—Consolidated Revenue Increased 7% to Ps.18,215 Million,
Supported by a 24% Increase in Commercial Business—
—14% Growth in Consolidated Deposits to Ps.86,701 Million
Generates Solid Perspectives in Financial Business—
MEXICO CITY, Oct. 23, 2014 (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 and nine months of 2014.
Consolidated third quarter results
Consolidated revenue totaled Ps.18,215 million, 7% higher than the Ps.17,067 million of the same period last year. Costs and operating expenses were Ps.15,800 million, from Ps.14,404 million for the same period of 2013.
As a result, Grupo Elektra reported EBITDA of Ps.2,415 million, compared with Ps.2,664 million from the previous year's quarter; EBITDA margin was 13% this period.
The company reported net income of Ps.1,836 million, from a net income of Ps.672 million a year ago.
| 3Q 2013 | 3Q 2014 | Change | ||||||
| Ps. | % | |||||||
| Consolidated revenue | $17,067 | $18,215 | $1,147 | 7% | ||||
| EBITDA | $2,664 | $2,415 | $(249) | -9% | ||||
| Net result | $672 | $1,836 | $1,164 | --- | ||||
| Net result per share | $2.83 | $7.75 | $4.92 | --- | ||||
| Figures in millions of pesos | ||||||||
| As of September 30, 2013, Elektra outstanding shares were 237.3 million and as of September 30, 2014, were 236.9 million. | ||||||||
Revenue
Consolidated revenue grew 7%, as a result of increases of 24% in commercial sales and 1% in financial revenue.
Commercial sales, of Ps.5,430 million from Ps.4,378 million last year, increased as a result of strategies that generate growing customer satisfaction through an optimal mix of merchandise on the sales floor, which is offered by a highly trained sales force under the most competitive market conditions.
The growth of 1% in financial revenues to Ps.12,785 million, compared with Ps.12,690 million last year, is explained mainly by higher revenue from Advance America —the largest non-bank provider of cash advance services in the US— partially compensated by a decrease in revenue from Banco Azteca Mexico.
Costs and expenses
Consolidated costs for the quarter increased 19% to Ps.8,070 million, from Ps.6,758 million from the previous year. The change mainly derives from a 21% increase in financial cost —derived from the creation of loan loss reserves— and an 18% increase in commercial cost.
Sales, administration and promotion expenses grew 1% to Ps.7,730 million. The increase was below the growth of consolidated revenues due to the implementation of strategies that generated operating efficiencies in the quarter.
EBITDA and net result
Consolidated EBITDA was Ps.2,415 million, compared to Ps.2,664 million a year ago.
The most significant change below EBITDA was an increase of Ps.2,186 million in other financial results, as a consequence of an improvement 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 net income of Ps.1,836 million, compared to net income of Ps.672 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, 2014, was Ps.76,494 million, compared to Ps.77,576 million from the previous year. Consolidated delinquency rate was 8% at the end of the period.
The gross portfolio of Banco Azteca Mexico was Ps.61,656 million, compared to Ps.63,382 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 8%. The non-performing loan portfolio is reserved 1.41 times. 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.4,598 million, 15% higher than the Ps.3,996 million a year ago. More dynamism in the operations of the company is expected with the successful launch of title loans in a growing number of points of sale in the U.S.
Grupo Elektra consolidated deposits grew 14%, to Ps.86,701 million, compared to Ps.76,240 million a year ago. Deposits of Banco Azteca Mexico were Ps.80,802 million, 15% higher than the Ps.70,434 million a year ago. Financial products that satisfy clients in the best way, with world class service, resulted in the increase in deposits. The higher deposit base sets a strong foundation for future financial business growth.
As of September 30, 2014, the capitalization index of Banco Azteca Mexico was 15%. The company considers the index to be at a level that optimizes equity profitability.
Debt
Consolidated debt with cost as of September 30, 2014, was Ps.19,798 million, 12% below Ps.22,543 million of the prior year, mainly as a consequence of debt prepayments of Ps.2,172 million of Banco Azteca Mexico this period.
Consolidated debt at the close of September 2014 was comprised of Ps.18,488 million of the commercial business, and Ps.1,310 million of the financial business. The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.15,822 million at the end of the period; as a result, net debt for the commercial business was Ps.2,666 million.
Expansion
Grupo Elektra currently has 6,951 points of sale, 8% more than the 6,460 from a year ago; the change comes mainly from the addition of 312 Blockbuster stores in the period.
