Grupo Elektra Announces 21% Growth in Operating Profit to Ps.3,595 Million in 1Q17
— EBITDA increases 18% to Ps.4,134 million during the period—
—Notable performance in both commercial and financial businesses generates increase of 21% in consolidated revenues, to Ps.22,006 million—
— Gross portfolio of Banco Azteca Mexico grew 32%, to Ps.66,530 million—
—Deliquency rate of Banco Azteca Mexico
decreases more than one percentage point, to 2.5%—
MEXICO CITY, May 02, 2017 (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 first quarter of 2017.
Consolidated first quarter results
Consolidated revenue was Ps.22,006 million, 21% above the Ps.18,254 million for the same quarter of last year. Costs and operating expenses were Ps.17,872 million, compared to Ps.14,750 million for the same period of 2016.
As a result, Grupo Elektra reported EBITDA of Ps.4,134 million, 18% higher than the Ps.3,504 million of the previous year’s quarter; EBITDA margin was 19% this period, similar to that of the previous year.
Operating profit grew 21% to Ps.3,595 million during the quarter, from Ps.2,978 million in same period of 2016.
The company reported net income of Ps.4,501 million, compared to net income of Ps.1,158 million a year ago.
| 1Q 2016 | 1Q 2017 | Change | ||||||
| Ps. | % | |||||||
| Consolidated revenue | $ | 18,254 | $ | 22,006 | $ | 3,753 | 21 | % |
| EBITDA | $ | 3,504 | $ | 4,134 | $ | 630 | 18 | % |
| Operating profit | $ | 2,978 | $ | 3,595 | $ | 617 | 21 | % |
| Net result | $ | 1,158 | $ | 4,501 | $ | 3,342 | ---- | |
| Net result per share | $ | 4.86 | $ | 19.4 | $ | 14.54 | ---- | |
| Figures in millions of pesos | ||||||||
| EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. | ||||||||
| As of March 31, 2016, Elektra* outstanding shares were 238.4 million and as of March 31, 2017, were 232 million. | ||||||||
Revenue
Consolidated revenue increased 21%, as a result of growth of 22% and 18% in financial revenues and commercial sales, respectively.
The increase in commercial division sales ̶ to Ps.7,637 million compared to Ps.6,470 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.14,369 million from Ps.11,783 million from the previous year ̶ results mainly from a 24% growth in revenue of Banco Azteca Mexico and a 9% increase in revenue from Advance America.
Costs and expenses
Consolidated costs for the quarter increased 19% to Ps.7,758 million, from Ps.6,523 million in the previous year, as a result of a 21% increase in commercial costs, in line with the performance of commercial revenue, and a 13% growth in financial cost. The increase in financial cost is less than the increase in financial revenue, which reflects a moderate growth in provisions for loan losses, in line with greater strength in asset quality.
Sales, administration and promotion expenses increased 23% to Ps.10,114 million, as a result of higher personnel expenses due to higher compensation plans that encourage productivity; an increase in advertising, which achieves a better positioning of Grupo Elektra brands, and an increase in operating expenses.
EBITDA and net result
Consolidated EBITDA grew 18% to Ps.4,134 million this quarter. Operating income increased 21% to Ps.3,595 million, from Ps.2,978 million for the same quarter of 2016.
The most significant change below EBITDA was a positive variation of Ps.5,071 million in other financial results, as a consequence of a gain this period in the market value of the underlying assets of financial instruments owned by the company –which does not imply cash flow– compared to a reduction of the previous year.
Grupo Elektra reported a net result of Ps.4,501 million, compared to a net result of Ps.1,158 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 March 31, 2017 grew 28% to Ps.81,247 million, from Ps.63,707 million for the previous year. Consolidated delinquency rate was 3.2% at the end of the period, compared to 4.7% in the previous year.
The gross portfolio of Banco Azteca Mexico grew 32% to Ps.66,530 million, from Ps.50,499 million a year ago.
The delinquency rate for the bank at the end of the quarter was 2.5%, more than one percentage point lower than the 3.9% from the previous year. 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.
