News Column

Grupo Elektra Announces Revenue of Ps.18,963 Million and EBITDA of Ps.2,085 Million in 4Q13

February 27, 2014

—Solid dynamism in consolidated bank deposits, growing 15% to Ps.78,589 million—

—Continued increase of gross loan portfolio; 6% expansion to Ps.77,092 million—

—The company acquired Blockbuster Mexico, further expanding its distribution network to 6,800 points of sale—

Strategies to further strengthen financial and commercial businesses are expected to translate into future yields

MEXICO CITY, Feb. 27, 2014 (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 2013.

Consolidated fourth quarter results

Consolidated revenue was Ps.18,963 million, compared to Ps.19,312 million for the same period last year. Costs and operating expenses were Ps.16,878 million, 2% below the Ps.17,212 million for the same period of 2012.

Grupo Elektra reported EBITDA of Ps.2,085 million, compared to Ps.2,099 million for the previous year's quarter; EBITDA margin was 11% this quarter, constant from the prior year. The company reported net income of Ps.1,863 million, from Ps.2,259 million a year ago.

       
   4Q 2012 4Q 2013 Change
     Ps.%
       
Consolidated revenue$19,312$18,963$(348)-2%
      
EBITDA $2,099$2,085$(14) -1%
      
Net result$2,259$1,863$(396)-18%
      
Net result per share$9.53$7.85$(1.68)-18%
 
Figures in millions of pesos
As of December 31, 2012, Elektra outstanding shares were 237.1 million and as of December 31, 2013, were 237.2 million.


Revenue

Consolidated revenue fell 2%, as a result of an increase of 3% in financial revenue and an 11% reduction in commercial sales.  

Financial revenue grew to Ps.13,255 million, from Ps.12,929 million last year. The development of revenue from Banco Azteca Mexico contributed significantly to the growth of the financial business, increasing 4% to Ps.9,203 million, from Ps.8,871 million, mainly as a result of an expansion of personal loans and Presta Prendacredits.

The decrease in commercial revenue is in the context of the removal of low-margin products, as well as the reorganization of sales activities, 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 increased 5% to Ps.8,952 million, from Ps.8,557 million from the previous year. The change mainly derives from a 24% increase in financial cost —to Ps.4,802 million compared to Ps.3,887 million a year ago— and an 11% reduction in commercial cost, in line with revenue performance.

The change in financial cost mainly resulted from the creation of loan loss reserves—in the context of growth of the consolidated portfolio; as well as more interest paid to savers, as a result of a firm increase in traditional deposits.

Consolidated operating expenses decreased 8% to Ps.7,926 million, compared to Ps.8,655 million for the same quarter of the previous year; as a result of high operational efficiency in the period.

EBITDA and net result

Consolidated EBITDA was Ps.2,085 million, compared to Ps.2,099 million a year ago; the EBITDA margin for the quarter was11%.

The most significant changes below EBITDA were i) a positive Ps.671 million in other financial results, as a consequence of a larger increase 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, and ii) an increase of Ps.1,039 million in tax provisions, according to the tax rate applicable to the results for the company.

Grupo Elektra reported net income of Ps.1,863 million, compared to net income of Ps.2,259 million a year ago.

Consolidated balance sheet

Loan portfolio and deposits

Banco Azteca Mexico, Advance America — the largest non-bank provider of cash advance services in the US — and Banco Azteca Latin America's consolidated gross portfolio as of December 31, 2013 was Ps.77,092 million, 6% higher than the Ps.72,891 million from the previous year, as a result of the growing preference of customers for our credit products, which directly improve quality of life. The consolidated delinquency rate was 8.1% at the end of the period.

The gross portfolio of Banco Azteca Mexico was Ps.62,281 million, compared to Ps.61,466 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 8.2%. The non-performing loan portfolio is reserved 1.4 times. 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.4,174 million, 12% higher Ps.3,716 million a year ago. More dynamism in the operations of the company is expected with the successful launch of title loans in a growing number of points of sale in the U.S.

