Grupo Elektra Announces 44% Growth in Operating Pr

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Posted On: 02/21/2017 9:30:29 PM

Posted By: News Desk 2018

Grupo Elektra Announces 44% Growth in Operating Profit to Ps.3,207 Million in 4Q16

—EBITDA increases 35% to Ps.3,887 million in the period—

—Continued dynamism in both commercial and financial businesses generates 17% increase in consolidated revenues to Ps.23,508 million—

—Gross portfolio of Banco Azteca Mexico grew 27%, to Ps.67,743 million—

—Notable reduction in the delinquency rate of Banco Azteca Mexico; decreases more than two percentage points to 2.6%—

MEXICO CITY, Feb. 21, 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 fourth quarter, and 2016.

Consolidated fourth quarter results

Consolidated revenue was Ps.23,508 million, 17% above the Ps.20,049 million for the same quarter of last year. Costs and operating expenses were Ps.19,620 million, compared to Ps.17,177 million for the same period of 2015.

As a result, Grupo Elektra reported EBITDA of Ps.3,887 million, 35% higher than the Ps.2,871 million of the previous year’s quarter; EBITDA margin was 17% this period, three percentage point above the previous year.

Operating profit grew 44% to Ps.3,207 million during the quarter, from Ps.2,222 million in same period of 2015.

The company reported net income of Ps.2,924 million, compared to a net income of Ps.808 million a year ago.

	4Q 2015		4Q 2016		Change
					Ps.		%

Consolidated revenue	$	20,049	$	23,508	$	3,459	17	%

EBITDA	$	2,871	$	3,887	$	1,016	35	%

Operating profit	$	2,222	$	3,207	$	984	44	%

Net result	$	808	$	2,924	$	2,116	----

Net result per share	$	3.43	$	12.53	$	9.10	----

Figures in millions of pesos EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. As of December 31, 2015, Elektra* outstanding shares were 235.4 million and as of December 31, 2016, were 233.3 million.

Revenue

Consolidated revenue increased 17%, as a result of growth of 22% and 14% in commercial sales and financial revenues, respectively.

The increase in commercial division sales ̶ to Ps.9,801 million compared to Ps.8,051 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.13,706 million from Ps.11,997 million from the previous year ̶ results mainly from a 7% growth in revenue of Banco Azteca Mexico, together with an 11% increase in revenue from Advance America during the period.

Costs and expenses

Consolidated costs for the quarter increased 12% to Ps.9,320 million, from Ps.8,332 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 6% decrease in financial cost, largely driven by a reduction in provisions for loan losses, along with the strength in asset quality.

Sales, administration and promotion expenses increased 16% to Ps.10,300 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 35% to Ps.3,887 million this quarter. Operating income increased 44% to Ps.3,207 million, from Ps.2,222 million for the same quarter of 2015.

The most significant changes below EBITDA were the following:

A negative variation for Ps.3,030 million in other financial results, as a consequence of smaller 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 the previous year.

A decrease of Ps.3,592 million in the impairment of intangible assets, as a result of a partial reversal of the impairment of intangible assets –brands and licenses– of Advance America registered a year ago, due to improved financial performance and projected cash flows of the company.

Grupo Elektra reported net income of Ps.2,924 million, compared to net income of Ps.808 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 December 31, 2016 grew 24% to Ps.83,471 million, from Ps.67,207 million for the previous year. Consolidated delinquency rate was 3.4% at the end of the period, compared to 6.1% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 27% to Ps.67,743 million, from Ps.53,215 million a year ago.

The delinquency rate for the bank at the end of the quarter was 2.6%, more than two percentage points lower than the 5.3% from the previous year. The average term of the credit portfolio for principal credit lines – consumer, personal loans and Tarjeta Azteca – was 63 weeks at the end of the fourth quarter.

The Advance America loan portfolio was Ps.6,032 million, 22% higher than the Ps.4,941 million a year ago.

