Grupo Elektra Reports EBITDA of Ps.4,630 Million and Operating Profit of Ps.3,921 Million in 2Q18


     —Solid performance in both commercial and financial businesses generates 11% increase in consolidated revenue to Ps.25,223 million—

—Firm increase of 11%  in gross loan portfolio to Ps.94,503 million—

MEXICO CITY, July 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 second quarter of 2018.

Consolidated second quarter results

Consolidated revenue was Ps.25,223 million in the period, 11% above the Ps.22,794 million for the same quarter of the previous year. Costs and operating expenses were Ps.20,593 million, compared to Ps.18,301 million for the same period of 2017.

As a result, Grupo Elektra reported EBITDA of Ps.4,630 million, 3% higher than the Ps.4,493 million of the previous year’s quarter; EBITDA margin was 18% for the period.

Operating profit was of Ps.3,921 million this quarter, from Ps.3,895 million in the same period of 2017.

The company reported net income of Ps.3,678 million, compared to net income of Ps.7,137 million a year ago.

   2Q 2017  2Q 2018  Change
   Ps.%
     
Consolidated revenue$22,794$25,223$2,42811%
     
EBITDA  $4,493$4,630$137 3%
     
Operating profit   $3,895$3,921$251%
      
Net result $7,137$3,678$(3,460)-48%
     
Net result per share$30.78$16.20$(14.58)-48%
     

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.       
As of June 30, 2017, Elektra* outstanding shares were 231.9 million and as of June 30, 2018, were 227.1 million.

Revenue

Consolidated revenue increased 11%, as a result of 11% and 9% growth in both financial revenues and commercial sales, respectively.

The increase in commercial division sales —to Ps.9,394 million from Ps.8,597 million last year— results from strategies focused on effectively satisfying customer needs with world class merchandise, optimal customer service and the most competitive terms 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 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.15,829 million from Ps.14,197 million the previous year—  reflects mainly revenue growth of 20% at Banco Azteca Mexico.

Costs and expenses

Consolidated costs for the quarter increased 12% to Ps.9,568 million, from Ps.8,563 million in the previous year, as a result of a 4% increase in commercial costs, and 27% 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 13% to Ps.11,025 million, as a result of higher personnel and maintenance expenditures, in the context of growing operations in Grupo Elektra.

EBITDA and net result

EBITDA grew 3% to Ps.4,630 million this quarter. Operating income increased 1% to Ps.3,921 million, from Ps.3,895 million for the same quarter of 2017.

The most significant variation below EBITDA was a negative variation of Ps.5,997 million in other financial results —which reflects a 6% appreciation 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 72% increase a year ago.

Congruent with the negative variation of other financial results, a decrease of Ps.1,406 million in the provision of taxes was registered during the period.

Grupo Elektra reported net income of Ps.3,678 million, compared to a net profit of Ps.7,137 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 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.21,930 million as of June 30, 2018, compared to Ps.11,864 million for the previous year.

During the quarter, Certificados Bursátiles were issued for Ps.7,500 million for capital investments largely related to growth and improvement of the company's distribution infrastructure.

The balance of cash and cash equivalents was Ps.24,917 million; as a result, the net cash balance excluding the amount of debt with cost as of June 30, 2018, was favorable at Ps.2,987 million.

The company's equity increased 6% to Ps.70,496 million; while the ratio of stockholders' equity to total liabilities is 1.6 times at the close of the quarter.