As previously announced, the company acquired in January 100% of the shares of Blockbuster Mexico, increasing the points of sale of Grupo Elektra's distribution network. The Blockbuster stores are located in 108 cities throughout the country, mainly in the B and C demographic areas, which will expand the customer base of the company.
In the Blockbuster stores, Grupo Elektra plans to offer commercial products, in addition to strengthening its current financial services platform, and promote the transformation of the entertainment distribution network. The transition to the new formats has begun, which means costs and expenses, but will generate significant yields in the future.
Grupo Elektra has 3,882 points of sale in Mexico, 2,432 in the United States, and 637 in Central and South America. The wide distribution network allows the company to keep its proximity and closeness to 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 was Ps.53,737 million, 4% higher than the Ps.51,769 million for the same period of 2013, boosted by 12% growth in the commercial business.
EBITDA was Ps.7,081 million, compared to Ps.7,594 million for the same period a year ago; the EBITDA margin in the first nine months of 2014 was 13%. The company registered consolidated net income of Ps.547 million, compared to a loss of Ps.1,034 million a year ago, mainly due an improvement 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.
| 9M 2013 | 9M 2014 | Change | ||||||
| Ps. | % | |||||||
| Consolidated revenue | $51,769 | $53,737 | $1,968 | 4% | ||||
| EBITDA | $7,594 | $7,081 | $(513) | -7% | ||||
| Net result | $(1,034) | $547 | $1,581 | --- | ||||
| Net result per share | $(4.36) | $2.32 | $6.68 | --- | ||||
| Figures in millions of pesos | ||||||||
| As of September 30, 2013, Elektra outstanding shares were 237.3 million and as of September 30, 2014, were 236.9 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 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 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 | ||||||
| 3Q13 | 3Q14 | Change | ||||
| Financial income | 12,690 | 74% | 12,785 | 70% | 95 | 1% |
| Commercial income | 4,378 | 26% | 5,430 | 30% | 1,052 | 24% |
| Income | 17,067 | 100% | 18,215 | 100% | 1,147 | 7% |
| Financial cost | 3,731 | 22% | 4,502 | 25% | 771 | 21% |
| Commercial cost | 3,027 | 18% | 3,568 | 20% | 541 | 18% |
| Costs | 6,758 | 40% | 8,070 | 44% | 1,312 | 19% |
| Gross income | 10,309 | 60% | 10,144 | 56% | (165) | -2% |
| Sales, administration and promotion expenses | 7,646 | 45% | 7,730 | 42% | 84 | 1% |
| Depreciation and amortization | 737 | 4% | 705 | 4% | (32) | -4% |
| Operating expenses | 8,383 | 49% | 8,435 | 46% | 52 | 1% |
| Operating income | 1,927 | 11% | 1,710 | 9% | (217) | -11% |
| EBITDA | 2,664 | 16% | 2,415 | 13% | (249) | -9% |
| Comprehensive financial result: | ||||||
| Interest income | 17 | 0% | 89 | 0% | 72 | ---- |
| Interest expense | (460) | -3% | (342) | -2% | 119 | 26% |
| Foreign exchange loss, net | (65) | 0% | (72) | 0% | (6) | -10% |
| Other financial results, net | (1,043) | -6% | 1,143 | 6% | 2,186 | ---- |
| (1,552) | -9% | 818 | 4% | 2,370 | ---- | |
| Other income (expense), net | 9 | 0% | (12) | 0% | (21) | ---- |
| Participation in the net income of CASA and other associated companies | (23) | 0% | 62 | 0% | 85 | ---- |
| Income before income tax | 361 | 2% | 2,578 | 14% | 2,217 | ---- |
| Income tax | (59) | 0% | (743) | -4% | (683) | ---- |
| Income before discontinued operations | 302 | 2% | 1,836 | 10% | 1,534 | ---- |
