—EBITDA increases 25% to Ps.4,493 million during the period—

—Notable performance in both commercial and financial businesses generates
increase of 17% in consolidated revenues, to Ps.22,794 million—

— Gross portfolio of Banco Azteca Mexico grows 28%, to Ps.69,850 million,
and its delinquency rate decreases to 2.5%—

MEXICO CITY, July 20, 2017 (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, announced today its financial results for the second quarter of 2017.

Consolidated second quarter results

Consolidated revenue was Ps.22,794 million in the period, 17% above the Ps.19,510 million for the same quarter of previous year. Costs and operating expenses were Ps.18,301 million, compared to Ps.15,909 million for the same period of 2016.

As a result, Grupo Elektra reported EBITDA of Ps.4,493 million, 25% higher than the Ps.3,601 million of the previous year’s quarter; EBITDA margin was 20% this period, two percentage points above the previous year.

Operating profit grew 32% to Ps.3,895 million during the quarter, from Ps.2,952 million in same period of 2016.

The company reported net income of Ps.7,137 million, compared to net loss of Ps.79 million a year ago.

	2Q 2016			2Q 2017		Change
						Ps.		%
Consolidated revenue	$19,510			$22,794		$3,285		17%
EBITDA	$3,601			$4,493		$892		25%
Operating profit	$2,952			$3,895		$943		32%
Net result	$(79)			$7,137		$7,216		----
Net result per share	$(0.33)			$30.78		$31.11		----
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of June 30, 2016, Elektra* outstanding shares were 237.9 million and as of June 30, 2017, were 231.9 million.

Revenue

Consolidated revenue increased 17%, as a result of a 17% growth in both financial revenues and commercial sales, respectively.

The increase in commercial division sales  ̶ to Ps.8,597 million compared to Ps.7,337 million last year ̶  reflects strategies that focus on generating optimum value propositions for the customers, through lines of merchandise that best meet their needs, with world-class service and under the most competitive market conditions.

The increase in financial revenue  ̶ to Ps.14,197 million from Ps.12,172 million from the previous year ̶   reflect mainly a 21% growth in revenue of Banco Azteca Mexico.

Costs and expenses

Consolidated costs for the quarter increased 15% to Ps.8,563 million, from Ps.7,419 million in the previous year, as a result of a 19% increase in commercial costs, in line with the increase in commercial revenue, and 9% growth in financial cost. The increase in financial cost is less than the increase in financial revenue, which reflects a moderate growth in loan-loss provisions, in line with greater strength in asset quality. 

Sales, administration and promotion expenses increased 15% to Ps.9,738 million, as a result of higher personnel expenses due to higher compensation plans that encourage productivity; an increase in advertising, which achieves a better positioning of Grupo Elektra brands, and an increase in operating expenses.

EBITDA and net result

The Company´s EBITDA grew 25% to Ps.4,493 million this quarter. Operating income increased 32% to Ps.3,895 million, from Ps.2,952 million for the same quarter of 2016.

The most significant change below EBITDA was a positive variation of Ps.9,407 million in other financial results, as a consequence of a gain this period in the market value of the underlying assets of financial instruments owned by the company –which does not imply cash flow– compared to a reduction of the previous year.

Grupo Elektra reported net income of Ps.7,137 million, compared to a net loss of Ps.79 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 June 30, 2017 grew 24% to Ps.85,050 million, from Ps.68,440 million for the previous year. Consolidated delinquency rate was 3.1% at the end of the period, compared to 3.7% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 28% to Ps.69,850 million, from Ps.54,515 million a year ago.

The delinquency rate for the bank at the end of the quarter was 2.5%, from 2.9% of the previous year. Past-due loan portfolio is reserved 3.2 times, which reflects a past-due portfolio of Ps.1,729 million, in comparison to allowance for credit risks of Ps.5,475 million in balance, as of June 30, 2017.

The average term of the credit portfolio for principal credit lines – consumer, personal loans and Tarjeta Azteca – was 63 weeks at the end of the second quarter.

