—Strong increase in consolidated gross portfolio, grows 27% to Ps.77,085 million—
—The number of credit accounts increases 37% to 18.8 million—
—Current costs and expenses related to the expansion of the credit business will translate into future yields—
MEXICO CITY, July 19, 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 second quarter, and first half of 2013.
Consolidated first quarter results
Consolidated revenue was Ps.17,355 million, up 2% from Ps.17,046 million for the last year. Costs and operating expenses were Ps.15,451 million, from Ps.14,233 million in the same period of 2012.
Grupo Elektra reported EBITDA of Ps.1,905 million, compared to Ps.2,813 million for the previous year; EBITDA margin was 11% this quarter. The company reported a net loss of Ps.1,124 million, from a loss of Ps.19,188 million a year ago.
| 2Q 2012 | 2Q 2013 | Change | ||
| Ps. | % | |||
| Consolidated revenue | $ 17,046 | $ 17,355 | $ 310 | 2% |
| EBITDA | $ 2,813 | $ 1,905 | $ (908) | -32% |
| Net result | $ (19,188) | $ (1,124) | $ 18,064 | 94% |
| Net result per share | $ (80.86) | $ (4.74) | $ 76.12 | 94% |
| Figures in millions of pesos | ||||
| *As of June 30, 2012, Elektra outstanding shares were 237.3 million and as of June 30, 2013, were 237.2 million. | ||||
Revenue
Consolidated revenue grew 2%, as a result of an increase of 9% in financial revenue and a 13% reduction in commercial sales.
Financial revenue grew to Ps.12,298 million, from Ps.11,260 million last year. The dynamism of Banco Azteca Mexico income significantly contributed to the growth of the financial business. Banco Azteca revenue increased 5%, to Ps.8,403 million from Ps.7,993 million, mainly as a result of an expansion of personal loans, and Presta Prenda credits.
Advance America — the largest non-bank provider of cash advance services in the US— acquired by the company during the second quarter of the previous year, and which consolidates its results in Grupo Elektra's financial statements, also contributed to the increase, with Ps.268 in revenue.
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 66% a year ago.
The decrease in commercial revenue is in the context of removal of low margin products, as well as 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 8% to Ps.6,901 million, from Ps.7,490 million from the previous year. The change mainly derives from a 2% increase in financial cost —to Ps.3,403 million compared to Ps.3,347 million a year ago— and a 16% 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.
Consolidated operating expenses were Ps.8,550 million, compared to Ps.6,743 million for the same quarter of the previous year; the growth is due mainly to increases in operations and personnel 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 will translate into a larger credit portfolio that generates solid benefits in the future.
Grupo Elektra currently has 6,517 points of sale, 11% above the 5,871 from a year ago. This change is mainly due to the opening of 658 new financial services branches— as part of the company's strategy to further strengthen this business segment.
The increase in points of sale, and the further specialization of the sales force resulted in a 12% increase in the number of employees, to 77,473 at the end of the quarter, compared to 69,397 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.1,905 million, compared to Ps.2,813 million a year ago; the EBITDA margin for the quarter was 11%. The major expenses associated to the growth of the credit portfolio contribute to the reduction of EBITDA this quarter, however we anticipate solid returns of that growth of portfolio in the future.
The most significant change below EBITDA was a positive variation of Ps.26,052 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.1,124 million, from net loss of Ps.19,188 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 June 30, 2013, was Ps.77,085 million, 27% higher than the Ps.60,524 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 8.1% at the end of the period.
It is expected that the solid growth of the portfolio will result in significant financial revenues for Grupo Elektra in the future.
The most significant driver of the consolidated gross portfolio was a 24% growth in the gross portfolio of Banco Azteca Mexico, to Ps.62,892 million from Ps.50,626 million.
The delinquency rate of Banco Azteca Mexico at the end of the quarter was 7.9%. The non-performing loan portfolio is reserved 1.3 times.
At the end of the quarter, the bank had a total of 18.8 million active credit accounts, 37% above the 13.7 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 second quarter.
Banco Azteca Mexico deposits were Ps.70,756 million, 21% higher than last year. The total number of active savings and deposit accounts of the bank was 17.7 million, an increase of 20% compared to 14.8 million at the end of the same period a year ago.
As of June 30, 2013, the capitalization index of Banco Azteca Mexico was 14.1%. The company considers the index to be at a level that optimizes equity profitability.
