—Consolidated revenue increases 9% to Ps.20,510 million, supported by a 29% solid expansion of the commercial business—
—19% growth in consolidated deposits to Ps.93,147 million generates solid perspectives in the financial business—
—Grupo Elektra surpasses 7,000 points of sale milestone in eight countries—
MEXICO CITY, Feb. 24, 2015 (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 fourth quarter, and 2014.
Consolidated fourth quarter results
Consolidated revenue totaled Ps.20,510 million, 9% higher than the Ps.18,881 million of the same period last year. Costs and operating expenses were Ps.18,212 million, from Ps.16,732 million for the same period of 2013.
As a result, Grupo Elektra reported EBITDA of Ps.2,298 million, 7% higher than the Ps.2,150 million of the previous year's quarter; EBITDA margin was 11% this period, same as the previous year.
The company reported net income of Ps.6,785 million, from net income of Ps.1,863 million a year ago.
| 4Q 2013 | 4Q 2014 | Change | ||
| Ps. | % | |||
| Consolidated revenue | $18,881 | $20,510 | $1,629 | 9% |
| EBITDA | $2,150 | $2,298 | $149 | 7% |
| Net result | $1,863 | $6,785 | $4,923 | -- |
| Net result per share | $7.85 | $28.7 | $20.83 | -- |
| Figures in millions of pesos | ||||
| EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. | ||||
| As of December 31, 2013, Elektra outstanding shares were 237.2 million and as of December 31, 2014, were 236.4 million. | ||||
Revenue
Consolidated revenue grew 9%, as a result of an increase of 29% in commercial sales, together with largely unchanged financial revenues.
Commercial sales —of Ps.7,285 million from Ps.5,627 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, as well as solid marketing campaigns for the higher seasonal demand towards year-end.
Financial revenues, of Ps.13,225 million in the quarter, were stable compared to previous year, mainly as a combined result of higher revenue from Advance America —the largest non-bank provider of cash advance services in the US— and a decrease in revenue from Banco Azteca Mexico.
Costs and expenses
Consolidated costs for the quarter increased 13% to Ps.9,993 million, from Ps.8,856 million from the previous year. The change mainly derives from a 31% increase in commercial cost —in line with the performance of commercial sales— and a 3% reduction in financial cost, resulting from lower interests paid.
Sales, administration and promotion expenses grew 4% to Ps.8,219 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.2,298 million, compared to Ps.2,150 million a year ago.
The most significant change below EBITDA was a positive variation of Ps.5,899 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.
The other expense line grew Ps.529 million this quarter, due mainly to non-recurring charges coming from assets deterioration.
Grupo Elektra reported net income of Ps.6,785 million, compared to net income of Ps.1,863 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 December 31, 2014, was Ps.75,901 million, compared to Ps.77,103 million from the previous year. Consolidated delinquency rate was 9% at the end of the period.
The gross portfolio of Banco Azteca Mexico was Ps.60,120 million, compared to Ps.62,281 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 9.3%. The non-performing loan portfolio is reserved 1.32 times. The average term of the credit portfolio for principal credit lines —consumer, personal loans and Tarjeta Azteca— was 54 weeks at the end of the fourth quarter.
The Advance America loan portfolio was Ps.5,002 million, 20% higher than the Ps.4,174 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 19%, to Ps.93,147 million, compared to Ps.78,559 million a year ago. Deposits of Banco Azteca Mexico were Ps.87,574 million, 18% higher than the Ps.73,968 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 December 31, 2014, the capitalization index of Banco Azteca Mexico was 14.9%. The company considers the index to be at a level that optimizes equity profitability.
Debt
Consolidated debt with cost as of December 31, 2014, was Ps.18,940 million, 16% below the Ps.22,673 million of the prior year, mainly as a consequence of debt prepayments of Ps.2,772 million for Banco Azteca Mexico this period.
Consolidated debt at the end of December 2014 was comprised of Ps.17,442 million for the commercial business, and Ps.1,498 million for the financial business. The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.19,743 million at the end of the period; as a result, that division has a positive net cash balance —excluding the debt with cost amount— of Ps.2,301 million.
Expansion
Grupo Elektra currently has 7,034 points of sale, 9% more than the 6,479 from a year ago; the change comes mainly from the addition of 293 Blockbuster stores in the period.
As previously announced, the company acquired in January 2014, 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 3,987 points of sale in Mexico, 2,414 in the United States, and 633 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.
