Grupo Elektra Announces 37% Growth in Operating Profit to Ps.2,065 Million in 4Q15

—EBITDA increases 18% to Ps.2,729 million in the period—

—Continued dynamism in sales from the commercial business;
16% increase to Ps.8,402 million—

—8% growth in consolidated deposits to Ps.100,573 million
generates solid perspectives in the financial business—

— Notable reduction in the delinquency rate of Banco Azteca Mexico;
decreases four percentage points to 5.3%—

MEXICO CITY, Feb. 24, 2016 (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 2015.

Consolidated fourth quarter results

Consolidated revenue was Ps.20,399 million, from Ps.20,402 million for the same period last year. Costs and operating expenses decreased 2% to Ps.17,670 million, compared to Ps.18,094 million for the same period of 2014.

As a result, Grupo Elektra reported EBITDA of Ps.2,729 million, 18% higher than the Ps.2,307 million of the previous year’s quarter; EBITDA margin was 13% this period, two percentage points above previous year. Operating profit grew 37% to Ps.2,065 million during the quarter.

The company reported net income of Ps.769 million, from net income of Ps.7,010 million a year ago.

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of December 31, 2014, Elektra outstanding shares were 236.4 million and as of December 31, 2015, were 237.4 million.

Revenues

Consolidated revenue remained virtually unchanged as a result of a 16% increase in commercial sales, offset by a 9% reduction in financial revenue.

The increase in commercial sales —of Ps.8,402 million from Ps.7,272 million last year— was the result of strategies to offer products and services that effectively improve the quality of life of clients, under the most competitive market conditions, with world-class service.

The decrease in financial revenue —to Ps.11,997 million from Ps.13,129 million from the previous year— results mainly from a 7% decrease in revenues of Banco Azteca Mexico, to Ps.7,889 million, in comparison to Ps.8,515 million a year ago.

Costs and expenses

Consolidated costs for the quarter decreased 13% to Ps.8,650 million, from Ps.9,951 million for  the previous year, as a result from a 37% decrease in the financial cost —largely driven by a reduction in provisions for loan losses, along with the strength in asset quality—and an 8% increase in commercial costs, in line with the performance of commercial revenue.

Sales, administration and promotion expenses increased 11% to Ps.9,020 million, as a result of higher operating expenses.    

EBITDA and net result

Consolidated EBITDA increased 18% to Ps.2,729 million this quarter. Operating profit grew 37% to Ps.2,065 million, from Ps.1,510 million in same quarter of 2014.

The most significant change below EBITDA was a negative variation of Ps.4,092 million in the other financial results, as a consequence of a reduction in the market value of the underlying assets of financial instruments owned by the company –which does not imply cash flow– compared to increase last year.

Impairment of intangible assets increased Ps.2,776 million in the period, mainly due to impairment charges on the value of goodwill and other intangible assets —which does not imply cash flow— related to Advance America.

Grupo Elektra reported net income of Ps.769 million, compared to net income of Ps.7,010 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, 2015 was Ps.67,199 million, compared to Ps.75,901 million from the previous year. Consolidated delinquency rate was 6.1% at the end of the period, from 9% for the previous year.

The gross portfolio of Banco Azteca Mexico was Ps.53,214 million, compared to Ps.60,121 million a year ago. In comparison to the balance of Ps.52,273 million as of September 30, 2015, gross portfolio grew 2%, as a result of strategies to strengthen the growth of credit with solid quality.

The delinquency rate of the bank at the end of the quarter was 5.3%, four percentage points lower than the 9.3% from the previous year. The non-performing loan portfolio is reserved 1.99 times, reflecting loan loss reserves of Ps.5,626 million, compared with a non-performing loan balance of Ps.2,833 million as of December 31, 2015. 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 fourth quarter.

The Advance America loan portfolio was Ps.4,941 million, compared to Ps.5,002 million a year ago.

Grupo Elektra consolidated deposits grew 8%, to Ps.100,573 million, compared to Ps.93,147 million a year ago. Deposits of Banco Azteca Mexico were Ps.96,457 million, 10% higher than the Ps.87,573 million a year ago.  Financial products that satisfy clients 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, 2015, the estimated capitalization index of Banco Azteca Mexico was 18.35%.

Debt

Consolidated debt with cost as of December 31, 2015, was Ps.18,119 million, 4% less than the Ps.18,940 million for the prior year.

During the quarter, Grupo Elektra amortized Ps.1,575 million in Certificados Bursatiles with the company’s own funds, generated from solid financial performance.

Consolidated debt was comprised of Ps.16,536 million for the commercial business, and Ps.1,583 million for the financial business.  The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.26,116 million at the end of the period; as a result, the net cash commercial balance —excluding debt with cost— is favorable at Ps.9,580 million.

Infrastructure

Grupo Elektra currently has 7,963 points of sale, compared to 9,337 units a year ago. The reduction results from strategies that focus on maximizing the profitability of the units.

The company has 4,939 points of sale in Mexico, 2,323 in the United States, and 701 in Central and South America. The extensive distribution network allows the company to maintain close contact with clients, granting superior market positioning in the countries where it operates.

Twelve month consolidated results

Resulting from sound management in both the commercial and the financial divisions, the results of the company gradually strengthened during the year. Total consolidated revenue in 2015 was Ps.75,902 million, 3% higher than the Ps.73,629 million for 2014, as a result of a 19% growth in the commercial business.

EBITDA was Ps.10,734 million, 13% higher than the Ps.9,479 million for the same period a year ago; the EBITDA margin in 2015 was 14%, one percentage point above the prior year. Operating profit was Ps.8,194 million, 23% higher than the Ps.6,670 million of 2014.

The company registered a consolidated net loss of Ps.5,153 million, compared to a gain of Ps.7,558 million a year ago, mainly due to i) a decrease in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to the prior year, as well as ii) an increase in the impairment of intangible assets —which does not imply cash flow— related to Advance America.

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of December 31, 2014, Elektra outstanding shares were 236.4 million and as of December 31, 2015, were 237.4 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 close to 8,000 points of contact in Mexico, USA, 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 TV Azteca (www.tvazteca.com; www.irtvazteca.com), Azteca US (us.azteca.com), Grupo Elektra (www.elektra.com.mx: 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 TP (enlacetp.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.