Debt
As of June 30, 2013, consolidated total debt with cost was Ps.22,535 million, of which Ps.18,103 million correspond to the commercial business, and Ps.4,432 million to the financial business.
The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.24,385 million at the end of the period; as a result, net cash for the commercial business –excluding debt with cost– was a positive Ps.6,282 million.
Six months results
Total consolidated revenue in the first six months of the year was Ps.34,927 million, 9% higher than the Ps.32,154 million for the same period of 2012. The company reported EBITDA of Ps.4,955 million, compared to Ps.6,121 million for the same period a year ago; the EBITDA margin in the first six months of 2013 was 14%. The company registered a consolidated net loss of Ps.1,706 million, compared to a loss of Ps.23,021 million a year ago, mainly due to a lower depreciation this period in the market value of underlying financial instruments that the company holds, which doesn't imply cash flow, compared to the prior year.
| 6M 2012 | 6M 2013 | Change | |||
| Ps. | % | ||||
| Consolidated revenue | $ 32,154 | $ 34,927 | $ 2,773 | 9% | |
| EBITDA | $ 6,121 | $ 4,955 | $ 1,167 | -19% | |
| Net result | $ (23,021) | $ (1,706) | $ 21,315 | 93% | |
| Net result per share | $ (97.01) | $ (7.19) | $ 89.82 | 93% | |
| Figures in million of pesos. | |||||
| As of June 30, 2012, Elektra* outstanding shares were 237.3 million and the number of shares as of June 30, 2013 was 237.2 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 | ||||||
| 2Q12 | 2Q13 | Change | ||||
| Financial income | 11,260 | 66% | 12,298 | 71% | 1,038 | 9% |
| Commercial income | 5,786 | 34% | 5,057 | 29% | (728) | -13% |
| Income | 17,046 | 100% | 17,355 | 100% | 310 | 2% |
| Financial cost | 3,347 | 20% | 3,403 | 20% | 57 | 2% |
| Commercial cost | 4,143 | 24% | 3,497 | 20% | (646) | -16% |
| Costs | 7,490 | 44% | 6,901 | 40% | (589) | -8% |
| Gross income | 9,556 | 56% | 10,455 | 60% | 899 | 9% |
| Sales, administration and promotion expenses | 6,743 | 40% | 8,550 | 49% | 1,807 | 27% |
| Depreciation and amortization | 569 | 3% | 656 | 4% | 88 | 15% |
| Operating expenses | 7,311 | 43% | 9,206 | 53% | 1,895 | 26% |
| Operating income | 2,244 | 13% | 1,249 | 7% | (996) | -44% |
| EBITDA | 2,813 | 17% | 1,905 | 11% | (908) | -32% |
| Comprehensive financial result: | ||||||
| Interest income | 473 | 3% | 212 | 1% | (261) | -55% |
| Interest expense | (492) | -3% | (379) | -2% | 114 | 23% |
| Foreign exchange gain, net | 43 | 0% | 191 | 1% | 148 | ---- |
| Other financial results, net | (28,993) | -170% | (2,942) | -17% | 26,052 | 90% |
| (28,970) | -170% | (2,917) | -17% | 26,052 | 90% | |
| Other income (expense), net | 2 | 0% | (3) | 0% | (5) | ---- |
| Participation in the net income of CASA and other associated companies | 44 | 0% | 57 | 0% | 13 | 30% |
| Loss before income tax | (26,680) | -157% | (1,615) | -9% | 25,065 | 94% |
| Income tax | 7,492 | 44% | 491 | 3% | (7,000) | -93% |
| Consolidated net loss | (19,188) | -113% | (1,124) | -6% | 18,064 | 94% |
| GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES | ||||||
| CONSOLIDATED INCOME STATEMENTS | ||||||
