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Grupo Elektra Announces 14% Growth in Operating Profit to Ps.2,311 Million in 3Q16

—EBITDA increases 11% to Ps.2,975 million in the period—

—Continued dynamism in both commercial and financial businesses generates 8% increase in consolidated revenues to Ps.19,971 million—

—Notable reduction in the delinquency rate of Banco Azteca Mexico; decreases more than four percentage points to 2.7%—

MEXICO CITY, Oct. 27, 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 third quarter of 2016.

Consolidated third quarter results

Consolidated revenue was Ps.19,971 million, 8% above the Ps.18,470 million for the same quarter of last year. Costs and operating expenses were Ps.16,996 million, compared to Ps.15,798 million for the same period of 2015.

As a result, Grupo Elektra reported EBITDA of Ps.2,975 million, 11% higher than the Ps.2,672 million of the previous year’s quarter; EBITDA margin was 15% this period, one percentage point above the previous year.

Operating profit grew 14% to Ps.2,311 million during the quarter, from Ps.2,030 million in same period of 2015.

The company reported net income of Ps.1,330 million, compared to a net loss of Ps.1,220 million a year ago.

    3Q 2015   3Q 2016   Change
      Ps. %
         
Consolidated revenue $ 18,470   $ 19,971   $ 1,501     8 %
         
EBITDA   $ 2,672   $ 2,975   $ 303      11 %
         
Operating profit
$
2,030
  $
2,311
  $
280
    14
%
                         
Net result  $ (1,220 ) $ 1,330   $ 2,550   -----
         
Net result per share $ (5.19 ) $ 5.61   $ 10.80   -----
         

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of September 30, 2015, Elektra outstanding shares were 234.9 million and as of September 30, 2016, were 237.1 million.

Revenue

Consolidated revenue increased 8%, as a result of growth of 13% and 5% in commercial sales and financial revenues, respectively.

The increase in sales from the commercial division — to Ps.7,426 million compared to Ps.6,549 million last year — reflects strategies that generate growing customer satisfaction through an optimal mix of merchandise on the sales floor, offered by a highly trained sales force under the most competitive market conditions.

The increase in financial revenue — to Ps.12,545 million from Ps.11,921 million from the previous year — results mainly from a 7% growth in revenue of Advance America, together with a 2% increase in revenue from Banco Azteca Mexico during the period.

Costs and expenses

Consolidated costs for the quarter decreased 3% to Ps.7,410 million, from Ps.6,624 million in  the previous year, as a result of a 22% decrease in financial cost — largely driven by a reduction in provisions for loan losses, along with increased strength in asset quality — and an 12% increase in commercial costs, in line with the performance of commercial revenue.

Sales, administration and promotion expenses increased 17% to Ps.9,586 million, as a result of higher personnel expenses—from higher compensation schemes that encourage productivity—increase in advertising—which achieves a better positioning of Grupo Elektra´s brands—and an increase in operating expenses.

EBITDA and net result

Consolidated EBITDA grew 11% to Ps.2,975 million this quarter.

Operating income increased 14% to Ps.2,311 million, from Ps.2,030 million for the same quarter of 2015.

The most significant change below EBITDA was a positive variation of Ps.3,335 million in other financial results, as a consequence of a gain in the market value of the underlying assets of financial instruments owned by the company – which does not imply cash flow – compared with a reduction in value of previous year.

Grupo Elektra reported a net income of Ps.1,330 million, compared to a net loss of Ps.1,220 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 September 30, 2016 grew 10% to Ps.74,341 million, from Ps.67,646 million from the previous year. Consolidated delinquency rate was 3.7% at the end of the period, compared to 7.7% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 15% to Ps.59,903 million, from Ps.52,273 million a year ago.

The delinquency rate of the bank at the end of the quarter was 2.7%, more than four percentage points lower than the 7.1% from the previous year. 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 third quarter.

The Advance America loan portfolio was Ps.5,391 million, 2% higher than the Ps.5,309 million a year ago.