Grupo Elektra consolidated deposits were Ps.103,896 million, from Ps.102,496 million a year ago. Deposits of Banco Azteca Mexico were Ps.102,538 million, 5% higher than the Ps.97,588 million a year ago. 

As of June 30, 2017, the estimated capitalization index of Banco Azteca Mexico was 16.9%.

Debt

Consolidated debt with cost as of June 30, 2017, was Ps.12,935 million, 29% less than the Ps.18,303 million for the prior year.

Consolidated debt was comprised of Ps.11,054 million for the commercial business, and Ps.1,881 million for the financial business.  The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.12,193 million at the end of the period; as a result, the net cash balance of the commercial business, excluding debt with cost, recorded a favourable amount of  Ps.1,139 million.

As previously announced, during the last twelve months, Grupo Elektra paid in advance its senior notes of US$550 million due in 2018.

To cover the payments, Grupo Elektra issued three certificates in local currency for a total of Ps.6,000 million, and used cash generated by the company, within the framework of solid financial performance.

Through these amortizations, the company ceased to hold dollar-denominated bonds, and the debt transactions reflect Grupo Elektra's firm strategy to further strengthen its strong capital structure.

Infrastructure

Grupo Elektra currently has 7,181 points of contact, compared to 7,492 units a year ago. The reduction is a result of strategies to focus on maximizing profitability of such units.

The company has 4,423 points of contact in Mexico, 2,086 in the United States, and 672 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.

Six months consolidated results

Total consolidated revenue in the first six months of the year grew 19% to Ps.44,801 million, from Ps.37,763 million for the same period of 2016, boosted by 19% and 18% growth in both financial and commercial businesses, respectively.

EBITDA was Ps.8,628 million, 21% higher than the Ps.7,105 million for the same period a year ago; the EBITDA margin in the first six months of 2017 was 19%. Operating profit grew 26% to Ps.7,491 million during the period.

The company reported net income of Ps.11,638 million, compared to Ps.1,080 million a year ago, mainly due an appreciation this quarter in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to depreciation the prior year.

	6M 2016		6M 2017		Change
					Ps.		%
Consolidated revenue	$37,763		$44,801		$7,037		19%
EBITDA	$7,105		$8,628		$1,523		21%
Operating profit	$5,930		$7,491		$1,560		26%
Net result	$1,080		$11,638		$10,559		----
Net result per share	$4.54		$50.19		$45.65		----
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of June 30, 2016, Elektra* outstanding shares were 237.9 million and as of June 30, 2017, were 231.9 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 more than 7,000 points of contact in Mexico, the United States, 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 building 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 America (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.

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
		2Q16					2Q17					Change
Financial income		12,172		62	%		14,197		62	%		2,025		17	%
Commercial income		7,337		38	%		8,597		38	%		1,260		17	%
Income		19,510		100	%		22,794		100	%		3,285		17	%
Financial cost		2,673		14	%		2,926		13	%		253		9	%
Commercial cost		4,746		24	%		5,637		25	%		891		19	%
Costs		7,419		38	%		8,563		38	%		1,144		15	%
Gross income		12,091		62	%		14,232		62	%		2,140		18	%
Sales, administration and promotion expenses		8,490		44	%		9,738		43	%		1,248		15	%
EBITDA		3,601		18	%		4,493		20	%		892		25	%
Depreciation and amortization		642		3	%		537		2	%		(105	)	-16	%
Other expense, net		7		0	%		61		0	%		54		----
Operating income		2,952		15	%		3,895		17	%		943		32	%
Comprehensive financial result:
Interest income		162		1	%		135		1	%		(27	)	-17	%
Interest expense		(334	)	-2	%		(327	)	-1	%		6		2	%
Foreign exchange gain (loss), net		116		1	%		(394	)	-2	%		(511	)	----
Other financial results, net		(2,796	)	-14	%		6,611		29	%		9,407		----
		(2,852	)	-15	%		6,024		26	%		8,876		----
Participation in the net income of
CASA and other associated companies		(145	)	-1	%		(8	)	0	%		137		----
(Loss) income before income tax		(45	)	0	%		9,911		43	%		9,956		----
Income tax		14		0	%		(2,728	)	-12	%		(2,742	)	----
(Loss) income before discontinued operations		(31	)	0	%		7,183		32	%		7,214		----
Result from discontinued operations		(48	)	0	%		(45	)	0	%		3		6	%
Impairment of intangible assets		-		0	%		-		0	%		-		----
Consolidated net (loss) income		(79	)	0	%		7,137		31	%		7,216		----

