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Grupo Elektra Reports 6% EBITDA Growth to Ps.4,397 Million in 1Q18

—Operating profit increases 4% to Ps.3,720 million during the period—

— Solid performance in both commercial and financial businesses generates
9% increase in consolidated revenue, to Ps.23,896 million—

—Firm increase of 11%  in gross loan portfolio to Ps.90,582 million—

MEXICO CITY, April 24, 2018 (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 financial results for the first quarter of 2018.

Consolidated first quarter results

Consolidated revenue was Ps.23,896 million in the period, 9% above the Ps.22,006 million for the same quarter of the previous year. Costs and operating expenses were Ps.19,499 million, compared to Ps.17,872 million for the same period of 2017.

As a result, Grupo Elektra reported EBITDA of Ps.4,397 million, 6% higher than the Ps.4,134 million of the previous year’s quarter; EBITDA margin was 18% for the period.

Operating profit grew 4% to Ps.3,720 million during the quarter, from Ps.3,587 million in the same period of 2017.

The company reported net loss of Ps.1,291 million, compared to net income of Ps.4,501 million a year ago.

 
  1Q 2017 1Q 2018 Change
      Ps. %
         
Consolidated revenue $22,006 $23,896 $1,890 9%
         
EBITDA $4,134 $4,397 $263  6%
         
Operating profit

Net result
$3,587

$4,501
$3,720

$(1,291)
$132

$(5,972)
4%

---
         
Net result per share $19.40 $(5.67) $(25.07) ---
         
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of March 31, 2017, Elektra* outstanding shares were 232 million and as of March 31, 2018, were 227.7 million.

/EIN News/ -- Revenue

Consolidated revenue increased 9%, as a result of 8% and 9% growth in both financial revenues and commercial sales, respectively.

The increase in commercial division sales  ̶ to Ps.8,310 million compared to Ps.7,637 million last year ̶  reflects strategies that focus on generating optimum value propositions for customers through lines of merchandise that best meet their needs, with world-class service, all under the most competitive conditions in the market.

In recent quarters, these strategies have an additional boost with the launch of a new, larger store format, which includes a greater selection of goods and services to satisfy a growing number of families. In October, Grupo Elektra also launched its omnichannel strategy, with its online store www.elektra.com.mx, through which hundreds of thousands of products are sold, at unparalleled prices, from any device and at all times, which further strengthens the company's business operations.

The increase in financial revenue  ̶ to Ps.15,586 million from Ps.14,369 million the previous year ̶   reflects mainly revenue growth of 18% at Banco Azteca Mexico.

Costs and expenses

Consolidated costs for the quarter increased 14% to Ps.8,825 million, from Ps.7,758 million in the previous year, as a result of a 6% increase in commercial costs, in line with the increase in commercial revenue, and 29% growth in financial cost. The increase in the financial cost results from the creation of loan-loss provisions and higher interest payments, in line with higher market interest rates, as well as increased consolidated deposits.

Sales, administration and promotion expenses increased 6% to Ps.10,674 million, as a result of higher personnel and operation expenditures. Expenses grew slower than consolidated revenue, reflecting strong strategies that drive Grupo Elektra's operating efficiency.

EBITDA and net result

EBITDA grew 6% to Ps.4,397 million this quarter. Operating income increased 4% to Ps.3,720 million, from Ps.3,587 million for the same quarter of 2017.

The most significant variation below EBITDA was a negative variation of Ps.8,226 million in other financial results —which reflects a 27% reduction this quarter in the market value of the underlying assets of financial instruments held by the company, and does not imply cash flow— compared to a 68% increase a year ago.

Congruent with the negative variation of other financial results, a decrease of Ps.2,190 million in the provision of taxes was registered during the period.

Grupo Elektra reported a net loss of Ps.1,291 million, compared to a net profit of Ps.4,501 million a year ago.

Unconsolidated balance sheet

A proforma exercise of the balance sheet of Grupo Elektra is presented, which allows visualizing the non-consolidated financial situation, excluding the net assets of the financial business, whose investment is valued in this case under the equity method.

