News Column

Azteca Announces 8% Growth in EBITDA to Ps.912 Million in 2Q14

July 24, 2014

—Net Sales increased 15% to Ps.3,253 million in the quarter—



—Solid expansion in Net Income to Ps.276 million—



—94% advance in the construction of the largest fiber optic network in Latin America—

MEXICO CITY, July 24, 2014 (GLOBE NEWSWIRE) -- TV Azteca, S.A.B. de C.V. (BMV:AZTECA) (Latibex:XTZA), one of the two largest producers of Spanish-language television programming in the world, announced today financial results for the second quarter of 2014.

Second quarter results

"Successful programming grids throughout the entire day generated strong demand for advertising space on Azteca, which was complemented this quarter with solid ad campaigns related to the World Cup soccer tournament in Brazil," commented Mario San Roman, CEO of Azteca. "Advertiser preferences resulted in a significant expansion in revenue, and determined a steady increase in EBITDA and higher growth in net income for the period."

Net sales for the quarter were Ps.3,253 million, 15% above the Ps.2,820 million for the same quarter of last year. Total costs and expenses were Ps.2,341 million, compared to Ps.1,973 million from the same period last year.

As a result, Azteca reported EBITDA of Ps.912 million, 8% higher than the Ps.847 million from last year; EBITDA margin for the quarter was 28%. The company registered a net profit of Ps.276 million, compared to a net loss of Ps.85 million for the same quarter of 2013.

 
  2Q 20132Q 2014Change
     Ps.%
       
Net Sales$2,820$3,253$43315%
      
EBITDA$847$912$658%
      
Net result$(85)$276$361--
     
Net result per CPO$(0.03)$0.09$0.12--
 
Figures in millions of pesos.
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
The number of CPOs outstanding as of June 30, 2013 was 2,984 million and as of June 30, 2014 was 2,986 million.


Net sales

Domestic ad sales were Ps.2,965 million in the quarter, 14% above the Ps.2,601 million for the same period of the previous year, in the context of superior preference of advertisers to reach their targeted market segments, both through the successful daily programming of Azteca, and the related broadcasting of the World Cup soccer tournament, with a professional sports analysis and vibrant content around the event, that attracted large audiences.

In addition, the company registered sales from Azteca America—the company's wholly-owned broadcast television network focused on the U.S. Hispanic market—of Ps.199 million this quarter, a 15% increase compared to Ps.173 million a year ago.

Content sales to other countries were Ps.68 million in the quarter, from Ps.46 million from the previous year. The revenue was directly related to the export of popular programs for global audiences, including CorazÓn en Condominio and Prohibido Amar to Asia, and Siempre Tuya Acapulco to Europe.

Costs and expenses

Costs and expenses increased 19% during the period, as a result of a 22% growth in production, programming and transmission costs —to Ps.1,947 million, from Ps.1,599 million in the same period a year ago— and a 5% increase in selling and administrative expenses —to Ps.394 million, compared to Ps.374 million in the same quarter of 2013.

The growth in costs mainly derives from exhibition rights and production and broadcasting costs related to the World Cup in Brazil, as well as the consolidation of the Atlas soccer team in the results of Azteca, and the strengthening of its player rooster. As was previously announced, the soccer team was acquired by the company on December 2013. The acquisition will give Azteca an important presence in one of Mexico's largest soccer markets.

The increase in costs also reflects the consolidation of Azteca Comunicaciones Colombia in the results of the company. Azteca anticipates that the commercialization of telecommunications services in Colombia will generate solid yields in the future.

The smaller increase in expenses compared to revenue is the result of strategies that generate additional operating efficiencies.

EBITDA and net result

EBITDA was Ps.912 million, 8% higher compared to Ps.847 million in the same period of the prior year.

The most significant change below EBITDA was a Ps.299 million improvement in the comprehensive financing result, mainly derived from a foreign exchange gain for the period compared to a loss in the same quarter a year ago.

The company registered net income of Ps.276 million for the quarter, compared to a net loss of Ps.85 million for the same period a year ago

Debt

As of June 30, 2014, Azteca's outstanding debt —excluding Ps.1,190 million debt due in 2069—was Ps.10,143 million. The cash balance of the company was Ps.5,792 million. As a result, net debt was Ps.4,351 million at the end of the quarter.

Debt to last twelve months (LTM) EBITDA ratio was 2.5 times, and net debt to LTM EBITDA was 1.1 times.

Fiber optics network in Colombia

During the quarter, Azteca made solid progress in the construction of the largest fiber optic network in Latin America. At the end of June, there were 17,940 kilometers already built across the Colombian territory, equivalent to 94% of the 19,000 kilometers of the project. The network currently covers 667 of the 753 municipalities planned.

As previously announced, Azteca is building a fiber optic network that will cover almost 80% of Colombia, and will commercialize telecommunications services in the country. The offer of telecommunications services will diversify and strengthen Azteca revenue sources, adding its operation to the existing broadcast television business.

Six months results

Net sales for the first six months of 2014 were Ps.5,793 million, 11% higher than the Ps.5,236 million for the same period of 2013. Total costs and expenses were Ps.4,354 million, from Ps.3,776 million for the same period of the previous year. The increase in costs mainly derives from exhibition rights and production and broadcasting costs related to the World Cup in Brazil, as well as the consolidation of Azteca Comunicaciones Colombia and the Atlas soccer team in the results of Azteca.

Azteca reported EBITDA of Ps.1,439 million, compared to Ps.1,460 million from the first half a year ago; EBITDA margin was 25% for the six-month period. The company recorded net income of Ps.99 million, compared to Ps.67 million for the same period of 2013. 