Appointment in Banco Azteca
In January, the appointment of Alejandro Valenzuela was announced as CEO of Banco Azteca. Mr. Valenzuela has over 20 years of experience in the financial industry in Mexico, both in the public and private sectors. He was CEO of Grupo Financiero Banorte, and previously, he was Director of International Relations at Banco de Mexico and held strategic positions in the Finance Ministry.
Mr. Valenzuela plans to offer more and better world-class financial services and generate important synergies with the commercial division of Grupo Elektra, which will further drive the continued well-being of millions of families and the progress of businesses in more market segments in Mexico and Latin America.
Alejandro Valenzuela replaces Luis Niño de Rivera, who will become Vice Chairman of Banco Azteca.
Twelve months consolidated results
Total consolidated revenue in 2014 was Ps.74,082 million, 5% higher than the Ps.70,423 million for 2013, as a result of a 17% and 1% growth in the commercial and financial divisions, respectively.
EBITDA was Ps.9,484 million, compared to Ps.9,882 million for the previous year; the EBITDA margin for the year was 13%. The company registered net income of Ps.7,333 million, compared to a net result of Ps.829 million in 2013, mainly due to 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.
| 2013 | 2014 | Change | ||
| Ps. | % | |||
| Consolidated revenue | $70,423 | $74,082 | $3,659 | 5% |
| EBITDA | $9,882 | $9,484 | $(398) | -4% |
| Net result | $829 | $7,333 | $6,504 | -- |
| Net result per share | $3.49 | $31.02 | $27.53 | -- |
| Figures in millions of pesos | ||||
| EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. | ||||
| As of December 31, 2013, Elektra outstanding shares were 237.2 million and as of December 31, 2014, were 236.4 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), Totalplay (www.totalplay.com.mx) and Enlace TPE (www.enlacetpe.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 | ||||||
| 4Q13 | 4Q14 | Change | ||||
| Financial income | 13,254 | 70% | 13,225 | 64% | (30) | 0% |
| Commercial income | 5,627 | 30% | 7,285 | 36% | 1,658 | 29% |
| Income | 18,881 | 100% | 20,510 | 100% | 1,629 | 9% |
| Financial cost | 4,802 | 25% | 4,681 | 23% | (121) | -3% |
| Commercial cost | 4,054 | 21% | 5,312 | 26% | 1,257 | 31% |
| Costs | 8,856 | 47% | 9,993 | 49% | 1,137 | 13% |
| Gross income | 10,025 | 53% | 10,517 | 51% | 492 | 5% |
| Sales, administration and promotion expenses | 7,876 | 42% | 8,219 | 40% | 343 | 4% |
| Depreciation and amortization | 875 | 5% | 800 | 4% | (75) | -9% |
| Operating expenses | 8,750 | 46% | 9,018 | 44% | 268 | 3% |
| EBITDA | 2,150 | 11% | 2,298 | 11% | 149 | 7% |
| Other expense, net | (42) | 0% | (572) | -3% | (529) | -- |
| Operating income | 1,233 | 7% | 927 | 5% | (305) | -25% |
| Comprehensive financial result: | ||||||
| Interest income | 173 | 1% | 176 | 1% | 3 | 2% |
| Interest expense | (365) | -2% | (391) | -2% | (25) | -7% |
| Foreign exchange gain, net | 49 | 0% | 353 | 2% | 304 | -- |
| Other financial results, net | 1,472 | 8% | 7,371 | 36% | 5,899 | -- |
| 1,329 | 7% | 7,510 | 37% | 6,181 | -- | |
| Participation in the net income of | ||||||
| CASA and other associated companies | 258 | 1% | 53 | 0% | (204) | -79% |
| Income before income tax | 2,819 | 15% | 8,490 | 41% | 5,671 | 201% |
| Income tax | (866) | -5% | (1,496) | -7% | (630) | -73% |