The Advance America loan portfolio was Ps.4,401 million, 2% higher than the Ps.4,302 million a year ago.
Grupo Elektra consolidated deposits increased 4% to Ps.105,703 million, from Ps.101,223 million a year ago. Deposits of Banco Azteca Mexico were Ps.102,509 million, 6% higher than the Ps.96,470 million a year ago.
As of March 31, 2017, the capitalization index of Banco Azteca Mexico was 17.3%.
Debt
Consolidated debt with cost as of March 31, 2017, was Ps.13,026 million, 25% less in comparison to Ps.17,276 million for the prior year.
Consolidated debt was comprised of Ps.11,035 million for the commercial business, and Ps.1,991 million for the financial business. The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.10,845 million at the end of the period; as a result, net debt is Ps.190 million.
As previously announced, during the period, Grupo Elektra paid in advance its senior notes of US$550 million due in 2018.
To cover the payments, Grupo Elektra issued three certificates in local currency for a total of Ps.6,000 million and used cash generated by the company, within the framework of solid financial performance.
These debt transactions reflect Grupo Elektra's firm strategy to further strengthen its strong capital structure; through these transactions, the company no longer holds US dollar denominated bonds.
Infrastructure
Grupo Elektra currently has 7,391 points of contact, compared to 7,671 units a year ago. The reduction is a result of strategies to focus on maximizing profitability of units.
The company has 4,612 points of contact in Mexico, 2,100 in the United States, and 679 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 shareholder value, contributing to building 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 America (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 | ||||||||||||||||||
| 1Q16 | 1Q17 | Change | ||||||||||||||||
| Financial income | 11,783 | 65 | % | 14,369 | 65 | % | 2,585 | 22 | % | |||||||||
| Commercial income | 6,470 | 35 | % | 7,637 | 35 | % | 1,167 | 18 | % | |||||||||
| Income | 18,254 | 100 | % | 22,006 | 100 | % | 3,753 | 21 | % | |||||||||
| Financial cost | 2,295 | 13 | % | 2,601 | 12 | % | 306 | 13 | % | |||||||||
| Commercial cost | 4,228 | 23 | % | 5,157 | 23 | % | 929 | 22 | % | |||||||||
| Costs | 6,523 | 36 | % | 7,758 | 35 | % | 1,235 | 19 | % | |||||||||
| Gross income | 11,731 | 64 | % | 14,248 | 65 | % | 2,517 | 21 | % | |||||||||
| Sales, administration and promotion expenses | 8,227 | 45 | % | 10,114 | 46 | % | 1,887 | 23 | % | |||||||||
| EBITDA | 3,504 | 19 | % | 4,134 | 19 | % | 630 | 18 | % | |||||||||
| Depreciation and amortization | 540 | 3 | % | 537 | 2 | % | (4 | ) | -1 | % | ||||||||
| Other (income) expense, net | (15 | ) | 0 | % | 2 | 0 | % | 17 | ---- | |||||||||
| Operating income | 2,978 | 16 | % | 3,595 | 16 | % | 617 | 21 | % | |||||||||
| Comprehensive financial result: | ||||||||||||||||||
| Interest income | 234 | 1 | % | 148 | 1 | % | (86 | ) | -37 | % | ||||||||
| Interest expense | (328 | ) | -2 | % | (468 | ) | -2 | % | (140 | ) | -43 | % | ||||||