| MILLIONS OF MEXICAN PESOS | ||||||
| 6M12 | 6M13 | Change | ||||
| Financial income | 20,336 | 63% | 24,766 | 71% | 4,430 | 22% |
| Commercial income | 11,818 | 37% | 10,161 | 29% | (1,657) | -14% |
| Income | 32,154 | 100% | 34,927 | 100% | 2,773 | 9% |
| Financial cost | 5,955 | 19% | 6,570 | 19% | 615 | 10% |
| Commercial cost | 8,515 | 26% | 7,110 | 20% | (1,405) | -17% |
| Costs | 14,470 | 45% | 13,679 | 39% | (790) | -5% |
| Gross income | 17,684 | 55% | 21,248 | 61% | 3,563 | 20% |
| Sales, administration and promotion expenses | 11,563 | 36% | 16,293 | 47% | 4,730 | 41% |
| Depreciation and amortization | 1,042 | 3% | 1,318 | 4% | 276 | 26% |
| Operating expenses | 12,605 | 39% | 17,611 | 50% | 5,006 | 40% |
| Operating Income | 5,079 | 16% | 3,637 | 10% | (1,442) | -28% |
| EBITDA | 6,121 | 19% | 4,955 | 14% | (1,167) | -19% |
| Comprehensive financial result: | ||||||
| Interest income | 576 | 2% | 261 | 1% | (315) | -55% |
| Interest expense | (917) | -3% | (799) | -2% | 118 | 13% |
| Foreign exchange loss, net | (299) | -1% | (177) | -1% | 122 | 41% |
| Other financial results, net | (36,577) | -114% | (5,543) | -16% | 31,034 | 85% |
| (37,217) | -116% | (6,259) | -18% | 30,959 | 83% | |
| Other income, net | 1 | 0% | 6 | 0% | 5 | ---- |
| Participation in the net income expense of CASA and other associated companies | 75 | 0% | 55 | 0% | (20) | -26% |
| Loss before income tax | (32,062) | -100% | (2,561) | -7% | 29,501 | 92% |
| Income tax | 9,041 | 28% | 855 | 2% | (8,187) | -91% |
| Consolidated net loss | (23,021) | -72% | (1,706) | -5% | 21,315 | 93% |
| 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, 2012 | At June 30, 2013 | |||||||
| Cash and cash equivalents | 1,789 | 14,516 | 16,305 | 2,317 | 16,300 | 18,617 | 2,312 | 14% |
| Marketable financial instruments | 12,464 | 13,449 | 25,913 | 22,068 | 14,983 | 37,051 | 11,138 | 43% |
| Performing loan portfolio | 426 | 42,296 | 42,722 | 455 | 51,237 | 51,692 | 8,969 | 21% |
| Total past-due loans | 267 | 2,757 | 3,023 | 273 | 5,340 | 5,613 | 2,590 | 86% |
| Gross loan portfolio | 693 | 45,053 | 45,746 | 728 | 56,577 | 57,305 | 11,559 | 25% |
| Allowance for credit risks | 267 | 5,515 | 5,781 | 273 | 7,917 | 8,190 | 2,409 | 42% |
| Loan portfolio, net | 426 | 39,538 | 39,964 | 455 | 48,660 | 49,115 | 9,151 | 23% |
| Inventories | 6,723 | 6,723 | 6,808 | 6,808 | 85 | 1% | ||
| Other current assets | 5,885 | 5,322 | 11,207 | 7,721 | 8,405 | 16,126 | 4,919 | 44% |
| Total current assets | 27,288 | 72,825 | 100,113 | 39,369 | 88,348 | 127,718 | 27,605 | 28% |
| Financial instruments | 10,751 | -- | 10,751 | -- | -- | -- | (10,751) | ---- |
| Performing loan portfolio | -- | 14,248 | 14,248 | -- | 19,183 | 19,183 | 4,936 | 35% |
| Total past-due loans | -- | 531 | 531 | -- | 597 | 597 | 66 | 12% |
| Loan portfolio | -- | 14,778 | 14,778 | -- | 19,780 | 19,780 | 5,002 | 34% |
| Other non-current assets | 8,086 | -- | 8,086 | 754 | 0 | 754 | (7,332) | ---- |
| Investment in shares | 2,547 | 2,547 | 3,950 | -- | 3,950 | 1,403 | 55% | |
| Property, furniture, equipment and investment in stores, net | 4,192 | 2,331 | 6,523 | 4,576 | 2,892 | 7,467 | 944 | 14% |
| Intangible assets | 634 | 7,004 | 7,637 | 626 | 6,594 | 7,220 | (418) | -5% |