 

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
		6M16					6M17					Change
Financial income		23,956		63	%		28,566		64	%		4,610		19	%
Commercial income		13,808		37	%		16,234		36	%		2,427		18	%
Income		37,763		100	%		44,801		100	%		7,037		19	%
Financial cost		4,968		13	%		5,527		12	%		559		11	%
Commercial cost		8,974		24	%		10,794		24	%		1,820		20	%
Costs		13,941		37	%		16,321		36	%		2,380		17	%
Gross income		23,822		63	%		28,480		64	%		4,658		20	%
Sales, administration and promotion expenses		16,717		44	%		19,852		44	%		3,135		19	%
EBITDA		7,105		19	%		8,628		19	%		1,523		21	%
Depreciation and amortization		1,182		3	%		1,074		2	%		(109	)	-9	%
Other (income) expense, net		(8	)	0	%		63		0	%		71		----
Operating Income		5,930		16	%		7,491		17	%		1,560		26	%
Comprehensive financial result:
Interest income		395		1	%		276		1	%		(119	)	-30	%
Interest expense		(662	)	-2	%		(796	)	-2	%		(134	)	-20	%
Foreign exchange gain (loss), net		172		0	%		(1,330	)	-3	%		(1,503	)	----
Other financial results, net		(4,004	)	-11	%		10,480		23	%		14,484		----
		(4,098	)	-11	%		8,630		19	%		12,729		----
Participation in the net income of
CASA and other associated companies		(216	)	-1	%		57		0	%		273		----
Income before income tax		1,616		4	%		16,178		36	%		14,562		----
Income tax		(438	)	-1	%		(4,489	)	-10	%		(4,051	)	----
Income before discontinued operations		1,179		3	%		11,689		26	%		10,511		----
Result from discontinued operations		(99	)	0	%		(43	)	0	%		56		56	%
Impairment of intangible assets		-		0	%		(8	)	0	%		(8	)	----
Consolidated net income		1,080		3	%		11,638		26	%		10,559		----