| Foreign exchange gain (loss), net | 56 | 0 | % | (936 | ) | -4 | % | (992 | ) | ---- | ||||||||
| Other financial results, net | (1,208 | ) | -7 | % | 3,863 | 18 | % | 5,071 | ---- | |||||||||
| (1,247 | ) | -7 | % | 2,606 | 12 | % | 3,853 | ---- | ||||||||||
| Participation in the net income of | ||||||||||||||||||
| CASA and other associated companies | (71 | ) | 0 | % | 66 | 0 | % | 136 | ---- | |||||||||
| Income before income tax | 1,661 | 9 | % | 6,267 | 28 | % | 4,606 | 277 | % | |||||||||
| Income tax | (451 | ) | -2 | % | (1,760 | ) | -8 | % | (1,309 | ) | -290 | % | ||||||
| Income before discontinued operations | 1,209 | 7 | % | 4,507 | 20 | % | 3,297 | 273 | % | |||||||||
| Result from discontinued operations | (51 | ) | 0 | % | 2 | 0 | % | 53 | ---- | |||||||||
| Impairment of intangible assets | - | 0 | % | (8 | ) | 0 | % | (8 | ) | ---- | ||||||||
| Consolidated net income | 1,158 | 6 | % | 4,501 | 20 | % | 3,342 | 289 | % | |||||||||
| 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, 2016 | At March 31, 2017 | ||||||||||||||
| Cash and cash equivalents | 1,781 | 21,210 | 22,991 | 2,199 | 20,757 | 22,956 | (35 | ) | 0 | % | |||||
| Marketable financial instruments | 21,792 | 53,245 | 75,037 | 8,646 | 45,829 | 54,474 | (20,563 | ) | -27 | % | |||||
| Performing loan portfolio | - | 44,989 | 44,989 | - | 53,866 | 53,866 | 8,877 | 20 | % | ||||||
| Total past-due loans | - | 2,927 | 2,927 | - | 2,474 | 2,474 | (453 | ) | -15 | % | |||||
| Gross loan portfolio | - | 47,917 | 47,917 | - | 56,341 | 56,341 | 8,424 | 18 | % | ||||||
| Allowance for credit risks | - | 6,698 | 6,698 | - | 6,732 | 6,732 | 34 | 1 | % | ||||||
| Loan portfolio, net | - | 41,219 | 41,219 | - | 49,609 | 49,609 | 8,390 | 20 | % | ||||||
| Inventories | 6,571 | - | 6,571 | 7,389 | - | 7,389 | 818 | 12 | % | ||||||
| Other current assets | 6,036 | 7,408 | 13,444 | 8,682 | 8,606 | 17,287 | 3,843 | 29 | % | ||||||
| Total current assets | 36,179 | 123,082 | 159,262 | 26,916 | 124,800 | 151,715 | (7,547 | ) | -5 | % | |||||
| Financial instruments | 7,498 | 269 | 7,767 | 16,806 | 302 | 17,109 | 9,342 | 120 | % | ||||||
| Performing loan portfolio | - | 15,704 | 15,704 | - | 24,793 | 24,793 | 9,088 | 58 | % | ||||||
| Total past-due loans | - | 85 | 85 | - | 113 | 113 | 28 | 33 | % | ||||||
| Loan portfolio | - | 15,790 | 15,790 | - | 24,906 | 24,906 | 9,116 | 58 | % | ||||||
| Other non-current assets | 142 | 765 | 906 | 102 | 673 | 774 | (132 | ) | -15 | % | |||||
| Investment in shares | 3,138 | - | 3,138 | 2,796 | (0 | ) | 2,796 | (341 | ) | -11 | % | ||||
| Property, furniture, equipment and | |||||||||||||||
| investment in stores, net | 3,664 | 2,720 | 6,384 | 3,723 | 2,793 | 6,515 | 131 | 2 | % | ||||||
| Intangible assets | 600 | 5,250 | 5,850 | 662 | 6,330 | 6,992 | 1,142 | 20 | % | ||||||
| Other assets | 1,250 | 403 | 1,653 | 1,019 | 403 | 1,422 | (231 | ) | -14 | % | |||||
| TOTAL ASSETS | 52,471 | 148,279 | 200,749 | 52,024 | 160,206 | 212,230 | 11,481 | 6 | % | ||||||
| Demand and term deposits | - | 101,223 | 101,223 | - | 105,703 | 105,703 | 4,479 | 4 | % | ||||||
