—Firm expansion of credit business generates immediate costs and expenses, setting the stage for future profitability—
—The company surpasses 6,500 points of sale in Mexico, the United States, Central and South America—
—Firm increase of consolidated gross portfolio, grows 49%, to Ps.73,400 million—
MEXICO CITY, April 23, 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 first quarter of 2013 .
Consolidated first quarter results
Consolidated income was Ps.17,572 million, up 16% from Ps.15,108 million for the last year. Costs and operating expenses were Ps.14,522 million, from Ps.11,800 million in the same period of 2012.
Grupo Elektra reported EBITDA of Ps.3,050 million, compared to Ps.3,308 million for the previous year; EBITDA margin was 17% this quarter. The company reported a net loss of Ps.582 million, from a loss of Ps.3,832 million a year ago.
| 1Q 2012 | 1Q 2013 | Change | ||
| Ps. | % | |||
| Consolidated revenue | $15,108 | $17,572 | $2,463 | 16% |
| EBITDA | $3,308 | $3,050 | $(258) | -8% |
| Net result | $(3,832) | $(582) | $3,250 | 85% |
| Net result per share | $(15.84) | $(2.45) | $13.39 | 85% |
| Figures in millions of pesos | ||||
| *As of March 31, 2012, Elektra outstanding shares were 241.9 million and as of March 31, 2013, were 237.2 million. | ||||
Income
Consolidated income grew 16%, as a result of a solid increase of 37% in financial income and a 15% reduction in commercial sales.
Financial income grew to Ps.12,468 million, from Ps.9,076 million last year. Advance America contributed to this increase with Ps.2,071 million; as previously announced, Grupo Elektra acquired Advance America —the largest non-bank provider of cash advance services in the US— in April of 2012, and consolidates the company's results in Grupo Elektra's financial statements.
The dynamism of Banco Azteca Mexico income also contributed with the growth of the financial business. Banco Azteca income increased 8%, to Ps.8,262 million from Ps.7,650 million, mainly as a result of an expansion of personal loans, and Presta Prenda credits.
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 60% a year ago.
The decrease in commercial income is in the context of 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 3% to Ps.6,779 million, from Ps.6,980 million from the previous year. The change mainly derives from a 21% increase in financial cost — to Ps.3,166 million compared to Ps.2,608 million a year ago — and a 17% 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—as well as from the registration of the costs of Advance America, which added Ps.217 million this period.
Consolidated operating expenses were Ps.7,743 million, compared to Ps.4,820 million for the same quarter of the previous year; the growth is due mainly to increases in personnel and operating expenses 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 are expected to generate solid benefits in the future. The increase in expenses also reflects the consolidation of the expenses of Advance America for the period.
Grupo Elektra currently has 6,580 points of sale, compared to 2,989 a year ago. This change is mainly due to the acquisition of Advance America, which added 2,507 points of sale to the company this period. Additionally, 1,084 financial services branches were opened, mainly Elektra Dinero –as part of the company's strategy to further strengthen this business segment.
The increase in points of sale represents a 36% growth in the exhibition area of Grupo Elektra, which together with the further specialization of the sales force resulted in a 35% increase in the number of employees, to 78,236 at the end of the quarter, compared to 58,093 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.3,050 million, compared to Ps.3,308 million a year ago; the EBITDA margin for the quarter was 17%.
The most significant change below EBITDA was a positive variation of Ps.4,983 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.582 million, from net loss of Ps.3,832 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 March 31, 2013, was Ps.73,400 million, 49% higher than the Ps. 49,287 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 8.4% at the end of the period.
The most significant driver of the consolidated gross portfolio was a 45% growth in the gross portfolio of Banco Azteca Mexico, to Ps.62,273 million from Ps.43,023 million. The gross portfolio of Advance America as of March 31, 2013, totaled Ps.3,060 million.
The delinquency rate of Banco Azteca Mexico at the end of the quarter was 8.2%. The non-performing loan portfolio is reserved 1.3 times.
At the end of the quarter, the bank had a total of 18.6 million active credit accounts, 35% above of 13.8 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 first quarter.
Banco Azteca Mexico deposits were Ps.70,594 million, 21% higher than last year. The total number of active savings and deposit accounts of the bank was 17 million, an increase of 27% compared to 13.4 million at the end of the same period a year ago.
As of March 31, 2013, the capitalization index of Banco Azteca Mexico was 13.9%. The company considers the index to be at a level that optimizes equity profitability.
Debt
As of March 31, 2013, consolidated total debt with cost was Ps.23,781 million, of which Ps.19,796 million correspond to the commercial business, and Ps.3,984 million to the financial business.