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 June 30, 2016						At June 30, 2017
Cash and cash equivalents		2,011		18,899		20,911		2,770		18,008		20,778		(132	)	-1	%
Marketable financial instruments		21,471		53,850		75,321		9,423		46,917		56,340		(18,981	)	-25	%
Performing loan portfolio		-		48,196		48,196		-		56,515		56,515		8,319		17	%
Total past-due loans		-		2,473		2,473		-		2,563		2,563		90		4	%
Gross loan portfolio		-		50,669		50,669		-		59,077		59,077		8,409		17	%
Allowance for credit risks		-		6,426		6,426		-		6,960		6,960		534		8	%
Loan portfolio, net		-		44,243		44,243		-		52,117		52,117		7,875		18	%
Inventories		7,059		-		7,059		8,000		-		8,000		942		13	%
Other current assets		6,955		8,007		14,962		7,067		7,170		14,237		(725	)	-5	%
Total current assets		37,495		124,999		162,494		27,260		124,212		151,473		(11,021	)	-7	%
Financial instruments		8,390		292		8,682		16,202		291		16,493		7,810		90	%
Performing loan portfolio		-		17,686		17,686		-		25,857		25,857		8,172		46	%
Total past-due loans		-		85		85		-		116		116		30		36	%
Loan portfolio		-		17,771		17,771		-		25,973		25,973		8,202		46	%
Other non-current assets		-		764		764		7,200		672		7,872		7,108		930	%
Investment in shares		3,036		-		3,036		2,712		-		2,712		(325	)	-11	%
Property, furniture, equipment and
investment in stores, net		3,767		2,660		6,427		4,104		2,744		6,848		421		7	%
Intangible assets		611		5,619		6,229		686		6,097		6,784		555		9	%
Other assets		1,116		571		1,687		804		405		1,210		(477	)	-28	%
TOTAL ASSETS		54,416		152,675		207,090		58,968		160,395		219,363		12,273		6	%
Demand and term deposits		-		102,496		102,496		-		103,896		103,896		1,400		1	%
Creditors from repurchase agreements		-		3,818		3,818		-		5,785		5,785		1,966		52	%
Short-term debt		66		534		599		3,278		971		4,249		3,650		609	%
Short-term liabilities with cost		66		106,848		106,914		3,278		110,652		113,930		7,016		7	%
Suppliers and other short-term liabilities		16,814		6,483		23,298		12,900		8,561		21,461		(1,837	)	-8	%
Short-term liabilities without cost		16,814		6,483		23,298		12,900		8,561		21,461		(1,837	)	-8	%
Total short-term liabilities		16,880		113,331		130,211		16,178		119,213		135,391		5,180		4	%
Long-term debt		15,917		1,787		17,704		7,776		910		8,686		(9,017	)	-51	%
Long-term liabilities with cost		15,917		1,787		17,704		7,776		910		8,686		(9,017	)	-51	%
Long-term liabilities without cost		1,977		3,903		5,879		5,351		3,296		8,647		2,768		47	%
Total long-term liabilities		17,893		5,690		23,583		13,127		4,206		17,333		(6,250	)	-27	%
TOTAL LIABILITIES		34,773		119,021		153,794		29,305		123,419		152,724		(1,070	)	-1	%
TOTAL STOCKHOLDERS' EQUITY		19,642		33,654		53,296		29,663		36,976		66,639		13,343		25	%
LIABILITIES + EQUITY		54,416		152,675		207,090		58,968		160,395		219,363		12,273		6	%

 

		INFRASTRUCTURE
		2Q16				2Q17				Change
Points of sale in Mexico
Elektra		969	13	%		1,011	14	%		42		4	%
Salinas y Rocha		51	1	%		48	1	%		(3	)	-6	%
Banco Azteca		1,221	16	%		1,251	17	%		30		2	%
Freestanding branches		2,314	31	%		2,113	29	%		(201	)	-9	%
Total		4,555	61	%		4,423	62	%		(132	)	-3	%
Points of sale in Central and South America
Elektra		193	3	%		164	2	%		(29	)	-15	%
Banco Azteca		193	3	%		164	2	%		(29	)	-15	%
Freestanding branches		343	5	%		344	5	%		1		0	%
Total		729	10	%		672	9	%		(57	)	-8	%
Points of sale in North America
Advance America		2,208	29	%		2,086	29	%		(122	)	-6	%
Total		2,208	29	%		2,086	29	%		(122	)	-6	%
TOTAL		7,492	100	%		7,181	100	%		(311	)	-4	%
Floor space (m²)		1,483	100	%		1,512	100	%		29		2	%
Employees
Mexico		47,415	76	%		50,881	78	%		3,466		7	%
Central and South America		8,576	14	%		8,730	13	%		154		2	%
North America		6,219	10	%		5,818	9	%		(401	)	-6	%
Total employees		62,210	100	%		65,429	100	%		3,219		5	%

Investor Relations:

Bruno Rangel
Grupo Salinas
Tel. +52 (55) 1720-9167
jrangelk@gruposalinas.com.mx

Rolando Villarreal
Grupo Elektra S.A.B. de C.V.
Tel. +52 (55) 1720-9167
rvillarreal@elektra.com.mx

Press Relations 

Luciano Pascoe
Grupo Salinas
Tel. +52 (55) 1720-1313 ext. 36553
lpascoe@gruposalinas.com.mx 

Daniel McCosh
Grupo Salinas
Tel. +52 (55) 1720-0059
dmccosh@gruposalinas.com.mx