Grupo Elektra consolidated deposits increased 5% to Ps.103,236 million, from Ps.98,598 million a year ago. Deposits of Banco Azteca Mexico were Ps.97,984 million, 7% higher than the Ps.91,927 million a year ago. 

As of September 30, 2016, the estimated capitalization index of Banco Azteca Mexico was 16.56%.

Debt

Consolidated debt with cost as of September 30, 2016, was Ps.18,730 million, from Ps.19,812 million for the prior year.

Consolidated debt was comprised of Ps.16,274 million for the commercial business, and Ps.2,456 million for the financial business. The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.15,208 million at the end of the period; as a result, the net cash commercial balance — excluding debt with cost — is favorable at Ps.1,066 million.

Infrastructure

Grupo Elektra currently has 7,391 points of sale, compared to 8,339 units a year ago. The reduction results from strategies that focus on maximizing the profitability of the units.

The company has 4,546 points of sale in Mexico, 2,165 in the United States, and 680 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.

Nine months consolidated results

Total consolidated revenue in the first nine months of the year grew 4% to Ps.57,928 million, from Ps.55,503 million for the same period of 2015, boosted mainly by 12% growth in  the commercial business.

EBITDA was Ps.9,830 million, 23% higher than the Ps.8,004 million for the same period a year ago; the EBITDA margin in the first nine months of 2016 was 17%, three percentage points above the prior year. Operating profit grew 33% to Ps.8,145 million during the period.

The company registered consolidated net income of Ps.2,410 million, compared to a loss of Ps.5,922 million a year ago, mainly due a smaller reduction in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to the prior year.

    9M 2015   9M 2016   Change
      Ps. %
         
Consolidated revenue $ 55,503   $ 57,928   $ 2,425     4 %
         
EBITDA   $ 8,004   $ 9,830   $ 1,825      23 %
         
Operating profit
$
6,130
  $
8,145
  $
2,015
    33
%
Net result  $ (5,922 ) $ 2,410   $ 8,332   ----
         
Net result per share $ (25.21 ) $ 10.16   $ 35.37   ----
         

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of September 30, 2015, Elektra outstanding shares were 234.9 million and as of September 30, 2016, were 237.1 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 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.

                     
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
                     
    3Q15   3Q16   Change  
                     
  Financial income     11,921     65 %       12,545     63 %       624     5 %  
  Commercial income     6,549     35 %       7,426     37 %       877     13 %  
  Income     18,470     100 %       19,971     100 %       1,501     8 %  
                     
  Financial cost     3,342     18 %       2,596     13 %       (746 )   -22 %  
  Commercial cost     4,282     23 %       4,814     24 %       532     12 %  
  Costs     7,624     41 %       7,410     37 %       (214 )   -3 %  
                     
  Gross income     10,846     59 %       12,561     63 %       1,715     16 %  
                     
  Sales, administration and promotion expenses     8,174     44 %       9,586     48 %       1,412     17 %  
                     
  EBITDA      2,672     14 %       2,975     15 %       303     11 %  
                     
  Depreciation and amortization     649     4 %       692     3 %       43     7 %  
                     
  Other expense (income), net     (7 )   0 %       (28 )   0 %       (21 )   -292 %  
                     
  Operating Income     2,030     11 %       2,311     12 %       280     14 %  
                     
  Comprehensive financial result:                  
  Interest income     71     0 %       258     1 %       188     -266 %  
  Interest expense     (355 )   -2 %       (345 )   -2 %       10     3 %  
  Foreign exchange gain, net     89     0 %       154     1 %       66     -74 %  
  Other financial results, net     (3,305 )   -18 %       30     0 %       3,335     ----    
        (3,500 )   -19 %       98     0 %       3,599     103 %  
                     
  Participation  in  the  net  income of CASA and other associated companies     (117 )   -1 %       (402 )   -2 %       (286 )   -245 %  
                     
  (Loss) income before income tax     (1,587 )   -9 %       2,007     10 %       3,593     ----    
                         
