Grupo Elektra Announces 15% Growth in Operating Profit to Ps.2,930 Million in 1Q16

—EBITDA increases 5% to Ps.3,336 million—

—Solid performance in revenue from the commercial division with
an increase of 7% to Ps.6,658 million—

—Notable reduction in the delinquency rate of Banco Azteca Mexico;
decreases six percentage points to 3.9%—

MEXICO CITY, April 25, 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 first quarter of 2016.

Consolidated first quarter results

Consolidated revenue was Ps.18,441 million, from Ps.19,006 million for the same period last year. Costs and operating expenses decreased 5% to Ps.15,104 million, compared to Ps.15,823 million for the same period of 2015.

As a result, Grupo Elektra reported EBITDA of Ps.3,336 million, 5% higher than the Ps.3,183 million of the previous year’s quarter; EBITDA margin was 18% this period, one percentage point above the previous year.

Operating profit grew 15% to Ps.2,930 million during the quarter, from Ps.2,550 million in same period of 2015.

The company reported net income of Ps.1,158 million, from net loss of Ps.3,280 million a year ago.

Revenue

Consolidated revenue decreased 3%, as a result of a reduction of 8% in financial revenue, partly offset by a 7% increase in commercial sales. 

The decrease in financial revenue —to Ps.11,783 million from Ps.12,791 million from the previous year— results mainly from a 13% decrease in revenue of Banco Azteca Mexico, to Ps.7,172 million, in comparison to Ps.8,193 million a year ago.

The increase in sales from the commercial division —of Ps.6,658 million from Ps.6,215 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.

Costs and expenses

Consolidated costs for the quarter decreased 24% to Ps.6,755 million, from Ps.8,859 million for  the previous year, resulting from a 51% decrease in financial cost —largely driven by a reduction in provisions for loan losses, along with the strength in asset quality—and a 6% increase in commercial costs, in line with the performance of commercial revenue.

Sales, administration and promotion expenses increased 20% to Ps.8,349 million, as a result of higher personnel expenses —from higher compensation schemes that encourage productivity— as well as an increase in operating expenses.

EBITDA and net result

Consolidated EBITDA grew 5% to Ps.3,336 million this quarter.

Operating income was Ps.2,930 million, 15% higher than the Ps.2,550 million from the same quarter of 2015.

The most significant change below EBITDA was a positive variation of Ps.5,525 million in other financial results, as a consequence of a smaller reduction 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 a net result of Ps.1,158 million, compared to a net loss of Ps.3,280 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 March 31, 2016 was Ps.63,707 million, compared to Ps.69,817 million from the previous year. Consolidated delinquency rate was 4.7% at the end of the period, from 9.6% for the previous year.

The gross portfolio of Banco Azteca Mexico was Ps.50,499 million, compared to Ps.53,276 million a year ago.

The delinquency rate of the bank at the end of the quarter was 3.9%, more than six percentage points lower than the 10.5% from the previous year. The non-performing loan portfolio is reserved 2.62 times, reflecting loan loss reserves of Ps.5,094 million, compared with a non-performing loan balance of Ps.1,946 million as of March 31, 2016. 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 first quarter.

The Advance America loan portfolio was Ps.4,303 million, 11% higher than the Ps.3,871 million a year ago.

Grupo Elektra consolidated deposits were Ps.101,223 million, compared to Ps.101,386 million a year ago. Deposits of Banco Azteca Mexico were Ps.96,470 million, from Ps.97,023 million a year ago. 

As of March 31, 2016, the estimated capitalization index of Banco Azteca Mexico was 18.32%.

Debt

Consolidated debt with cost as of March 31, 2016, was Ps.17,276 million,12% less than the Ps.19,640 million for the prior year.

During the quarter, Grupo Elektra amortized Ps.2,575 million in Certificados Bursatiles with the company’s own funds, generated from solid financial performance.

Consolidated debt was comprised of Ps.15,515 million for the commercial business, and Ps.1,761 million for the financial business.  The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.23,573 million at the end of the period; as a result, the net cash commercial balance —excluding debt with cost— is favorable at Ps.8,058 million.

Infrastructure

Grupo Elektra currently has 7,671 points of sale, compared to 9,214 units a year ago. The reduction results from strategies that focus on maximizing the profitability of the units.

The company has 4,743 points of sale in Mexico, 2,250 in the United States, and 678 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.

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.