Grupo Elektra consolidated deposits grew 15%, to Ps.78,589 million, compared to Ps.68,511 million a year ago.

Financial products that satisfy clients in the best way, with the best market conditions, and with world class service, resulted in strong increases in deposits and credit portfolios, which anticipate strong future yields.

As of December 31, 2013, the capitalization index of Banco Azteca Mexico was 13.3%. The company considers the index to be at a level that optimizes equity profitability.

Debt

As of December 31, 2013, consolidated total debt with cost was Ps.22,673 million, of which Ps.18,064 million correspond to the commercial business, and Ps.4,609 million to the financial business.

The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.17,115 million at the end of the period; as a result, net cash for the commercial business –excluding debt with cost– was a positive Ps.949 million.

Acquisition of Blockbuster Mexico

In January 2014, the company acquired 100% of the shares of Blockbuster MÉxico, which adds 321 points of sale to the distribution network of Grupo Elektra, in 108 cities in Mexico, and are mainly located in the B and C demographic areas, which will expand the customer base of Grupo Elektra.

In the new locations, the company plans to offer commercial products, in addition to strengthening its current financial services platform, and promote the transformation of the digital entertainment distribution network.

On a pro forma basis, including the acquisition, the company has 6,800 points of sale, 6% more than the 6,397 from a year ago. There are 3,725 points of sale in Mexico, 2,454 in the United States, and 621 in Central and South America. The wide distribution network allows the company to keep its proximity and closeness to clients; granting superior market positioning in the countries where it operates.

Grupo Elektra extends its geographical distribution and service to additional markets, further strengthening the financial and commercial business, and expands the prospects for growth and profitability.

Twelve months consolidated results

Total consolidated revenue in 2013 was Ps.70,732 million, 2% higher than the Ps.69,179 million for 2012. The company reported EBITDA of Ps.9,679 million, compared to Ps.11,526 million for 2012; the EBITDA margin in the year was 14%. 

The company registered consolidated net income of Ps.829 million, compared to a loss of Ps.19,219 million a year ago, mainly due to lower depreciation this period in the market value of underlying financial instruments that the company holds, which doesn't imply cash flow, compared to the prior year.

 

       
  2012 2013 Change
     Ps.%
       
Consolidated revenue$69,179$70,732$1,5522%
      
EBITDA $11,526$9,679$(1,847)-16%
      
Net result$(19,219)$829$20,048----
      
Net result per share$(81.06)$3.49$84.55----
 
Figures in millions of pesos
As of December 31, 2012, Elektra outstanding shares were 237.1 million and as of December 31, 2013, were 237.2 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, 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 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
             
 4Q124Q13Change
             
Financial income  12,929 67%  13,255 70%  326 3%
Commercial income  6,382 33%  5,708 30%  (674) -11%
Income 19,312 100% 18,963 100%  (348) -2%
             
Financial cost  3,887 20%  4,802 25%  915 24%
Commercial cost  4,670 24%  4,150 22%  (520) -11%
Costs 8,557 44% 8,952 47%  395 5%
             
Gross income 10,755 56% 10,011 53%  (743) -7%
             
Sales, administration and promotion expenses  8,655 45%  7,926 42%  (729) -8%
Depreciation and amortization  729 4%  888 5%  159 22%
Operating expenses 9,385 49% 8,814 46%  (570) -6%
             
Operating income 1,370 7% 1,197 6%  (173) -13%
             
EBITDA  2,099 11% 2,085 11%  (14) -1%
             
Comprehensive financial result:            
Interest income  (351) -2%  173 1%  524 ---
Interest expense  (387) -2%  (365) -2%  22 6%
Foreign exchange gain, net  253 1%  48 0%  (204) -81%
Other financial results, net  800 4%  1,472 8%  671 84%
  316 2% 1,328 7%  1,013 ---
             
Other expense, net  (5) 0%  (37) 0%  (32) ---
             
Participation in the net income of            
CASA and other associated companies  420 2%  258 1%  (163) -39%
             
