financial income  17,934 62%   16,931 60%   (1,003)-6% 
 Commercial income  10,828 38%   11,223 40%   395 4% 
 Income  28,762  100%   28,154  100%   (608)-2% 
           
 Financial cost  4,716 16%   5,739 20%   1,023 22% 
 Commercial cost  7,263 25%   7,151 25%   (113)-2% 
 Costs  11,980  42%   12,890  46%   910 8% 
           
 Gross income  16,782  58%   15,264  54%   (1,518)-9% 
           
 Sales, administration and promotion expenses  12,769  44%   12,718  45%   (51)0% 
           
 EBITDA   4,014  14%   2,547  9%   (1,467)-37% 
           
 Depreciation and amortization  1,028 4%   1,351 5%   323 31% 
           
 Depreciation right of use asset  737 3%    765 3%   28 4% 
           
 Other expense, net  (6)0%   (7)0%   (1)-18% 
           
 Operating income  2,255  8%   438  2%   (1,817)-81% 
           
 Comprehensive financial result:         
 Interest income  324 1%    320 1%   (4)-1% 
 Interest expense  (922)-3%   (989)-4%   (67)-7% 
 Foreign exchange gain (loss), net   (88)0%   (68)0%   21 23% 
 Other financial results, net  6,417 22%   (4,629)-16%   (11,045)---- 
    5,730  20%   (5,366)-19%   (11,096)---- 
           
 Participation  in  the  net  income of         
 CASA and other associated companies  (84)0%   (139)0%   (55)-66% 
           
 Income before income tax  7,901  27%   (5,067)-18%   (12,968)---- 
           
 Income tax  (2,367)-8%   1,562 6%   3,929 ---- 
           
 Income before discontinued operations  5,534  19%   (3,505)-12%   (9,038)---- 
           
 Result from discontinued operations  163 1%   9 0%    (154)-95% 
           
 Impairment of intangible assets  -  0%   (42)0%   (42)-100% 
           
 Consolidated net income   5,697  20%   (3,538)-13%   (9,234)---- 
           
           


           
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
           
           
  6M19 6M20 Change 
           
 Financial income  35,506 64%   37,328 63%   1,822 5% 
 Commercial income  20,294 36%   21,991 37%   1,696 8% 
 Income  55,800  100%   59,318  100%   3,519 6% 
           
 Financial cost  8,683 16%   16,351 28%   7,668 88% 
 Commercial cost  13,341 24%   14,320 24%   979 7% 
 Costs  22,024  39%   30,671  52%   8,647 39% 
           
 Gross income  33,775  61%   28,647  48%   (5,129)-15% 
           
 Sales, administration and promotion expenses  24,205  43%   25,359  43%   1,154 5% 
           
 EBITDA   9,571  17%   3,288  6%   (6,283)-66% 
           
 Depreciation and amortization  1,983 4%   2,628 4%   645 33% 
           
 Depreciation right of use asset  1,428 3%   1,489 3%   61 4% 
           
 Other expense, net  (2)0%   (0)0%   2 90% 
           
 Operating income  6,162  11%   (828)-1%   (6,991)---- 
           
 Comprehensive financial result:         
 Interest income  631 1%   571 1%   (60)-10% 
 Interest expense  (1,760)-3%   (1,898)-3%   (138)-8% 
 Foreign exchange gain (loss), net  (196)0%   2,461 4%   2,657 ---- 
 Other financial results, net  9,406 17%   (4,241)-7%   (13,647)---- 
    8,082  14%   (3,106)-5%   (11,188)---- 
           
 Participation  in  the  net  income of         
 CASA and other associated companies  (58)0%   (760)-1%   (702)-100% 
           
 Income before income tax  14,186  25%   (4,694)-8%   (18,880)---- 
           
 Income tax  (3,990)-7%   1,336 2%   5,326 ---- 
           
 Income before discontinued operations  10,196  18%   (3,358)-6%   (13,554)---- 
           
 Result from discontinued operations  164 0%   4 0%   (160)---- 
           
 Impairment of intangible assets  -  0%   (42)0%   (42)-100% 
           
 Consolidated net income   10,360  19%   (3,396)-6%   (13,755)---- 
           
           


  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, 2019 At June 30, 2020   
             
 Cash and cash equivalents   5,420  21,599  27,019   6,124  31,838  37,962   10,943 41% 
             
 Marketable financial instruments   23,697  74,100  97,797   8,468  102,321  110,789   12,991 13% 
             
 Performing loan portfolio   -   76,616  76,616   -   64,150  64,150   (12,467)-16% 
 Total past-due loans  -    3,682  3,682   -   4,615  4,615   934 25% 
 Gross loan portfolio  -   80,298  80,298   -   68,765  68,765   (11,533)-14% 
             