| Creditors from repurchase agreements | - | 4,053 | 4,053 | - | 3,555 | 3,555 | (498 | ) | -12 | % | |||||
| Short-term debt | 84 | 317 | 400 | 3,284 | 1,022 | 4,306 | 3,906 | 976 | % | ||||||
| Short-term liabilities with cost | 84 | 105,593 | 105,677 | 3,284 | 110,280 | 113,564 | 7,887 | 7 | % | ||||||
| Suppliers and other short-term liabilities | 12,436 | 6,859 | 19,295 | 12,198 | 9,614 | 21,812 | 2,517 | 13 | % | ||||||
| Short-term liabilities without cost | 12,436 | 6,859 | 19,295 | 12,198 | 9,614 | 21,812 | 2,517 | 13 | % | ||||||
| Total short-term liabilities | 12,519 | 112,453 | 124,972 | 15,482 | 119,894 | 135,376 | 10,404 | 8 | % | ||||||
| Long-term debt | 15,431 | 1,445 | 16,876 | 7,751 | 969 | 8,720 | (8,156 | ) | -48 | % | |||||
| Long-term liabilities with cost | 15,431 | 1,445 | 16,876 | 7,751 | 969 | 8,720 | (8,156 | ) | -48 | % | |||||
| Long-term liabilities without cost | 3,023 | 2,954 | 5,978 | 3,759 | 3,724 | 7,483 | 1,506 | 25 | % | ||||||
| Total long-term liabilities | 18,454 | 4,399 | 22,853 | 11,510 | 4,693 | 16,203 | (6,650 | ) | -29 | % | |||||
| TOTAL LIABILITIES | 30,974 | 116,852 | 147,825 | 26,992 | 124,587 | 151,579 | 3,754 | 3 | % | ||||||
| TOTAL STOCKHOLDERS' EQUITY | 21,497 | 31,427 | 52,924 | 25,032 | 35,619 | 60,651 | 7,727 | 15 | % | ||||||
| LIABILITIES + EQUITY | 52,471 | 148,279 | 200,749 | 52,024 | 160,206 | 212,230 | 11,481 | 6 | % | ||||||
| INFRASTRUCTURE | ||||||||||||||
| 1Q16 | 1Q17 | Change | ||||||||||||
| Points of sale in Mexico | ||||||||||||||
| Elektra | 968 | 13 | % | 1,000 | 14 | % | 32 | 3 | % | |||||
| Salinas y Rocha | 51 | 1 | % | 49 | 1 | % | (2 | ) | -4 | % | ||||
| Banco Azteca | 1,222 | 16 | % | 1,244 | 17 | % | 22 | 2 | % | |||||
| Freestanding branches | 2,359 | 31 | % | 2,319 | 31 | % | (40 | ) | -2 | % | ||||
| B-Store | 143 | 2 | % | - | 0 | % | (143 | ) | -100 | % | ||||
| Total | 4,743 | 62 | % | 4,612 | 62 | % | (131 | ) | -3 | % | ||||
| Points of sale in Central and South America | ||||||||||||||
| Elektra | 169 | 2 | % | 164 | 2 | % | (5 | ) | -3 | % | ||||
| Banco Azteca | 169 | 2 | % | 164 | 2 | % | (5 | ) | -3 | % | ||||
| Freestanding branches | 340 | 4 | % | 351 | 5 | % | 11 | 3 | % | |||||
| Total | 678 | 9 | % | 679 | 9 | % | 1 | 0 | % | |||||
| Points of sale in North America | ||||||||||||||
| Advance America | 2,250 | 29 | % | 2,100 | 28 | % | (150 | ) | -7 | % | ||||
| Total | 2,250 | 29 | % | 2,100 | 28 | % | (150 | ) | -7 | % | ||||
| TOTAL | 7,671 | 100 | % | 7,391 | 100 | % | (280 | ) | -4 | % | ||||
| Floor space (m²) | 1,516 | 100 | % | 1,502 | 100 | % | (14 | ) | -1 | % | ||||
| Employees | ||||||||||||||
| Mexico | 47,591 | 76 | % | 50,321 | 78 | % | 2,730 | 6 | % | |||||
| Central and South America | 8,626 | 14 | % | 8,624 | 13 | % | (2 | ) | 0 | % | ||||
| North America | 6,382 | 10 | % | 5,921 | 9 | % | (461 | ) | -7 | % | ||||
| Total employees | 62,599 | 100 | % | 64,866 | 100 | % | 2,267 | 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@elektra.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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