Income before income tax 2,101 11% 2,746 14%  645 31%
             
Income tax  173 1%  (866) -5%  (1,039) ---
             
Income before discontinued operations 2,274 12% 1,880 10%  (394) -17%
             
Loss from discontinued operations   (15) 0%  (18) 0%  (2) -13%
             
Consolidated net income 2,259 12% 1,863 10%  (396) -18%
 
 
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
             
 12M1212M13Change
             
Financial income  45,031 65%  50,513 71%  5,482 12%
Commercial income  24,148 35%  20,219 29%  (3,930) -16%
Income 69,179 100% 70,732 100%  1,552 2%
             
Financial cost  12,347 18%  15,082 21%  2,735 22%
Commercial cost  17,517 25%  14,258 20%  (3,258) -19%
Costs 29,864 43% 29,340 41%  (523) -2%
             
Gross income 39,316 57% 41,392 59%  2,076 5%
             
Sales, administration and promotion expenses  27,790 40%  31,713 45%  3,922 14%
Depreciation and amortization  2,321 3%  2,932 4%  611 26%
Operating expenses 30,111 44% 34,645 49%  4,533 15%
             
Operating Income 9,204 13% 6,747 10%  (2,457) -27%
             
EBITDA  11,526 17% 9,679 14%  (1,847) -16%
             
Comprehensive financial result:            
 Interest income  765 1%  451 1%  (314) -41%
 Interest expense  (1,783) -3%  (1,625) -2%  158 9%
 Foreign exchange loss, net  (49) 0%  (194) 0%  (145) ---
 Other financial results, net  (36,579) -53%  (5,114) -7%  31,465 86%
  (37,646)-54% (6,482)-9%  31,164 83%
             
Other expense, net  (19) 0%  (21) 0%  (2) -13%
             
Participation in the net income expense of            
CASA and other associated companies  503 1%  289 0%  (214) -43%
             
(Loss) income before income tax (27,957)-40% 533 1%  28,491 100%
             
Income tax  8,837 13%  (70) 0%  (8,907) -100%
             
(Loss) income before discontinued operations (19,121)-28% 463 1%  19,583 ---
             
(Loss) profit from discontinued operations   (99) 0%  366 1%  465 ---
             
Consolidated net (loss) income (19,219)-28% 829 1%  20,048 ---
 
 
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MILLIONS OF MEXICAN PESOS
                 
 Commercial Financial   Commercial Financial       
 BusinessBusinessGrupo Elektra BusinessBusinessGrupo Elektra Change
                 
 At December 31, 2012At December 31, 2013  
                 
Cash and cash equivalents  6,387  13,089  19,476  3,302  16,476  19,778  303 2%
                 
Marketable financial instruments  23,778  11,380  35,158  13,813  20,596  34,409  (749) -2%
                 
Performing loan portfolio  374  50,843  51,216  --   51,626  51,626  409 1%
Total past-due loans  275  4,255  4,530  --   6,027  6,027  1,497 33%
Gross loan portfolio  649  55,097  55,746  --   57,653  57,653  1,907 3%
                 
Allowance for credit risks  279  7,452  7,730  --   8,632  8,632  902 12%
                 
Loan portfolio, net  371  47,646  48,016  --   49,021  49,021  1,005 2%
                 
Inventories  7,180    7,180  6,043    6,043  (1,137) -16%
                 
Other current assets   8,601  9,443  18,043  1,320  7,907  9,227  (8,816) -49%
                 
Total current assets 46,316  81,556  127,873  24,479  94,001  118,479  (9,394) -7%
                 
Financial instruments  --   --   --   10,522  214  10,736  10,736 ---
                 
Performing loan portfolio  36  16,566  16,602    19,224  19,224  2,622 16%
Total past-due loans  3  540  543    215  215  (328) -60%
Loan portfolio  39  17,106  17,145  --   19,439  19,439  2,294 13%
                 
Other non-current assets   868  0  868  6,001  2  6,003  5,134 ---
                 
Investment in shares  3,895  --   3,895  4,317    4,317  422 11%
Property, furniture, equipment and                
 investment in stores, net  4,262  2,866  7,128  4,664  2,971  7,634  507 7%
Intangible assets  571  6,708  7,279  624  6,687  7,311  32 0%
Other assets  808  183  991  664  494  1,158  167 17%
TOTAL ASSETS 56,760  108,419  165,179  51,270  123,807  175,077  9,898 6%
                 