 As of June
30, 2017
As of June
30, 2018
  Change
  Ps. %
     
     
Cash & marketable fin. instr.$12,193$24,917$12,724104%
     
Inventories$7,980$10,462$2,48231%
     
Other current assets$2,065$2,084$201%
     
Financial instruments$16,202$17,841$1,63910%
     
Accounts receivable$25,844$20,159($5,685)-22%
     
Investment share$28,415$31,847$3,43212%
     
Fixed assets$4,104$5,833$1,72942%
     
Other assets$1,490$1,471($19)-1%
     
Total assets$98,292
$114,615
$16,323
17%
     
Short-term debt$3,278$8,908$5,630172%
     
Other short-term liabilities$14,617$17,057$2,44017%
     
Long-term debt$8,406$13,022$4,61655%
     
Other long-term debt$5,351$5,131($220)-4%
                  
Total liabilities$31,653
$44,119
$12,466
39%
                  
Stakeholders’ equity$66,639
$70,496
$3,857
6%
                     
Liabilities and equity$98,292
$114,615
$16,323
17%
     

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 June 30, 2018 grew 11% to Ps.94,503 million, from Ps.85,050 million for the previous year. The consolidated delinquency rate was 4.6% at the end of the period, compared to 3.1% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 12% to Ps.77,931 million, from Ps.69,850 million a year ago.

The delinquency rate for the bank at the end of the quarter was 4.2%, from 2.5% for the previous year. The past-due loan portfolio is reserved 2.3 times, which reflects a past-due portfolio of Ps.3,296 million, in comparison to allowance for credit risks of Ps.7,447 million in balance, as of June 30, 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 second quarter.

Grupo Elektra consolidated deposits were Ps.121,090 million, 17% higher than the Ps.103,896 million a year ago. Deposits of Banco Azteca Mexico were Ps.118,489 million, 16% higher than the Ps.102,538 million a year ago. 

As of June 30, 2018, the estimated capitalization index of Banco Azteca Mexico was 17.97%.

Infrastructure

Grupo Elektra currently has 7,317 points of contact, compared to 7,181 units a year ago.

In the last twelve months, 52 new Elektra stores were opened at strategic points across Mexico, with greater exhibition area, which increases the offer of products and services, and thereby maximizes customer shopping experiences.

The company has 4,672 points of contact in Mexico, 2,018 in the United States, and 627 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 10% to Ps.49,119 million, from Ps.44,801 million for the same period of 2017, boosted by 10% and 9% growth in both financial and commercial businesses, respectively.

EBITDA was Ps.9,028 million, 5% higher than the Ps.8,628 million for the same period a year ago; the EBITDA margin in the first six months of 2018 was 18%. Operating profit grew 2% to Ps.7,640 million during the period.

The company reported net income of Ps.2,386 million, compared to Ps.11,638 million a year ago, mainly due a depreciation this period 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 2017  6M 2018  Change
   Ps.%
     
Consolidated revenue$44,801$49,119$4,31810%
     
EBITDA  $8,628$9,028$400  5%
     
Operating profit
$7,483$7,640$1582%
     
Net result $11,638$2,386$(9,252)-79%
     
Net result per share$50.19$10.51$39.68-79%
     

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.       
As of June 30, 2017, Elektra* outstanding shares were 231.9 million and as of June 30, 2018, were 227.1 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: 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       
              
              
  2Q17
 2Q18 Change
 
              
 Financial income  14,197 62%   15,82963%   1,632 11%  
 Commercial income  8,597 38%   9,39437%   797 9%  
 Income  22,794 100%   25,223100%   2,428 11%  
              
 Financial cost  2,926 13%   3,70715%   781 27%  
 Commercial cost  5,637 25%   5,86123%   224 4%  
 Costs  8,563 38%   9,56838%   1,005 12%  
              
 Gross income  14,232 62%   15,65562%   1,424 10%  
              
 Sales, administration and promotion expenses  9,738 43%   11,02544%   1,287 13%  
              
 EBITDA   4,493 20%   4,63018%   137 3%  
              
 Depreciation and amortization  537 2%   7133%   176 33%  
              
 Other expense (income), net  61 0%   (3)0%   (64) ----  
              
 Operating income  3,895 17%   3,92116%   25 1%  
              
 Comprehensive financial result:            
   Interest income  135 1%   1881%   53 40%  
   Interest expense  (327) -1%   (491)-2%   (164) -50%  
   Foreign exchange (loss) gain, net  (394) -2%   9824%   1,377 ----  
   Other financial results, net  6,611 29%   6142%   (5,997) -91%  
    6,024 26%   1,2945%   (4,730) -79%  
              