| Income before discontinued operations | 1,953 | 10% | 6,994 | 34% | 5,041 | -- |
| Result from discontinued operations | (90) | 0% | (208) | -1% | (118) | -131% |
| Consolidated net income | 1,863 | 10% | 6,785 | 33% | 4,923 | -- |
| GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES | ||||||
| CONSOLIDATED INCOME STATEMENTS | ||||||
| MILLIONS OF MEXICAN PESOS | ||||||
| 12M13 | 12M14 | Change | ||||
| Financial income | 50,512 | 72% | 50,781 | 69% | 269 | 1% |
| Commercial income | 19,911 | 28% | 23,300 | 31% | 3,390 | 17% |
| Income | 70,423 | 100% | 74,082 | 100% | 3,659 | 5% |
| Financial cost | 15,082 | 21% | 16,635 | 22% | 1,553 | 10% |
| Commercial cost | 13,968 | 20% | 16,109 | 22% | 2,141 | 15% |
| Costs | 29,050 | 41% | 32,744 | 44% | 3,694 | 13% |
| Gross income | 41,373 | 59% | 41,337 | 56% | (35) | 0% |
| Sales, administration and promotion expenses | 31,490 | 45% | 31,853 | 43% | 362 | 1% |
| Depreciation and amortization | 2,894 | 4% | 2,829 | 4% | (65) | -2% |
| Operating expenses | 34,385 | 49% | 34,682 | 47% | 297 | 1% |
| EBITDA | 9,882 | 14% | 9,484 | 13% | (398) | -4% |
| Other expense, net | (37) | 0% | (867) | -1% | (830) | -- |
| Operating Income | 6,951 | 10% | 5,789 | 8% | (1,162) | -17% |
| Comprehensive financial result: | ||||||
| Interest income | 451 | 1% | 481 | 1% | 29 | 7% |
| Interest expense | (1,625) | -2% | (1,497) | -2% | 128 | 8% |
| Foreign exchange (loss) gain, net | (194) | 0% | 397 | 1% | 591 | -- |
| Other financial results, net | (5,114) | -7% | 3,966 | 5% | 9,080 | 178% |
| (6,481) | -9% | 3,347 | 5% | 9,828 | 152% | |
| Participation in the net income expense of | ||||||
| CASA and other associated companies | 289 | 0% | 126 | 0% | (163) | -56% |
| Income before income tax | 759 | 1% | 9,262 | 13% | 8,503 | -- |
| Income tax | (70) | 0% | (1,616) | -2% | (1,545) | -- |
| Income before discontinued operations | 689 | 1% | 7,647 | 10% | 6,958 | -- |
| Result from discontinued operations | 140 | 0% | (314) | 0% | (454) | -- |
| Consolidated net income | 829 | 1% | 7,333 | 10% | 6,504 | -- |
| 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 December 31, 2013 | At December 31, 2014 | |||||||
| Cash and cash equivalents | 3,302 | 16,508 | 19,810 | 3,810 | 19,306 | 23,116 | 3,306 | 17% |
| Marketable financial instruments | 13,813 | 20,564 | 34,377 | 15,933 | 32,915 | 48,848 | 14,471 | 42% |
| Performing loan portfolio | -- | 51,568 | 51,568 | -- | 52,298 | 52,298 | 730 | 1% |
| Total past-due loans | -- | 6,027 | 6,027 | -- | 6,647 | 6,647 | 620 | 10% |
| Gross loan portfolio | -- | 57,595 | 57,595 | -- | 58,945 | 58,945 | 1,350 | 2% |
| Allowance for credit risks | -- | 8,643 | 8,643 | -- | 9,283 | 9,283 | 640 | 7% |
| Loan portfolio, net | -- | 48,952 | 48,952 | -- | 49,662 | 49,662 | 710 | 1% |
| Inventories | 6,043 | -- | 6,043 | 5,906 | -- | 5,906 | (137) | -2% |
| Other current assets | 899 | 8,025 | 8,924 | 130 | 11,039 | 11,170 | 2,245 | 25% |
| Total current assets | 24,058 | 94,050 | 118,107 | 25,779 | 112,923 | 138,702 | 20,595 | 17% |
| Financial instruments | 10,522 | 214 | 10,736 | 10,647 | 323 | 10,970 | 234 | 2% |
| Performing loan portfolio | -- | 19,293 | 19,293 | -- | 16,769 | 16,769 | (2,524) | -13% |
| Total past-due loans | -- | 215 | 215 | -- | 187 | 187 | (28) | -13% |
| Loan portfolio | -- | 19,508 | 19,508 | -- | 16,956 | 16,956 | (2,552) | -13% |
| Other non-current assets | 6,001 | 2 | 6,003 | 8,398 | -- | 8,398 | 2,395 | 40% |