| Result from discontinued operations | 370 | 2% | - | 0% | (370) | ---- |
| Consolidated net income | 672 | 4% | 1,836 | 10% | 1,164 | ---- |
| GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES | ||||||
| CONSOLIDATED INCOME STATEMENTS | ||||||
| MILLIONS OF MEXICAN PESOS | ||||||
| 9M13 | 9M14 | Change | ||||
| Financial income | 37,258 | 72% | 37,557 | 70% | 299 | 1% |
| Commercial income | 14,511 | 28% | 16,181 | 30% | 1,670 | 12% |
| Income | 51,769 | 100% | 53,737 | 100% | 1,968 | 4% |
| Financial cost | 10,280 | 20% | 11,954 | 22% | 1,674 | 16% |
| Commercial cost | 10,108 | 20% | 10,959 | 20% | 851 | 8% |
| Costs | 20,388 | 39% | 22,913 | 43% | 2,525 | 12% |
| Gross income | 31,381 | 61% | 30,824 | 57% | (557) | -2% |
| Sales, administration and promotion expenses | 23,787 | 46% | 23,743 | 44% | (44) | 0% |
| Depreciation and amortization | 2,044 | 4% | 2,038 | 4% | (6) | 0% |
| Operating expenses | 25,830 | 50% | 25,781 | 48% | (49) | 0% |
| Operating Income | 5,550 | 11% | 5,043 | 9% | (507) | -9% |
| EBITDA | 7,594 | 15% | 7,081 | 13% | (513) | -7% |
| Comprehensive financial result: | ||||||
| Interest income | 278 | 1% | 304 | 1% | 26 | 9% |
| Interest expense | (1,260) | -2% | (1,106) | -2% | 154 | 12% |
| Foreign exchange (loss) gain, net | (243) | 0% | 45 | 0% | 287 | ---- |
| Other financial results, net | (6,586) | -13% | (3,405) | -6% | 3,181 | 48% |
| (7,810) | -15% | (4,162) | -8% | 3,648 | 47% | |
| Other income (expense), net | 15 | 0% | (287) | -1% | (302) | ---- |
| Participation in the net income expense of CASA and other associated companies | 32 | 0% | 73 | 0% | 41 | ---- |
| (Loss) income before income tax | (2,213) | -4% | 667 | 1% | 2,879 | ---- |
| Income tax | 795 | 2% | (119) | 0% | (915) | ---- |
| (Loss) income before discontinued operations | (1,417) | -3% | 547 | 1% | 1,965 | ---- |
| Result from discontinued operations | 383 | 1% | - | 0% | (383) | ---- |
| Consolidated net (loss) income | (1,034) | -2% | 547 | 1% | 1,581 | ---- |
| 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 September 30, 2013 | At September 30, 2014 | |||||||
| Cash and cash equivalents | 2,755 | 15,754 | 18,510 | 2,736 | 16,226 | 18,963 | 453 | 2% |
| Marketable financial instruments | 22,461 | 15,891 | 38,352 | 13,086 | 29,509 | 42,595 | 4,243 | 11% |
| Performing loan portfolio | - | 52,330 | 52,330 | - | 52,597 | 52,597 | 267 | 1% |
| Total past-due loans | - | 5,453 | 5,453 | - | 5,819 | 5,819 | 366 | 7% |
| Gross loan portfolio | - | 57,783 | 57,783 | - | 58,417 | 58,417 | 634 | 1% |
| Allowance for credit risks | - | 8,128 | 8,128 | - | 8,901 | 8,901 | 773 | 10% |
| Loan portfolio, net | - | 49,655 | 49,655 | - | 49,515 | 49,515 | (139) | 0% |
| Inventories | 5,901 | 5,901 | 6,249 | 6,249 | 348 | 6% | ||
| Other current assets | 4,026 | 6,190 | 10,216 | 3,887 | 5,676 | 9,562 | (654) | -6% |
| Total current assets | 35,142 | 87,491 | 122,634 | 25,958 | 100,927 | 126,884 | 4,251 | 3% |
| Financial instruments | - | - | - | 10,042 | 222 | 10,264 | 10,264 | ---- |
| Performing loan portfolio | - | 19,605 | 19,605 | 17,744 | 17,744 | (1,861) | -9% | |
| Total past-due loans | - | 188 | 188 | 332 | 332 | 144 | 77% | |
| Loan portfolio | - | 19,793 | 19,793 | - | 18,077 | 18,077 | (1,716) | -9% |
| Other non-current assets | 4,728 | 2 | 4,730 | 3,100 | 0 | 3,101 | (1,629) | -34% |
| Investment in shares | 3,923 | - | 3,923 | 4,394 | 4,394 | 471 | 12% | |