 Participation  in  the  net  income of            
 CASA and other associated companies  (8) 0%   (218-1%   (210) ----  
              
 Income before income tax  9,911 43%   4,99620%   (4,915) -50%  
              
 Income tax  (2,728) -12%   (1,323)-5%   1,406 52%  
              
 Income before discontinued operations  7,183 32%   3,67415%   (3,509) -49%  
              
 Result from discontinued operations   (45) 0%   40%   50 ----  
              
 Impairment of intangible assets  -  0%   - 0%   - ----  
              
 Consolidated net income   7,137 31%   3,67815%   (3,460) -48%  
              


               
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES    
CONSOLIDATED INCOME STATEMENTS    
MILLIONS OF MEXICAN PESOS    
                 
                 
  6M17
 6M18
 Change  
                 
 Financial income  28,566 64%    31,415 64%    2,849 10%  
 Commercial income  16,234 36%    17,704 36%    1,469 9%  
 Income  44,801 100%    49,119 100%    4,318 10%  
                 
 Financial cost  5,527 12%    7,069 14%    1,542 28%  
 Commercial cost  10,794 24%    11,324 23%    530 5%  
 Costs  16,321 36%    18,393 37%    2,072 13%  
                 
 Gross income  28,480 64%    30,726 63%    2,246 8%  
                 
 Sales, administration and promotion expenses  19,852 44%    21,699 44%    1,846 9%  
                 
 EBITDA   8,628 19%    9,028 18%    400 5%  
                 
 Depreciation and amortization  1,074 2%    1,380 3%    306 29%  
                 
 Other expense, net  71 0%    7 0%    (64) -90%  
                 
 Operating Income  7,483 17%    7,640 16%    158 2%  
                 
 Comprehensive financial result:               
   Interest income  276 1%    316 1%    40 14%  
   Interest expense  (796) -2%    (837) -2%    (41) -5%  
   Foreign exchange (loss) gain, net  (1,330) -3%    148 0%    1,478 ----  
   Other financial results, net  10,480 23%    (3,743) -8%    (14,223) ----  
    8,630 19%    (4,115) -8%    (12,746) ----  
                 
 Participation  in  the  net  income of               
 CASA and other associated companies  57 0%    (245) 0%    (302) ----  
                 
 Income before income tax  16,170 36%    3,280 7%    (12,890) -80%  
                 
 Income tax  (4,489) -10%    (893) -2%    3,595 80%  
                 
 Income before discontinued operations  11,681 26%    2,387 5%    (9,294) -80%  
                 
 Result from discontinued operations   (43) 0%    (1) 0%    43 98%  
                 
 Impairment of intangible assets  -  0%    -  0%    - ----  
                 
 Consolidated net income   11,638 26%    2,386 5%    (9,252) -79%  
                 


 

            
  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, 2017 At June 30, 2018  
            
 Cash and cash equivalents  2,770  18,008  20,778   6,268  19,745  26,013   5,23525%
            
 Marketable financial instruments  9,423  46,917  56,340   18,649  56,585  75,235   18,89434%
            
 Performing loan portfolio  -   56,515  56,515   -   61,210  61,210   4,6958%
 Total past-due loans  -   2,563  2,563   -   4,051  4,051   1,48958%
 Gross loan portfolio  -   59,077  59,077   -   65,261  65,261   6,18410%
            
 Allowance for credit risks  -   6,960  6,960   -   8,321  8,321   1,36120%
            
 Loan portfolio, net  -   52,117  52,117   -   56,940  56,940   4,8229%
            
 Inventories  8,000  -  8,000   10,513  -  10,513   2,51331%
            
 Other current assets   7,067  7,170  14,237   7,903  9,607  17,511   3,27423%
            
 Total current assets  27,260   124,212   151,473    43,334   142,877   186,211    34,73923%
            
 Financial instruments  16,202  291  16,493   17,841  316  18,157   1,66510%
            
 Performing loan portfolio  -   25,857  25,857   -   28,990  28,990   3,13212%
 Total past-due loans  -   116  116   -   253  253   137118%
 Gross loan portfolio  -   25,973  25,973   -   29,242  29,242   3,26913%
            
 Allowance for credit risks  -   -   -    -   746  746   746n.a.
            