 
  6M 20136M 2014Change
     Ps.%
       
Net sales$5,236$5,793$55711%
      
EBITDA$1,460$1,439$(21)-1%
      
Net result$67$99$3248%
     
Net result per CPO$0.02$0.03$0.0148%
 
Figures in millions of pesos.
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
The number of CPOs outstanding as of June 30, 2013 was 2,984 million and as of June 30, 2014 was 2,986 million.


Company Profile

Azteca is one of the two largest producers of Spanish-language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. Azteca affiliates include Azteca America Network, a broadcast television network focused on the rapidly growing U.S. Hispanic market, and Azteca Web, an Internet company for North American Spanish speakers.

Azteca 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). Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders. Grupo Salinas has no equity holdings. However, 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 Azteca and its subsidiaries are identified in documents sent to securities authorities.

TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED RESULTS OF OPERATIONS
(Millions of Mexican pesos of June 30 of 2013 and 2014)
             
 Second Quarter of :      
 2013  2014      
         Change
Net revenue Ps  2,820 100% Ps  3,253 100%Ps  433 15%
           
Programming, production and transmission costs  1,599 57%  1,947 60%  348 22%
Selling and administrative expenses  374 13%  394 12%  20 5%
             
Total costs and expenses  1,973 70%  2,341 72%  368 19%
             
EBITDA 847 30% 912 28% 65 8%
             
Depreciation and amortization  144    177    33  
Other expense -Net  150    111    (39)  
             
Operating profit 553 20% 624 19% 71 13%
             
Equity in income from affiliates  1    (3)    (4)  
             
Comprehensive financing result:            
Interest expense  (224)    (243)    (18)  
Other financing expense  (49)    (17)    32  
Interest income  45    46    1  
Exchange loss -Net  (227)    58    286  
   (455)    (155)    299  
             
Income before the following provision 99 4% 466 14% 367 370%
             
Provision for income tax  (188)    (193)    (6)  
             
Net incomePs  (89)  Ps  273  Ps  361  
             
Non-controlling share in net profitPs  (4)  Ps  (4)  Ps  (0)  
             
Controlling share in net profit Ps  (85)-3%Ps  276 8%Ps  361 425%
 
 
TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED RESULTS OF OPERATIONS
(Millions of Mexican pesos of June 30 of 2013 and 2014)
             
 Period ended June 30,      
 2013  2014      
       Change
Net revenue Ps  5,236 100% Ps  5,793 100% Ps  557 11%
           
Programming, production and transmission costs  3,022 58%  3,569 62%  547 18%
Selling and administrative expenses  754 14%  785 14%  31 4%
             
Total costs and expenses  3,776 72%  4,354 75%  578 15%
             
EBITDA 1,460 28% 1,439 25% (21)-1%
             
Depreciation and amortization  292    347    55  
Other expense -Net  209    172    (37)  
             
Operating profit 959 18% 920 16% (39)-4%
             
Equity in income from affiliates  (9)    9    18  
             
Comprehensive financing result:            
Interest expense  (464)    (496)    (32)  
Other financing expense  (60)    (39)    22  
Interest income  87    82    (5)  
Exchange Gain -Net  (20)    54    74  
   (459)    (399)    60  
             
Income before the following provision 491 9% 530 9% 39 8%
             
Provision for income tax  (432)    (439)    (7)  
             
Net incomePs   59  Ps   91  Ps   32  
             
Non-controlling share in net profit Ps   (7)  Ps   (8)  Ps   (1)  
             
Controlling share in net profit Ps   67 1%Ps   99 2%Ps   32 48%
 
 
TV AZTECA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of Mexican pesos of June 30 of 2013 and 2014)
         
 At June 30    
 20132014    
     Change
Current assets:        
Cash and cash equivalents  Ps  6,010  Ps  5,792  Ps  (218)  
Accounts receivable  5,856  6,164  309  
Other current assets  2,990  3,329  339  
         
Total current assets 14,856  15,285  430 3%
         
Accounts receivable  491  136  (356)  
Exhibition rights  2,328  2,268  (60)  
Property, plant and equipment-Net  3,411  3,582  171  
Television concessions-Net  7,721  7,763  42  
Other assets  1,885  4,045  2,160  
Deferred income tax asset  4,672  3,372  (1,300)  
Total long term assets 20,508  21,166  657 3%
         
Total assets Ps  35,364  Ps  36,451  Ps  1,087 3%
         
         
Current liabilities:        
Short-term debt  Ps  667  Ps  --   Ps  (667)  
Other current liabilities  2,638  3,968  1,330  
Total current liabilities 3,305  3,968  663 20%
         
Long-term debt:        
Structured Securities Certificates  4,278  --   (4,278)  
Long-term debt  3,836  10,143  6,307  
Total long-term debt 8,114  10,143  2,029  
Other long term liabilities:        
Advertising advances  6,951  7,187  236  
American Tower Corporation (due 2069)  1,560  1,190  (370)  
Deferred income tax asset  3,463  1,741  (1,722)  
         
Total other long-term liabilities 11,974  10,118  (1,856)-16%
         
Total liabilities 23,393  24,229  836 4%
         
Total stockholders' equity 11,971  12,222  251 2%
         
Total liabilities and equity Ps  35,364  Ps  36,451  Ps  1,087 3%

CONTACT: Investor Relations Bruno RangelGrupo Salinas Tel. +52 (55) 1720-9167 jrangelk@gruposalinas.com.mxRolando Villarreal Grupo 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: TV Azteca, SAB de CV


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