  Income tax     453     2 %       (682 )   -3 %       (1,135 )   ----    
                         
  (Loss) income before discontinued operations     (1,133 )   -6 %       1,325     7 %       2,458     ----    
                         
  Result from discontinued operations      (86 )   0 %       5     0 %       92     ----    
                         
  Consolidated net (loss) income      (1,220 )   -7 %       1,330     7 %       2,550     ----    
                     

 

                   
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
                   
    9M15   9M16   Change
                   
  Financial income     36,305     65 %       36,501     63 %       196     1 %
  Commercial income     19,199     35 %       21,428     37 %       2,229     12 %
  Income     55,503     100 %       57,928     100 %       2,425     4 %
                   
  Financial cost     11,677     21 %       7,564     13 %       (4,113 )   -35 %
  Commercial cost     12,898     23 %       14,058     24 %       1,161     9 %
  Costs     24,574     44 %       21,622     37 %       (2,952 )   -12 %
                   
  Gross income     30,929     56 %       36,306     63 %       5,378     17 %
                   
  Sales, administration and promotion expenses     22,925     41 %       26,477     46 %       3,552     15 %
                   
  EBITDA      8,004     14 %       9,830     17 %       1,825     23 %
                   
  Depreciation and amortization     1,875     3 %       1,881     3 %       5     0 %
                   
  Other expense (income), net     (0 )   0 %       (195 )   0 %       (195 )   ----  
                   
  Operating Income     6,130     11 %       8,145     14 %       2,015     33 %
                   
  Comprehensive financial result:                
  Interest income     269     0 %       654     1 %       385     143 %
  Interest expense     (1,079 )   -2 %       (1,007 )   -2 %       73     7 %
  Foreign exchange gain, net     167     0 %       326     1 %       160     96 %
  Other financial results, net     (13,116 )   -24 %       (3,974 )   -7 %       9,142     70 %
        (13,760 )   -25 %       (4,001 )   -7 %       9,759     71 %
                   
  Participation  in  the  net  income of                
  CASA and other associated companies     (378 )   -1 %       (618 )   -1 %       (240 )   -63 %
                   
  (Loss) income before income tax     (8,008 )   -14 %       3,526     6 %       11,535     ----  
                   
  Income tax     2,296     4 %       (1,119 )   -2 %       (3,415 )   ----  
                   
  (Loss) income before discontinued operations     (5,713 )   -10 %       2,407     4 %       8,120     ----  
                   
  Result from discontinued operations      (210 )   0 %       3     0 %       213     ----  
                   
  Consolidated net (loss) income      (5,922 )   -11 %       2,410     4 %       8,332     ----  
                   


                       
    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 September 30, 2015   At September 30, 2016    
                       
  Cash and cash equivalents   2,117   18,284   20,401     2,719   19,494   22,214       1,812     9 %
  Marketable financial instruments   19,996   54,297   74,293     12,489   52,001   64,490       (9,803 )   -13 %
                       
  Performing loan portfolio   -    45,105   45,105     -    51,188   51,188       6,084     13 %
  Total past-due loans   -    4,927   4,927     -    2,663   2,663       (2,264 )   -46 %
  Gross loan portfolio   -    50,032   50,032     -    53,852   53,852       3,820     8 %
  Allowance for credit risks   -    8,055   8,055     -    6,693   6,693       (1,362 )   -17 %
  Loan portfolio, net   -    41,977   41,977     -    47,159   47,159       5,182     12 %
                       
  Inventories   6,287   -   6,287     7,705   -   7,705       1,419     23 %
  Other current assets    3,552   8,390   11,942     6,526   8,908   15,434       3,492     29 %
                       
  Total current assets   31,951   122,948   154,899     29,440   127,562   157,002       2,103     1 %
                       
  Financial instruments   4,252   292   4,543     17,672   306   17,978       13,435     296 %
                       
  Performing loan portfolio   -    17,367   17,367     -    20,406   20,406       3,039     17 %
  Total past-due loans   -    248   248     -    84   84       (164 )   -66 %
  Loan portfolio   -    17,614   17,614     -    20,489   20,489       2,875     16 %
                       