 Loan portfolio  -   25,973  25,973   -   28,496  28,496   2,52310%
            
 Other non-current assets   7,200  672  7,872   1,693  648  2,342   (5,530)-70%
            
 Investment in shares  2,712  -   2,712   1,881  -   1,881   (831)-31%
 Property, furniture, equipment and          
   investment in stores, net  4,104  2,744  6,848   5,833  3,675  9,508   2,66039%
 Intangible assets  686  6,097  6,784   662  6,673  7,336   5528%
 Other assets  804  405  1,210   809  331  1,141   (69)-6%
 TOTAL ASSETS  58,968   160,395   219,363    72,054   183,018   255,072    35,70916%
            
            
 Demand and term deposits  -  103,896  103,896   -  121,090  121,090   17,19417%
 Creditors from repurchase agreements  -  5,785  5,785   -  4,609  4,609   (1,176)-20%
 Short-term debt  3,278  971  4,249   8,908  528  9,436   5,187122%
 Short-term liabilities with cost  3,278  110,652  113,930   8,908  126,227  135,136   21,20619%
            
 Suppliers and other short-term liabilities  12,900  8,561  21,461   15,950  11,112  27,062   5,60126%
 Short-term liabilities without cost  12,900  8,561  21,461   15,950  11,112  27,062   5,60126%
            
 Total short-term liabilities  16,178   119,213   135,391    24,858   137,339   162,198    26,80720%
            
 Long-term debt  7,776  910  8,686   12,434  1,865  14,299   5,61365%
 Long-term liabilities with cost  7,776  910  8,686   12,434  1,865  14,299   5,61365%
            
 Long-term liabilities without cost  5,351  3,296  8,647   5,132  2,948  8,079   (568)-7%
            
 Total long-term liabilities  13,127   4,206   17,333    17,566   4,812   22,378    5,04529%
            
 TOTAL LIABILITIES  29,305   123,419   152,724    42,425   142,152   184,576    31,85221%
            
 TOTAL STOCKHOLDERS' EQUITY  29,663   36,976   66,639    29,629   40,866   70,496    3,8576%
            
            
 LIABILITIES + EQUITY  58,968   160,395   219,363    72,054   183,018   255,072    35,70916%
            

 


 

            
  INFRASTRUCTURE     
            
  2Q17 2Q18 Change  
            
 Points of sale in Mexico          
 Elektra   1,01114%   1,06315%   52 5% 
 Salinas y Rocha   481%   461%   (2) -4% 
 Banco Azteca  1,25117%   1,25917%   8 1% 
 Freestanding branches  2,11329%   2,30431%   191 9% 
 Total  4,42362%   4,67264%   249 6% 
            
 Points of sale in Central and South America          
 Elektra   1642%   1652%   1 1% 
 Banco Azteca  1642%   1652%   1 1% 
 Freestanding branches  3445%   2974%   (47) -14% 
 Total  6729%   6279%   (45) -7% 
            
 Points of sale in North America          
 Advance America  2,08629%   2,01828%   (68) -3% 
 Total  2,08629%   2,01828%   (68) -3% 
            
 TOTAL  7,181100%   7,317100%   136 2% 
            
            
            
            
 Floor space (m²)  1,512100%   1,614100%   103 7% 
            
            
            
 Employees          
 Mexico  50,88178%   59,75880%   8,877 17% 
 Central and South America  8,73013%   8,92112%   191 2% 
 North America  5,8189%   5,6598%   (159) -3% 
 Total employees  65,429100%   74,338100%   8,909 14%