                 
Demand and term deposits    68,511  68,511    78,589  78,589  10,078 15%
Creditors from repurchase agreements    3,321  3,321    4,140  4,140  820 25%
Short-term debt  6,386  2,411  8,797  3,341  738  4,079  (4,718) -54%
Short-term liabilities with cost  6,386  74,242  80,628  3,341  83,467  86,808  6,180 8%
                 
Suppliers and other short-term liabilities  7,385  6,561  13,945  7,578  7,978  15,556  1,611 12%
Short-term liabilities without cost  7,385  6,561  13,945  7,578  7,978  15,556  1,611 12%
                 
Total short-term liabilities 13,770  80,803  94,573  10,918  91,445  102,364  7,790 8%
                 
Long-term debt  13,786  1,118  14,904  14,723  3,871  18,594  3,690 25%
Long-term liabilities with cost  13,786  1,118  14,904  14,723  3,871  18,594  3,690 25%
                 
Long-term liabilities without cost  8,990  1,214 10,204  6,945  1,274  8,219  (1,985) -19%
                 
Total long-term liabilities 22,776  2,332  25,108  21,668  5,145  26,813  1,705 7%
                 
TOTAL LIABILITIES 36,546  83,135  119,682  32,586  96,591  129,177  9,495 8%
                 
TOTAL STOCKHOLDERS' EQUITY  20,213  25,284 45,497  18,683  27,217  45,900  403 1%
                 
LIABILITIES + EQUITY 56,760  108,419  165,179  51,270  123,807  175,077  9,898 6%
 
 
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
INFRASTRUCTURE
             
 4Q124Q13Change
             
Points of sale in Mexico            
Elektra (1)  967 15%  977 15%  10 1%
Salinas y Rocha (1)  55 1%  55 1%  -- 0%
Freestanding branches  2,327 36%  2,372 37%  45 2%
Total 3,349 52% 3,404 53%  55 2%
             
Points of sale in Central and South America            
Elektra (1)  220 3%  205 3%  (15) -7%
Freestanding branches  435 7%  416 6%  (19) -4%
Total 655 10% 621 10%  (34) -5%
             
Points of sale in North America            
Advance America  2,393 37%  2,454 38%  61 3%
Total 2,393 37% 2,454 38%  61 3%
             
TOTAL 6,397 100% 6,479 100%  82 1%
             
(1) Each store has a Banco Azteca branch.             
            
             
Floor space (m˛)            
Elektra Mexico  836,194 52%  841,100 52%  4,906 1%
Elektra Central and South America  164,796 10%  150,162 9%  (14,634) -9%
Salinas y Rocha  58,995 4%  58,995 4%  -- 0%
Freestanding branches  229,217 14%  241,243 15%  12,027 5%
Advance America  328,000 20%  338,000 21%  10,000 3%
TOTAL 1,617,201 100% 1,629,500 100%  12,299 1%
           
             
Employees            
Mexico  58,928 77%  65,460 78%  6,532 11%
Central and South America  11,609 15%  12,166 14%  557 5%
North America  6,053 8%  6,708 8%  655 11%
Total employees 76,590 100% 84,334 100%  7,744 10%

CONTACT: Investor Relations Bruno RangelGrupo Salinas Tel. +52 (55) 1720-9167 jrangelk@gruposalinas.com.mxRolando VillarrealGrupo Elektra S.A.B. de C.V. Tel. +52 (55) 1720-9167 rvillarreal@gruposalinas.com.mx Press Relations Luciano PascoeGrupo Salinas Tel. +52 (55) 1720 1313 ext. 36553 lpascoe@gruposalinas.com.mxDaniel McCoshGrupo Salinas Tel. +52 (55) 1720-0059 dmccosh@gruposalinas.com.mx

Source: Grupo Elektra SAB de CV


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