The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.26,973 million at the end of the period; as a result, net cash for the commercial business –excluding debt with cost– was a positive Ps.7,177 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 | ||||||
| 1Q12 | 1Q13 | Change | ||||
| Financial income | 9,076 | 60% | 12,468 | 71% | 3,392 | 37% |
| Commercial income | 6,033 | 40% | 5,104 | 29% | (929) | -15% |
| Income | 15,108 | 100% | 17,572 | 100% | 2,463 | 16% |
| Financial cost | 2,608 | 17% | 3,166 | 18% | 558 | 21% |
| Commercial cost | 4,372 | 29% | 3,612 | 21% | (759) | -17% |
| Costs | 6,980 | 46% | 6,779 | 39% | (201) | -3% |
| Gross income | 8,128 | 54% | 10,793 | 61% | 2,664 | 33% |
| Sales, administration and promotion expenses | 4,820 | 32% | 7,743 | 44% | 2,923 | 61% |
| Depreciation and amortization | 474 | 3% | 662 | 4% | 188 | 40% |
| Operating expenses | 5,294 | 35% | 8,405 | 48% | 3,111 | 59% |
| Operating income | 2,835 | 19% | 2,388 | 14% | (447) | -16% |
| EBITDA | 3,308 | 22% | 3,050 | 17% | (258) | -8% |
| Comprehensive financial result: | ||||||
| Interest income | 103 | 1% | 49 | 0% | (55) | -53% |
| Interest expense | (425) | -3% | (421) | -2% | 4 | 1% |
| Foreign exchange loss, net | (342) | -2% | (368) | -2% | (26) | -7% |
| Other financial results, net | (7,584) | -50% | (2,601) | -15% | 4,983 | 66% |
| (8,247) | -55% | (3,341) | -19% | 4,906 | 59% | |
| Other (expense) income, net | (0) | 0% | 9 | 0% | 9 | -- |
| Participation in the net income of CASA and other associated companies | 31 | 0% | (2) | 0% | (33) | -- |
| Loss before income tax | (5,382) | -36% | (946) | -5% | 4,436 | 82% |
| Income tax | 1,550 | 10% | 363 | 2% | (1,186) | -77% |
| Consolidated net loss | (3,832) | -25% | (582) | -3% | 3,250 | 85% |
| 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 March 31, 2012 | At March 31, 2013 | |||||||||
| Cash and cash equivalents | 1,805 | 14,288 | 16,093 | 3,819 | 15,475 | 19,294 | 3,201 | 20% | ||
| Marketable financial instruments | 19,789 | 17,047 | 36,836 | 23,154 | 13,002 | 36,156 | (680) | -2% | ||
| Performing loan portfolio | 356 | 34,026 | 34,383 | 224 | 49,675 | 49,898 | 15,516 | 45% | ||
| Total past-due loans | 222 | 2,173 | 2,394 | 263 | 5,353 | 5,616 | 3,222 | 135% | ||
| Gross loan portfolio | 578 | 36,199 | 36,777 | 487 | 55,028 | 55,515 | 18,738 | 51% | ||
| Allowance for credit risks | 228 | 4,067 | 4,294 | 264 | 8,055 | 8,319 | 4,024 | 94% | ||
| Loan portfolio, net | 350 | 32,133 | 32,483 | 223 | 46,973 | 47,196 | 14,713 | 45% | ||
| Inventories | 7,053 | 7,053 | 7,071 | 7,071 | 17 | 0% | ||||
| Other current assets | 3,649 | 6,685 | 10,334 | 9,299 | 8,295 | 17,593 | 7,259 | 70% | ||
| Total current assets | 32,645 | 70,154 | 102,799 | 43,565 | 83,745 | 127,310 | 24,511 | 24% | ||
| Financial instruments | 13,300 | 13,300 | -- | (13,300) | -100% | |||||
| Performing loan portfolio | 12,484 | 12,484 | 236 | 17,128 | 17,364 | 4,880 | 39% | |||
| Total past-due loans | 158 | 158 | 1 | 520 | 521 | 363 | 230% | |||
| Loan portfolio | -- | 12,510 | 12,510 | 237 | 17,648 | 17,885 | 5,375 | 43% | ||
| Other non-current assets | 36,069 | 32 | 36,100 | 844 | 168 | 1,013 | (35,088) | -97% | ||
| Investment in shares | 2,599 | 14 | 2,613 | 3,893 | 3,893 | 1,280 | 49% | |||
| Property, furniture, equipment and investment in stores, net | 4,123 | 1,563 | 5,686 | 4,087 | 2,862 | 6,949 | 1,264 | 22% | ||