  Other non-current assets    -    912   912     -    567   567       (345 )   -38 %
                       
  Investment in shares   3,938   -    3,938     2,736   -    2,736       (1,202 )   -31 %
  Property, furniture, equipment and                    
    investment in stores, net   3,912   2,825   6,737     3,542   2,762   6,304       (433 )   -6 %
  Intangible assets   544   8,180   8,724     624   5,891   6,515       (2,209 )   -25 %
  Other assets   1,115   385   1,501     599   568   1,167       (334 )   -22 %
  TOTAL ASSETS   45,713   153,156   198,868     54,612   158,147   212,759       13,891     7 %
                       
  Demand and term deposits   -   98,598   98,598     -   103,236   103,236       4,637     5 %
  Creditors from repurchase agreements   -   5,034   5,034     -   4,718   4,718       (316 )   -6 %
  Short-term debt   7,624   817   8,442     55   414   469       (7,973 )   -94 %
  Short-term liabilities with cost   7,624   104,450   112,074     55   108,367   108,423       (3,652 )   -3 %
                       
  Suppliers and other short-term liabilities   9,770   8,491   18,261     13,803   7,453   21,256       2,995     16 %
  Short-term liabilities without cost   9,770   8,491   18,261     13,803   7,453   21,256       2,995     16 %
                       
  Total short-term liabilities   17,395   112,940   130,335     13,858   115,821   129,679       (656 )   -1 %
                       
  Long-term debt   10,247   1,123   11,370     16,219   2,042   18,261       6,891     61 %
  Long-term liabilities with cost   10,247   1,123   11,370     16,219   2,042   18,261       6,891     61 %
                       
  Long-term liabilities without cost   2,980   3,693   6,673     5,601   4,060   9,662       2,988     45 %
                       
  Total long-term liabilities   13,227   4,816   18,043     21,820   6,103   27,922       9,880     55 %
                       
  TOTAL LIABILITIES   30,621   117,756   148,378     35,678   121,923   157,601       9,224     6 %
                       
  TOTAL STOCKHOLDERS' EQUITY   15,091   35,400   50,491     18,934   36,224   55,158       4,667     9 %
                       
  LIABILITIES + EQUITY   45,713   153,156   198,868     54,612   158,147   212,759       13,891     7 %
                       

  

                   
    INFRASTRUCTURE      
                   
    3Q15   3Q16   Change
                   
  Points of sale in Mexico                
  Elektra    1,002   12 %     978   13 %       (24 )   -2 %
  Salinas y Rocha    52   1 %     50   1 %       (2 )   -4 %
  Banco Azteca   1,257   15 %     1,228   17 %       (29 )   -2 %
  Freestanding branches   2,649   32 %     2,290   31 %       (359 )   -14 %
  B-Store   247   3 %     -    0 %       (247 )   -100 %
  Total   5,207   62 %     4,546   62 %       (661 )   -13 %
                   
  Points of sale in Central and South America                
  Elektra    198   2 %     167   2 %       (31 )   -16 %
  Banco Azteca   198   2 %     167   2 %       (31 )   -16 %
  Freestanding branches   372   4 %     346   5 %       (26 )   -7 %
  Total   768   9 %     680   9 %       (88 )   -11 %
                   
  Points of sale in North America                
  Advance America   2,364   28 %     2,165   29 %       (199 )   -8 %
  Total   2,364   28 %     2,165   29 %       (199 )   -8 %
                   
  TOTAL   8,339   100 %     7,391   100 %       (948 )   -11 %
                   
                   
  Floor space (m²)   1,610   100 %     1,484   100 %       (126 )   -8 %
                   
                   
  Employees                
  Mexico   50,658   76 %     49,353   77 %       (1,305 )   -3 %
  Central and South America   9,427   14 %     8,784   14 %       (643 )   -7 %
  North America   6,667   10 %     6,007   9 %       (660 )   -10 %
  Total employees   66,752   100 %     64,144   100 %       (2,608 )   -4 %
                                   


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@gruposalinas.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

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