| Other assets | 443 | 123 | 566 | 736 | 191 | 927 | 361 | 64% |
| TOTAL ASSETS | 53,940 | 97,061 | 151,001 | 50,011 | 117,805 | 167,816 | 16,815 | 11% |
| Demand and term deposits | 60,018 | 60,018 | 76,803 | 76,803 | 16,785 | 28% | ||
| Creditors from repurchase agreements | 5,019 | 5,019 | 2,314 | 2,314 | (2,704) | -54% | ||
| Short-term debt | 5,505 | 882 | 6,387 | 3,608 | 3,325 | 6,933 | 546 | 9% |
| Short-term liabilities with cost | 5,505 | 65,918 | 71,424 | 3,608 | 82,442 | 86,050 | 14,627 | 20% |
| Suppliers and other short-term liabilities | 7,247 | 5,050 | 12,298 | 6,487 | 7,194 | 13,681 | 1,384 | 11% |
| Short-term liabilities without cost | 7,247 | 5,050 | 12,298 | 6,487 | 7,194 | 13,681 | 1,384 | 11% |
| Total short-term liabilities | 12,753 | 70,969 | 83,721 | 10,095 | 89,637 | 99,732 | 16,010 | 19% |
| Long-term debt | 13,778 | 1,129 | 14,907 | 14,495 | 1,107 | 15,602 | 695 | 5% |
| Long-term liabilities with cost | 13,778 | 1,129 | 14,907 | 14,495 | 1,107 | 15,602 | 695 | 5% |
| Long-term liabilities without cost | 8,338 | 1,756 | 10,095 | 7,771 | 1,245 | 9,016 | (1,079) | -11% |
| Total long-term liabilities | 22,116 | 2,886 | 25,002 | 22,265 | 2,352 | 24,617 | (384) | -2% |
| TOTAL LIABILITIES | 34,869 | 73,854 | 108,723 | 32,360 | 91,989 | 124,349 | 15,626 | 14% |
| TOTAL STOCKHOLDERS' EQUITY | 19,071 | 23,207 | 42,278 | 17,651 | 25,816 | 43,467 | 1,189 | 3% |
| LIABILITIES + EQUITY | 53,940 | 97,061 | 151,001 | 50,011 | 117,805 | 167,816 | 16,815 | 11% |
| INFRASTRUCTURE | ||||||
| 2Q12 | 2Q13 | Change | ||||
| Points of sale in Mexico | ||||||
| Elektra (1) | 961 | 16% | 968 | 15% | 7 | 1% |
| Salinas y Rocha (1) | 55 | 1% | 55 | 1% | -- | 0% |
| Freestanding branches (2) | 1,825 | 31% | 2,342 | 36% | 517 | 28% |
| Total | 2,841 | 48% | 3,365 | 52% | 524 | 18% |
| Points of sale in Central and South America | ||||||
| Elektra (3) | 233 | 4% | 214 | 3% | (19) | -8% |
| Freestanding branches | 326 | 6% | 452 | 7% | 126 | 39% |
| Total | 559 | 10% | 666 | 10% | 107 | 19% |
| Points of sale in North America | ||||||
| Advance America | 2,471 | 42% | 2,486 | 38% | 15 | 1% |
| Total | 2,471 | 42% | 2,486 | 38% | 15 | 1% |
| TOTAL | 5,871 | 100% | 6,517 | 100% | 646 | 11% |
| (1) Each store has a Banco Azteca branch. | ||||||
| (2) In 2Q13, includes 46 Bodegas de Remate that continues operating only financial services. | ||||||
| (3) In 2Q13, only 204 Central and South America Elektra's store have a Banco Azteca branch. | ||||||
| Floor space (m²) | ||||||
| Elektra Mexico | 831,862 | 53% | 836,625 | 51% | 4,762 | 1% |
| Elektra Central and South America | 164,482 | 10% | 154,619 | 9% | (9,863) | -6% |
| Salinas y Rocha | 58,995 | 4% | 58,995 | 4% | -- | 0% |
| Freestanding branches | 188,825 | 12% | 245,960 | 15% | 57,136 | 30% |
| Advance America | 338,500 | 21% | 340,623 | 21% | 2,123 | 1% |
| TOTAL | 1,582,664 | 100% | 1,636,821 | 100% | 54,157 | 3% |
| Employees | ||||||
| Mexico | 52,979 | 76% | 58,578 | 76% | 5,599 | 11% |
| Central and South America | 10,275 | 15% | 12,566 | 16% | 2,291 | 22% |
| North America | 6,143 | 9% | 6,329 | 8% | 186 | 3% |
| Total employees | 69,397 | 100% | 77,473 | 100% | 8,076 | 12% |