Grupo Elektra consolidated deposits increased 5% to Ps.105,124 million, from Ps.100,573 million a year ago. Deposits of Banco Azteca Mexico were Ps.101,718 million, 5% higher than the Ps.96,457 million a year ago.

As of December 31, 2016, the estimated capitalization index of Banco Azteca Mexico was 15.34%.

Debt

Consolidated debt with cost as of December 31, 2016, was Ps.18,279 million, from Ps.18,119 million for the prior year.

Consolidated debt was comprised of Ps.15,779 million for the commercial business, and Ps.2,500 million for the financial business. The total balance of cash, cash equivalents and marketable securities for the commercial business was Ps.17,213 million at the end of the period; as a result, the net cash commercial balance – excluding debt with cost – is a positive Ps.1,434 million.

As previously announced, during the quarter, Grupo Elektra paid US$275 million in advance and canceled out US$45 million of its senior notes of US$550 due in 2018.

In addition, on February 20, 2017, the company paid in advance the remaining US$230 million of such senior notes, thus redeeming its dollar-denominated bonds.

To cover both payments during the quarter, 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.

Infrastructure

Grupo Elektra currently has 7,396 points of contact, compared to 7,963 units a year ago. The reduction is a result of strategies to focus on maximizing profitability of units.

The company has 4,602 points of contact in Mexico, 2,105 in the United States, and 689 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.

Twelve month consolidated results

Total consolidated revenue in 2016 increased 9% to Ps.81,242 million, from Ps.74,360 million in 2015, boosted mainly by 19% growth in the commercial business.

EBITDA was Ps.13,988 million, 28% higher than the Ps.10,893 million for the previous year; the EBITDA margin in 2016 was 17%, two percentage points above the prior year. Operating profit grew 36% to Ps.11,422 million during the period.

The company registered consolidated net income of Ps.5,334 million, compared to a loss of Ps.5,114 million a year ago, mainly due a smaller reduction in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to the prior year.

		2015			2016	Change
						Ps.		%

Consolidated revenue	$	74,360		$	81,242	$	6,881	9	%

EBITDA	$	10,893		$	13,988	$	3,095	28	%

Operating profit	$	8,387		$	11,422	$	3,035	36	%

Net result	$	(5,114	)	$	5,334	$	10,448	----

Net result per share	$	(21.72	)	$	22.66	$	44.38	----

Figures in millions of pesos EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. As of December 31, 2015, Elektra* outstanding shares were 235.4 million and as of December 31, 2016, were 233.3 million.

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

		4Q15				4Q16				Change

	Financial income	11,997		60	%	13,706		58	%	1,709		14	%
	Commercial income	8,051		40	%	9,801		42	%	1,750		22	%
	Income	20,049		100	%	23,508		100	%	3,459		17	%

	Financial cost	2,921		15	%	2,754		12	%	(167	)	-6	%
	Commercial cost	5,411		27	%	6,566		28	%	1,155		21	%
	Costs	8,332		42	%	9,320		40	%	988		12	%

	Gross income	11,716		58	%	14,187		60	%	2,471		21	%

	Sales, administration and promotion expenses	8,845		44	%	10,300		44	%	1,455		16	%

	EBITDA	2,871		14	%	3,887		17	%	1,016		35	%

	Depreciation and amortization	651		3	%	742		3	%	92		14	%

	Other income, net	(2	)	0	%	(62	)	0	%	(60	)	----

	Operating income	2,222		11	%	3,207		14	%	984		44	%

	Comprehensive financial result:
	Interest income	397		2	%	186		1	%	(212	)	53	%
	Interest expense	(318	)	-2	%	(519	)	-2	%	(201	)	-63	%
	Foreign exchange gain, net	34		0	%	464		2	%	430		----
	Other financial results, net	3,327		17	%	297		1	%	(3,030	)	91	%
		3,439		17	%	428		2	%	(3,012	)	88	%