| Intangible assets | 653 | -- | 653 | 544 | 6,295 | 6,839 | 6,186 | 947% | ||
| Other assets | 385 | 104 | 489 | 760 | 387 | 1,148 | 659 | 135% | ||
| TOTAL ASSETS | 89,774 | 84,375 | 174,149 | 53,932 | 111,105 | 165,037 | (9,112) | -5% | ||
| Demand and term deposits | 55,291 | 55,291 | 71,717 | 71,717 | 16,427 | 30% | ||||
| Creditors from repurchase agreements | 9,385 | 9,385 | 2,709 | 2,709 | (6,676) | -71% | ||||
| Short-term debt | 3,442 | -- | 3,442 | 9,163 | 2,872 | 12,036 | 8,594 | 250% | ||
| Short-term liabilities with cost | 3,442 | 64,676 | 68,118 | 9,163 | 77,299 | 86,462 | 18,344 | 27% | ||
| Suppliers and other short-term liabilities | 7,130 | 6,098 | 13,228 | 6,798 | 6,124 | 12,922 | (306) | -2% | ||
| Short-term liabilities without cost | 7,130 | 6,098 | 13,228 | 6,798 | 6,124 | 12,922 | (306) | -2% | ||
| Total short-term liabilities | 10,572 | 70,774 | 81,346 | 15,961 | 83,422 | 99,384 | 18,038 | 22% | ||
| Long-term debt | 10,484 | 1,097 | 11,581 | 10,633 | 1,112 | 11,745 | 164 | -- | ||
| Long-term liabilities with cost | 10,484 | 1,097 | 11,581 | 10,633 | 1,112 | 11,745 | 164 | -- | ||
| Long-term liabilities without cost | 16,295 | 683 | 16,978 | 8,562 | 949 | 9,511 | (7,467) | -- | ||
| Total long-term liabilities | 26,779 | 1,780 | 28,559 | 19,196 | 2,060 | 21,256 | (7,303) | -- | ||
| TOTAL LIABILITIES | 37,351 | 72,554 | 109,905 | 35,157 | 85,482 | 120,640 | 10,734 | 10% | ||
| TOTAL STOCKHOLDERS' EQUITY | 52,423 | 11,821 | 64,244 | 18,775 | 25,623 | 44,397 | (19,847) | -31% | ||
| LIABILITIES + EQUITY | 89,774 | 84,375 | 174,149 | 53,932 | 111,105 | 165,037 | (9,112) | -5% | ||
| INFRASTRUCTURE | ||||||
| 1Q12 | 1Q13 | Change | ||||
| Points of sale in Mexico | ||||||
| Elektra (1) | 952 | 32% | 967 | 15% | 15 | 2% |
| Salinas y Rocha (1) | 55 | 2% | 55 | 1% | -- | 0% |
| Freestanding branches (2) | 1,450 | 49% | 2,387 | 36% | 937 | 65% |
| Total | 2,457 | 82% | 3,409 | 52% | 952 | 39% |
| Points of sale in Central and South America | ||||||
| Elektra (3) | 232 | 8% | 217 | 3% | (15) | -6% |
| Freestanding branches | 300 | 10% | 447 | 7% | 147 | 49% |
| Total | 532 | 18% | 664 | 10% | 132 | 25% |
| Points of sale in North America | ||||||
| Advance America | -- | -- | 2,507 | 38% | 2,507 | -- |
| Total | -- | -- | 2,507 | 38% | 2,507 | -- |
| TOTAL | 2,989 | 100% | 6,580 | 100% | 3,591 | -- |
| (1) Each store has a Banco Azteca branch. | ||||||
| (2) In 1Q13, includes 45 Bodegas de Remate that continues operating only financial services. | ||||||
| (3) In 1Q13, only 206 Central and South America Elektra's store have a Banco Azteca branch. | ||||||
| Floor space (m²) | ||||||
| Elektra Mexico | 824,390 | 69% | 836,259 | 51% | 11,869 | 1% |
| Elektra Central and South America | 163,755 | 14% | 156,125 | 10% | (7,630) | -5% |
| Salinas y Rocha | 58,995 | 5% | 58,995 | 4% | -- | 0% |
| Freestanding branches | 156,247 | 13% | 246,437 | 15% | 90,189 | 58% |
| Advance America | -- | 0% | 343,500 | 21% | 343,500 | -- |
| TOTAL | 1,203,387 | 100% | 1,641,316 | 100% | 437,929 | 36% |
| Employees | ||||||
| Mexico | 48,644 | 84% | 59,278 | 76% | 10,634 | 22% |
| Central and South America | 9,449 | 16% | 12,610 | 16% | 3,161 | 33% |
| North America | -- | -- | 6,348 | 8% | 6,348 | -- |
| Total employees | 58,093 | 100% | 78,236 | 100% | 20,143 | 35% |