 Allowance for credit risks  -    8,481  8,481   -   7,358  7,358   (1,122)-13% 
             
 Loan portfolio, net  -    71,818  71,818   -   61,407  61,407   (10,411)-14% 
             
 Inventories  9,914   -  9,914   12,091  -  12,091   2,178 22% 
             
 Other current assets  28,840   12,617  41,458   15,251  14,474  29,725   (11,733)-28% 
             
 Total current assets  67,872   180,133   248,005    41,934   210,040   251,974    3,969 2% 
             
 Financial instruments  16,529  271  16,800   30,001  137  30,138   13,337 79% 
             
 Performing loan portfolio  -   26,506  26,506   -   43,348  43,348   16,842 64% 
 Total past-due loans  -   153  153   -   1,061  1,061   908 594% 
 Gross loan portfolio  -   26,659  26,659    -   44,409  44,409   17,750 67% 
             
 Allowance for credit risks  -   677  677    -   1,420  1,420   743 110% 
             
 Loan portfolio  -   25,982  25,982    -   42,989  42,989   17,007 65% 
             
 Other non-current assets  6,026  440  6,466   21,403  187  21,590   15,124 234% 
 Investment in shares  1,772  -   1,772    1,230  -   1,230   (542)-31% 
 Property, furniture, equipment and           
   investment in stores, net  7,446  5,360   12,806   8,017  8,075   16,092   3,286 26% 
 Intangible assets  678  6,677  7,355    633  8,104  8,737   1,383 19% 
 Right of use asset  8,652  2,012  10,664   8,604   1,980  10,584   (80)-1% 
 Other assets  1,351  505  1,856   1,203  8,194   9,397   7,541 406% 
 TOTAL ASSETS   110,326   221,380   331,706    113,026   279,706   392,731    61,025 18% 
             
             
 Demand and term deposits  -  140,603  140,603   -  183,746  183,746   43,144 31% 
 Creditors from repurchase agreements  -  13,904  13,904   -  19,605  19,605   5,701 41% 
 Short-term debt   3,718  62  3,780   11,215  1,187  12,402   8,622 228% 
 Leasing  961   851  1,812   1,935  1,096  3,031   1,219 67% 
 Short-term liabilities with cost   4,679  155,419  160,098   13,150  205,634  218,784   58,686 37% 
             
 Suppliers and other short-term liabilities  15,821   18,945  34,766   16,716  21,725  38,441   3,675 11% 
 Short-term liabilities without cost   15,821  18,945  34,766   16,716  21,725  38,441   3,675 11% 
             
 Total short-term liabilities   20,500    174,364   194,864    29,866   227,359   257,225    62,361 32% 
             
 Long-term debt   18,844  2,336  21,180   14,370  22  14,392   (6,788)-32% 
 Leasing  8,060  1,122  9,182    7,536  1,051  8,587   (595)-6% 
 Long-term liabilities with cost  26,904  3,458  30,362    21,906  1,073  22,979   (7,383)-24% 
             
 Long-term liabilities without cost  12,180  2,118   14,298    12,636  1,948  14,584   285 2% 
             
 Total long-term liabilities  39,084   5,576    44,660     34,542   3,020   37,563    (7,098)-16% 
             
 TOTAL LIABILITIES  59,584   179,940   239,524     64,408   230,379   294,787    55,264 23% 
             
 TOTAL STOCKHOLDERS' EQUITY  50,742   41,440   92,182     48,618   49,326   97,944    5,762 6% 
             
             
 LIABILITIES + EQUITY  110,326   221,380   331,706    113,026   279,706   392,731    61,025 18% 
             
             
             
             


         
 INFRASTRUCTURE   
         
 2Q19 2Q20 Change
         
Points of sale in Mexico        
Elektra  1,11716%   1,14016%   23 2%
Salinas y Rocha  381%    371%    (1)-3%
Banco Azteca  1,80725%   1,84026%   33 2%
Freestanding branches  1,67823%   1,74525%   67 4%
Total  4,640 65%   4,762 68%   122 3%
         
Points of sale in Central and South America        
Elektra  1682%   1953%   27 16%
Banco Azteca  3385%   3986%   60 18%
Freestanding branches  951%   911%   (4)-4%
Total  601 8%    684 10%   83 14%
         
Points of sale in North America        
Purpose Financial  1,91627%   1,60123%   (315)-16%
Total  1,916 27%   1,601 23%   (315)-16%
         
TOTAL  7,157 100%   7,047 100%   (110)-2%
         
         
         
         
Floor space (m²)   1,703 100%   1,532 100%   (171)-10%
         
         
         
Employees        
Mexico  73,14983%   66,25984%   (6,890)-9%
Central and South America  9,09310%    8,38711%   (706)-8%
North America  5,3926%   3,7915%   (1,601)-30%
Total employees  87,634 100%   78,437 100%   (9,197)-10%