	Participation in the net income of
	CASA and other associated companies	(361	)	-2	%	(22	)	0	%	340		----

	Income before income tax	5,300		26	%	3,612		15	%	(1,688	)	32	%

	Income tax	(1,126	)	-6	%	(1,251	)	-5	%	(125	)	-11	%

	Income before discontinued operations	4,174		21	%	2,361		10	%	(1,813	)	43	%

	Result from discontinued operations	(426	)	-2	%	(89	)	0	%	337		79	%

	Impairment of intangible assets	(2,940	)	-15	%	652		3	%	3,592		----

	Consolidated net income	808		4	%	2,924		12	%	2,116		-262	%


GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS

		12M15				12M16				Change

	Financial income	48,302		65	%	50,207		62	%	1,905		4	%
	Commercial income	26,059		35	%	31,035		38	%	4,976		19	%
	Income	74,360		100	%	81,242		100	%	6,881		9	%

	Financial cost	14,598		20	%	10,318		13	%	(4,280	)	-29	%
	Commercial cost	17,559		24	%	20,354		25	%	2,795		16	%
	Costs	32,157		43	%	30,671		38	%	(1,485	)	-5	%

	Gross income	42,204		57	%	50,570		62	%	8,366		20	%

	Sales, administration and promotion expenses	31,311		42	%	36,582		45	%	5,271		17	%

	EBITDA	10,893		15	%	13,988		17	%	3,095		28	%

	Depreciation and amortization	2,503		3	%	2,617		3	%	114		5	%

	Other expense (income), net	2		0	%	(51	)	0	%	(53	)	----

	Operating Income	8,387		11	%	11,422		14	%	3,035		36	%

	Comprehensive financial result:
	Interest income	666		1	%	839		1	%	174		26	%
	Interest expense	(1,398	)	-2	%	(1,526	)	-2	%	(128	)	-9	%
	Foreign exchange gain, net	198		0	%	791		1	%	593		300	%
	Other financial results, net	(9,790	)	-13	%	(3,677	)	-5	%	6,112		62	%
		(10,324	)	-14	%	(3,572	)	-4	%	6,751		65	%

	Participation in the net income of
	CASA and other associated companies	(739	)	-1	%	(640	)	-1	%	100		13	%

	(Loss) income before income tax	(2,676	)	-4	%	7,210		9	%	9,886		----

	Income tax	1,170		2	%	(2,370	)	-3	%	(3,540	)	----

	(Loss) income before discontinued operations	(1,506	)	-2	%	4,839		6	%	6,345		----

	Result from discontinued operations	(668	)	-1	%	(157	)	0	%	511		76	%

	Impairment of intangible assets	(2,940	)	-4	%	652		1	%	3,592		----

	Consolidated net (loss) income	(5,114	)	-7	%	5,334		7	%	10,448		----


	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 December 31, 2015*			*At December 31, 2016*

Cash and cash equivalents	2,866	20,043	22,909	2,584	21,791	24,375	1,465		6	%

Marketable financial instruments	23,238	45,622	68,860	14,629	41,506	56,135	(12,725	)	-18	%

Performing loan portfolio	-	45,699	45,699	-	55,123	55,123	9,425		21	%
Total past-due loans	-	3,986	3,986	-	2,704	2,704	(1,282	)	-32	%
Gross loan portfolio	-	49,685	49,685	-	57,827	57,827	8,143		16	%

Allowance for credit risks	-	7,426	7,426	-	6,841	6,841	(585	)	-8	%

Loan portfolio, net	-	42,258	42,258	-	50,986	50,986	8,728		21	%

Inventories	6,586	-	6,586	7,208	-	7,208	622		9	%

Other current assets	1,978	13,542	15,521	4,822	12,197	17,018	1,498		10	%

Total current assets	34,669	121,465	156,134	29,242	126,480	155,722	(412	)	0	%

Financial instruments	6,223	299	6,522	18,437	337	18,775	12,253		188	%

Performing loan portfolio	-	17,417	17,417	-	25,530	25,530	8,113		47	%
Total past-due loans	-	105	105	-	114	114	10		9	%
Loan portfolio	-	17,522	17,522	-	25,644	25,644	8,123		46	%