This presentation shows the debt of the company —without considering the immediate and term deposits of Banco Azteca, which do not constitute debt with cost for Grupo Elektra. The proforma balance sheet also does not include the bank's gross loan portfolio.

This provides greater clarity regarding the businesses that make up the company, and allows participants in the financial markets to make estimates of the value of the company, considering only the relevant debt for such calculations.

Congruent with that, debt with cost was Ps.13,393 million as of March 31, 2018, compared to Ps.11,666 million for the previous year. The balance of cash and cash equivalents was Ps.14,795 million; as a result, the net cash balance excluding the amount of debt with cost as of March 31, 2018, was favorable at Ps.1,402 million.

The company's equity increased 7% to Ps.64,981 million; while the ratio of stockholders' equity to total liabilities is 1.9 times, as the close of the quarter.

           
  As of March   As of March   Change
  31, 2017   31, 2018   Ps.   %
Cash & marketable fin. Instr. $10,845   $14,795   $3,951   36%
               
Inventories $7,369   $9,760   $2,391   32%
               
Other current assets $19,572   $9,005   $(10,567)   -54%
               
Financial instruments $16,806   $16,558   $(249)   -1%
               
Accounts receivable $3,391   $11,869   $8,478   ---
               
Investment shares $27,363   $30,780   $3,417   12%
               
Fixed assets $3,723   $5,357   $1,634   44%
               
Other assets $1,692   $1,455   $(237)   -14%
               
               
Total assets $90,761   $99,580   $8,819   10%
               
               
Short-term debt $3,284   $8,741   $5,457   ---
               
Other short-term liabilities $14,685   $16,590   $1,904   13%
               
Long-term debt $8,382   $4,652   $(3,729)   -44%
               
Other long-term liabilities $3,759   $4,616   $857   23%
               
               
Total liabilities $30,110   $34,599   $4,489   15%
               
               
Stakeholders´ equity $60,651   $64,981   $4,330   7%
               
               
Liabilities and equity $90,761   $99,580   $8,819   10%
               
Figures in millions of pesos.              

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, 2018 grew 11% to Ps.90,582 million, from Ps.81,547 million for the previous year. The consolidated delinquency rate was 4.8% at the end of the period, compared to 3.2% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 13% to Ps.74,875 million, from Ps.66,531 million a year ago.

The delinquency rate for the bank at the end of the quarter was 4.6%, from 2.5% for the previous year. The past-due loan portfolio is reserved 2.2 times, which reflects a past-due portfolio of Ps.3,457 million, in comparison to allowance for credit risks of Ps.7,550 million in balance, as of March 31, 2018.

The average term of the credit portfolio for principal credit lines –consumer, personal loans and Tarjeta Azteca– was 62 weeks at the end of the first quarter.

Grupo Elektra consolidated deposits were Ps.112,658 million, 7% higher than the Ps.105,703 million a year ago. Deposits of Banco Azteca Mexico were Ps.110,397 million, 8% higher than the Ps.102,510 million a year ago. 

As of March 31, 2018, the estimated capitalization index of Banco Azteca Mexico was 17.99%.

Infrastructure

Grupo Elektra currently has 7,344 points of contact, compared to 7,391 units a year ago. The reduction is a result of strategies to focus on maximizing profitability of such units.

These strategies involve replacing contact points with the most profitable formats. During the year, this resulted in 56 new Elektra stores at strategic points across Mexico, with greater exhibition area, which increase the offer of products and services, and thereby maximize customer shopping experiences.