| Property, furniture, equipment and investment in stores, net | 4,552 | 2,873 | 7,425 | 4,645 | 2,821 | 7,467 | 41 | 1% |
| Intangible assets | 625 | 6,865 | 7,490 | 628 | 6,707 | 7,334 | (155) | -2% |
| Other assets | 688 | 209 | 897 | 703 | 628 | 1,331 | 435 | 48% |
| TOTAL ASSETS | 49,658 | 117,233 | 166,891 | 49,471 | 129,381 | 178,852 | 11,961 | 7% |
| Demand and term deposits | 76,240 | 76,240 | 86,701 | 86,701 | 10,461 | 14% | ||
| Creditors from repurchase agreements | 2,430 | 2,430 | 3,817 | 3,817 | 1,387 | 57% | ||
| Short-term debt | 3,725 | 2,325 | 6,051 | 2,244 | 161 | 2,405 | (3,646) | -60% |
| Short-term liabilities with cost | 3,725 | 80,996 | 84,721 | 2,244 | 90,680 | 92,924 | 8,202 | 10% |
| Suppliers and other short-term liabilities | 6,062 | 6,389 | 12,451 | 8,713 | 6,521 | 15,234 | 2,783 | 22% |
| Short-term liabilities without cost | 6,062 | 6,389 | 12,451 | 8,713 | 6,521 | 15,234 | 2,783 | 22% |
| Total short-term liabilities | 9,787 | 87,385 | 97,172 | 10,957 | 97,201 | 108,158 | 10,986 | 11% |
| Long-term debt | 14,788 | 1,704 | 16,492 | 16,244 | 1,149 | 17,393 | 901 | 5% |
| Long-term liabilities with cost | 14,788 | 1,704 | 16,492 | 16,244 | 1,149 | 17,393 | 901 | 5% |
| Long-term liabilities without cost | 7,684 | 1,378 | 9,062 | 4,851 | 1,580 | 6,431 | (2,631) | -29% |
| Total long-term liabilities | 22,472 | 3,082 | 25,554 | 21,095 | 2,729 | 23,824 | (1,731) | -7% |
| TOTAL LIABILITIES | 32,259 | 90,467 | 122,726 | 32,051 | 99,930 | 131,982 | 9,255 | 8% |
| TOTAL STOCKHOLDERS' EQUITY | 17,399 | 26,766 | 44,165 | 17,420 | 29,451 | 46,871 | 2,706 | 6% |
| LIABILITIES + EQUITY | 49,658 | 117,233 | 166,891 | 49,471 | 129,381 | 178,852 | 11,961 | 7% |
| GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES | ||||||||||||
| INFRASTRUCTURE | ||||||||||||
| 3Q13 | 3Q14 | Change | ||||||||||
| Points of sale in Mexico | ||||||||||||
| Elektra (1) | 975 | 15% | 998 | 14% | 23 | 2% | ||||||
| Salinas y Rocha (1) | 55 | 1% | 55 | 1% | - | 0% | ||||||
| Freestanding branches | 2,337 | 36% | 2,517 | 36% | 180 | 8% | ||||||
| Blockbuster | - | 0% | 312 | 4% | 312 | 100% | ||||||
| Total | 3,367 | 52% | 3,882 | 56% | 515 | 15% | ||||||
| Points of sale in Central and South America | ||||||||||||
| Elektra (1) | 210 | 3% | 215 | 3% | 5 | 2% | ||||||
| Freestanding branches | 418 | 6% | 422 | 6% | 4 | 1% | ||||||
| Total | 628 | 10% | 637 | 9% | 9 | 1% | ||||||
| Points of sale in North America | ||||||||||||
| Advance America | 2,465 | 38% | 2,432 | 35% | (33) | -1% | ||||||
| Total | 2,465 | 38% | 2,432 | 35% | (33) | -1% | ||||||
| TOTAL | 6,460 | 100% | 6,951 | 100% | 491 | 8% | ||||||
| (1) Each store has a Banco Azteca branch. | ||||||||||||
| Floor space (m²) | ||||||||||||
| Elektra Mexico | 837,424 | 52% | 848,912 | 49% | 11,487 | 1% | ||||||
| Elektra Central and South America | 149,761 | 9% | 151,891 | 9% | 2,130 | 1% | ||||||
| Salinas y Rocha | 58,995 | 4% | 58,995 | 3% | - | 0% | ||||||
| Freestanding branches | 239,343 | 15% | 241,603 | 14% | 2,260 | 1% | ||||||
| Advance America | 337,745 | 21% | 333,184 | 19% | (4,561) | -1% | ||||||
| Blockbuster | - | 0% | 104,954 | 6% | 104,954 | 100% | ||||||
| TOTAL | 1,623,268 | 100% | 1,739,539 | 100% | 116,271 | 7% | ||||||
| Employees | ||||||||||||
| Mexico | 61,064 | 77% | 61,676 | 77% | 612 | 1% | ||||||
| Central and South America | 12,071 | 15% | 11,269 | 14% | (802) | -7% | ||||||
| North America | 6,522 | 8% | 6,947 | 9% | 425 | 7% | ||||||
| Total employees | 79,657 | 100% | 79,892 | 100% | 235 | 0% | ||||||