| Investment in shares | 4,317 | -- | 4,317 | 4,348 | -- | 4,348 | 31 | 1% |
| Property, furniture, equipment and | ||||||||
| investment in stores, net | 4,676 | 2,958 | 7,634 | 4,459 | 2,916 | 7,375 | (259) | -3% |
| Intangible assets | 624 | 6,687 | 7,311 | 565 | 7,174 | 7,738 | 427 | 6% |
| Other assets | 671 | 486 | 1,158 | 1,002 | 408 | 1,411 | 253 | 22% |
| TOTAL ASSETS | 50,869 | 123,905 | 174,774 | 55,197 | 140,701 | 195,898 | 21,124 | 12% |
| Demand and term deposits | -- | 78,559 | 78,559 | -- | 93,147 | 93,147 | 14,588 | 19% |
| Creditors from repurchase agreements | -- | 4,170 | 4,170 | -- | 4,788 | 4,788 | 617 | 15% |
| Short-term debt | 3,341 | 738 | 4,079 | 1,600 | 207 | 1,807 | (2,272) | -56% |
| Short-term liabilities with cost | 3,341 | 83,467 | 86,808 | 1,600 | 98,142 | 99,742 | 12,934 | 15% |
| Suppliers and other short-term liabilities | 7,680 | 8,101 | 15,781 | 8,213 | 7,378 | 15,591 | (189) | -1% |
| Short-term liabilities without cost | 7,680 | 8,101 | 15,781 | 8,213 | 7,378 | 15,591 | (189) | -1% |
| Total short-term liabilities | 11,021 | 91,568 | 102,589 | 9,813 | 105,520 | 115,333 | 12,744 | 12% |
| Long-term debt | 14,723 | 3,871 | 18,594 | 15,842 | 1,291 | 17,133 | (1,462) | -8% |
| Long-term liabilities with cost | 14,723 | 3,871 | 18,594 | 15,842 | 1,291 | 17,133 | (1,462) | -8% |
| Long-term liabilities without cost | 6,428 | 1,262 | 7,691 | 6,293 | 2,391 | 8,684 | 993 | 13% |
| Total long-term liabilities | 21,152 | 5,133 | 26,285 | 22,135 | 3,682 | 25,816 | (469) | -2% |
| TOTAL LIABILITIES | 32,173 | 96,701 | 128,874 | 31,947 | 109,202 | 141,149 | 12,276 | 10% |
| TOTAL STOCKHOLDERS' EQUITY | 18,696 | 27,204 | 45,900 | 23,250 | 31,499 | 54,748 | 8,848 | 19% |
| LIABILITIES + EQUITY | 50,869 | 123,905 | 174,774 | 55,197 | 140,701 | 195,898 | 21,124 | 12% |
| GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES | ||||||
| INFRASTRUCTURE | ||||||
| 4Q13 | 4Q14 | Change | ||||
| Points of sale in Mexico | ||||||
| Elektra (1) | 977 | 15% | 990 | 14% | 13 | 1% |
| Salinas y Rocha (1) | 55 | 1% | 55 | 1% | -- | 0% |
| Freestanding branches | 2,372 | 37% | 2,649 | 38% | 277 | 12% |
| Blockbuster | -- | 0% | 293 | 4% | 293 | 100% |
| Total | 3,404 | 53% | 3,987 | 57% | 583 | 17% |
| Points of sale in Central and South America | ||||||
| Elektra (1) | 205 | 3% | 199 | 3% | (6) | -3% |
| Freestanding branches | 416 | 6% | 434 | 6% | 18 | 4% |
| Total | 621 | 10% | 633 | 9% | 12 | 2% |
| Points of sale in North America | ||||||
| Advance America | 2,454 | 38% | 2,414 | 34% | (40) | -2% |
| Total | 2,454 | 38% | 2,414 | 34% | (40) | -2% |
| TOTAL | 6,479 | 100% | 7,034 | 100% | 555 | 9% |
| (1) Each store has a Banco Azteca branch. | ||||||
| Floor space (m²) | ||||||
| Elektra Mexico | 841,100 | 52% | 848,600 | 50% | 7,500 | 1% |
| Elektra Central and South America | 150,162 | 9% | 148,350 | 9% | (1,812) | -1% |
| Salinas y Rocha | 58,995 | 4% | 58,995 | 3% | -- | 0% |
| Freestanding branches | 241,243 | 15% | 243,150 | 14% | 1,906 | 1% |
| Advance America | 338,000 | 21% | 330,718 | 19% | (7,282) | -2% |
| Blockbuster | -- | 0% | 82,000 | 5% | 82,000 | 100% |
| TOTAL | 1,629,500 | 100% | 1,711,812 | 100% | 82,312 | 5% |
| Employees | ||||||
| Mexico | 65,460 | 78% | 59,618 | 77% | (5,842) | -9% |
| Central and South America | 12,166 | 14% | 11,100 | 14% | (1,066) | -9% |
| North America | 6,708 | 8% | 7,084 | 9% | 376 | 6% |
| Total employees | 84,334 | 100% | 77,802 | 100% | (6,532) | -8% |