The company has 4,672 points of contact in Mexico, 2,028 in the United States, and 644 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 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: economic value through market innovation and goods and services that improve standards of living; social value, to create social capabilities to improve the communities’ conditions; and environmental value, by reducing the negative impact related to its business activities. 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. These companies include: TV Azteca (www.TVazteca.com; www.irtvazteca.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), Punto Casa de Bolsa (www.puntocasadebolsa.mx), Totalplay (www.totalplay.com.mx) and Totalplay Empresarial (http://totalplayempresarial.com.mx). TV Azteca and Grupo Elektra trade shares on the Mexican Stock Market and in Spains' Latibex market. Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders. Grupo Salinas has no equity holdings. The group of companies shares a common vision, values and strategies for achieving rapid growth, superior results and world-class performance.

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


 
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
   
       
  1Q17   1Q18   Change
                 
Financial income 14,369   65 %   15,586   65 %   1,218   8%
Commercial income 7,637   35 %   8,310   35 %   672   9%
Income   22,006   100 %     23,896   100 %   1,890   9%
                 
Financial cost 2,601   12 %   3,362   14 %   761   29%
Commercial cost 5,157   23 %   5,463   23 %   306   6%
Costs   7,758   35 %     8,825   37 %   1,067   14%
                 
Gross income   14,248   65 %     15,071   63 %   823   6%
                 
Sales, administration and promotion expenses   10,114   46 %     10,674   45 %   560   6%
                 
EBITDA    4,134   19 %     4,397   18 %   263   6%
                 
Depreciation and amortization 537   2 %   667   3 %   130   24%
                 
Other expense, net 10   0 %   11   0 %   0   3%
                 
Operating income   3,587   16 %     3,720   16 %   132   4%
                 
Comprehensive financial result:                
Interest income 142   1 %   128   1 %   (14 ) -10%
Interest expense (468 ) -2 %   (346 ) -1 %   123   26%
Foreign exchange loss, net (936 ) -4 %   (834 ) -3 %   102   -11%
Other financial results, net 3,869   18 %   (4,357 ) -18 %   (8,226 ) ----
    2,606   12 %     (5,409 ) -23 %   (8,015 ) ----
                 
Participation  in  the  net  income of                
CASA and other associated companies 66   0 %   (26 ) 0 %   (92 ) ----
                 
Income (loss) before income tax   6,259   28 %     (1,716 ) -7 %   (7,975 ) -127%
                 
Income tax (1,760 ) -8 %   429   2 %   2,190   124%
                 
Income (loss) before discontinued operations   4,499   20 %     (1,286 ) -5 %   (5,785 ) -129%
                 
Result from discontinued operations 2   0 %   (5 ) 0 %   (7 ) 351%
                 
Impairment of intangible assets -   0 %   -   0 %   -   ----
                 
Consolidated net income (loss)   4,501   20 %     (1,291 ) -5 %   (5,792 ) -129%
                 


 
  INFRASTRUCTURE      
    
    
   
  1Q17   1Q18   Change
                 
Points of sale in Mexico                
Elektra 1,000 14 %   1,056 14 %   56   6%
Salinas y Rocha 49 1 %   47 1 %   (2 ) -4%
Banco Azteca 1,244 17 %   1,287 18 %   43   3%
Freestanding branches 2,319 31 %   2,282 31 %   (37 ) -2%
Total   4,612 62 %     4,672 64 %   60   1%
                 
Points of sale in Central and South America                
Elektra 164 2 %   164 2 %   -   0%
Banco Azteca 164 2 %   164 2 %   -   0%
Freestanding branches 351 5 %   316 4 %   (35 ) -10%
Total   679 9 %     644 9 %   (35 ) -5%
                 
Points of sale in North America                
Advance America 2,100 28 %   2,028 28 %   (72 ) -3%
Total   2,100 28 %     2,028 28 %   (72 ) -3%
                 
TOTAL   7,391 100 %     7,344 100 %   (47 ) -1%
                 
(1) Each store has a Banco Azteca branch.                
                 