Other non-current assets	628	912	1,540	-	672	672	(868	)	-56	%

Investment in shares	3,210	-	3,210	2,727	-	2,727	(482	)	-15	%
Property, furniture, equipment and
investment in stores, net	3,628	2,784	6,412	3,603	2,991	6,594	182		3	%
Intangible assets	581	5,275	5,856	664	6,934	7,598	1,742		30	%
Other assets	1,063	379	1,442	903	600	1,504	61		4	%
TOTAL ASSETS	50,002	148,636	198,637	55,576	163,659	219,236	20,599		10	%


Demand and term deposits	-	100,573	100,573	-	105,124	105,124	4,551		5	%
Creditors from repurchase agreements	-	4,364	4,364	-	4,200	4,200	(164	)	-4	%
Short-term debt	6,064	123	6,187	2,876	411	3,287	(2,900	)	-47	%
Short-term liabilities with cost	6,064	105,059	111,123	2,876	109,735	112,611	1,487		1	%

Suppliers and other short-term liabilities	11,101	6,337	17,438	11,085	9,089	20,173	2,735		16	%
Short-term liabilities without cost	11,101	6,337	17,438	11,085	9,089	20,173	2,735		16	%

Total short-term liabilities	17,165	111,397	128,562	13,961	118,823	132,784	4,222		3	%

Long-term debt	10,472	1,460	11,932	12,903	2,089	14,992	3,060		26	%
Long-term liabilities with cost	10,472	1,460	11,932	12,903	2,089	14,992	3,060		26	%

Long-term liabilities without cost	3,292	3,065	6,357	7,705	4,679	12,384	6,027		95	%

Total long-term liabilities	13,764	4,525	18,289	20,608	6,768	27,376	9,087		50	%

TOTAL LIABILITIES	30,929	115,922	146,851	34,569	125,591	160,160	13,309		9	%

TOTAL STOCKHOLDERS' EQUITY	19,072	32,714	51,786	21,008	38,068	59,076	7,290		14	%


LIABILITIES + EQUITY	50,002	148,636	198,637	55,576	163,659	219,236	20,599		10	%


	INFRASTRUCTURE

	4Q15			4Q16			Change

Points of sale in Mexico
Elektra	970	12	%	995	13	%	25		3	%
Salinas y Rocha	51	1	%	50	1	%	(1	)	-2	%
Banco Azteca	1,226	15	%	1,244	17	%	18		1	%
Freestanding branches	2,446	31	%	2,313	31	%	(133	)	-5	%
B-Store	246	3	%	-	0	%	(246	)	-100	%
Total	4,939	62	%	4,602	62	%	(337	)	-7	%

Points of sale in Central and South America
Elektra	173	2	%	167	2	%	(6	)	-3	%
Banco Azteca	173	2	%	167	2	%	(6	)	-3	%
Freestanding branches	355	4	%	355	5	%	-		0	%
Total	701	9	%	689	9	%	(12	)	-2	%

Points of sale in North America
Advance America	2,323	29	%	2,105	28	%	(218	)	-9	%
Total	2,323	29	%	2,105	28	%	(218	)	-9	%

TOTAL	7,963	100	%	7,396	100	%	(567	)	-7	%


Floor space (m²)	1,560	100	%	1,500	100	%	(60	)	-4	%


Employees
Mexico	49,590	76	%	50,152	77	%	562		1	%
Central and South America	9,125	14	%	8,838	14	%	(287	)	-3	%
North America	6,631	10	%	5,947	9	%	(684	)	-10	%
Total employees	65,346	100	%	64,937	100	%	(409	)	-1	%

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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