                 
Floor space (m²)   1,502 100 %     1,597 100 %   95   6%
                 
                 
Employees                
Mexico 50,321 78 %   58,329 80 %   8,008   16%
Central and South America 8,624 13 %   8,789 12 %   165   2%
North America 5,921 9 %   5,677 8 %   (244 ) -4%
Total employees   64,866 100 %     72,795 100 %   7,929   12%
                 

  

 
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 March 31, 2017   At March 31, 2018    
                     
Cash and cash equivalents 2,199 20,757 22,956   5,075 17,678 22,753   (203 ) -1%
                     
Marketable financial instruments 8,646 45,829 54,474   9,720 52,291 62,012   7,537   14%
                     
Performing loan portfolio - 53,866 53,866   - 58,428 58,428   4,562   8%
Total past-due loans - 2,474 2,474   - 4,097 4,097   1,623   66%
                     
Gross loan portfolio - 56,341 56,341   - 62,526 62,526   6,185   11%
                     
Allowance for credit risks - 6,732 6,732   - 8,235 8,235   1,502   22%
                     
Loan portfolio, net - 49,609 49,609   - 54,291 54,291   4,682   9%
                     
                     
Inventories 7,389 - 7,389   9,802 - 9,802   2,412   33%
                     
Other current assets 8,671 8,617 17,287   7,148 7,880 15,028   (2,260 ) -13%
                     
Total current assets   26,905   124,811   151,715     31,745   132,139   163,884   12,169   8%
                     
Financial instruments 16,806 302 17,109   16,558 295 16,852   (256 ) -1%
                     
Performing loan portfolio - 24,793 24,793   - 27,790 27,790   2,997   12%
Total past-due loans - 113 113   - 266 266   152   134%
Gross loan portfolio - 24,906 24,906   - 28,056 28,056   3,150   13%
                     
Allowance for credit risks - - -   - 757 757   757   n.a.
                     
Loan portfolio - 24,906 24,906   - 27,299 27,299   2,393   10%
                     
Other non-current assets 102 673 774   1,729 656 2,385   1,611   208%
                     
Investment in shares 2,796 - 2,796   1,982 - 1,982   (814 ) -29%
Property, furniture, equipment and                    
investment in stores, net 3,723 2,793 6,515   5,357 3,211 8,568   2,053   32%
Intangible assets 662 6,330 6,992   694 6,228 6,922   (70 ) -1%
Other assets 1,030 392 1,422   761 283 1,044   (378 ) -27%
TOTAL ASSETS   52,024   160,206   212,230     58,826   170,111   228,937   16,707   8%
                     
                     
Demand and term deposits - 105,703 105,703   - 112,658 112,658   6,955   7%
Creditors from repurchase agreements - 3,555 3,555   - 6,319 6,319   2,764   78%
                     
Short-term debt 3,284 1,022 4,306   8,741 58 8,799   4,493   104%
Financial leasing     -       -   -   n.a.
Short-term liabilities with cost 3,284 110,280 113,564   8,741 119,035 127,776   14,212   13%
                     
Suppliers and other short-term liabilities 12,198 9,614 21,812   14,477 9,529 24,006   2,194   10%
Short-term liabilities without cost 12,198 9,614 21,812   14,477 9,529 24,006   2,194   10%
                     
Total short-term liabilities   15,482   119,894   135,376     23,218   128,564   151,782   16,406   12%
                     
Long-term debt 7,751 969 8,720   4,065 945 5,010   (3,710 ) -43%
Financial leasing     -       -   -   ----
Long-term liabilities with cost 7,751 969 8,720   4,065 945 5,010   (3,710 ) -43%
                     
Long-term liabilities without cost 3,759 3,724 7,483   4,616 2,549 7,165   (318 ) -4%
                     
Total long-term liabilities   11,510   4,693   16,203     8,681   3,494   12,175   (4,028 ) -25%
                     
TOTAL LIABILITIES   26,992   124,587   151,579     31,899   132,058   163,956   12,377   8%
                     
TOTAL STOCKHOLDERS' EQUITY   25,032   35,619   60,651     26,927   38,053   64,981   4,330   7%
                     
LIABILITIES + EQUITY   52,024   160,206   212,230     58,826   170,111   228,937   16,707   8%
                     

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