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CST: 24/08/2019 05:12:05   

Grupo Elektra Reports EBITDA of Ps.4,014 Million and Operating Profit of Ps.2,255 Million in 2Q19

31 Days ago

—Consolidated revenues increase 14%, to Ps.28,899 million  as a result of strong dynamism in both financial and commercial income—

—16% growth in consolidated deposits, up to Ps.140,603 million,  creates strong prospects for the financial business—

—The consolidated gross portfolio increases 13%, to Ps.106,956 million—

—Consolidated delinquency rate is reduced from 4.6% to 3.6%—

MEXICO CITY, July 23, 2019 (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, today announced second quarter 2019 financial results.

Consolidated second quarter results

Consolidated revenue was Ps.28,899 million in the period, 14% above the Ps.25,344 million for the same quarter of the previous year. Costs and operating expenses were Ps.24,885 million, compared to Ps.20,746 million for the same period of 2018.

As a result, Grupo Elektra reported EBITDA of Ps.4,014 million, in comparison with Ps.4,599 million of the previous year’s quarter, with an EBITDA margin of 14% for the period.

Operating profit was of Ps.2,255 million this quarter, up from Ps.3,895 million in the same period of 2018.

On a pro forma basis— without considering the application of IFRS 16 standard, which was adopted as of 2019, as previously detailed— in the second quarter of 2019 EBITDA for the period was Ps.3,152 million and operating profit was Ps.2,127 million.

The company reported net income of Ps.5,697 million, compared to net income of Ps.3,678 million a year ago.

    2Q 2018   2Q 2019   Change
      Ps. %
         
Consolidated revenue $25,344 $ 28,899 $ 3,554   14%
EBITDA   $4,599 $ 4,014 $ (585 ) -13%
Operating profit $3,895 $2,255 $(1,640) -42%
Net result  $3,678 $5,697 $2,019 55%
Net result per share $16.20 $ 24.94 $ 8.74   54 %
         

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.       
As of June 30, 2018, Elektra* outstanding shares were 227.1 million and as of June 30, 2019, were 228.4 million.

Revenues

Consolidated revenue increased 14%, as a result of 14% growth in financial revenues and 15% growth in commercial sales.

The increase in financial revenue —to Ps.17,955 million, from Ps.15,798 million the previous year— mainly reflects revenue growth of 20% at Banco Azteca Mexico, in the context of strong growth in the gross portfolio and a notable dynamism in deposits.

The increase in commercial division sales —to Ps.10,944 million, up from Ps.9,547 million last year— largely results from a solid increase in sales of Italika motorcycles, which provide safe transportation alternatives and reduce the travel time for thousands of families and small-businesses. This growth also results from exceptional dynamism in the telephone and electronic lines, which are marketed in the most competitive market conditions.

Elektra’s commercial business sales have added additional momentum with the launch of a new store format with a larger exhibition space that includes an extensive merchandise and services selection to satisfy an increasing number of customers.  Similarly, Omnichannel operations— with the online store www.elektra.com.mx, which sells thousands of products at unparalleled prices from any device and at any time— further strengthens the performance of the division.

Costs and Expenses

Consolidated costs for the quarter were Ps.12,163 million, from Ps.9,819 million in the previous year, as a result of a 26% increase in financial costs, which mainly reflects higher interest paid —in the context of strong growth in deposits— and a 23% increase in commercial costs that results from the promotion of product lines that will generate superior positions in various markets of remarkable dynamism.

Sales, administration, and marketing expenses increased 16% to Ps.12,722 million as a result of increases in both personnel and operating expenses. The growth of expenses is related to the implementation of both marketing and customer service structures— which have added specialized personnel that focus on substantially boosting bank deposits, as well as the credit portfolio, with strong quality standards.

Likewise, staff have an impact on expenses, Omnichannel sales efforts, maintenance of distribution infrastructure costs —which include the new Elektra stores— and the development of new technology to further strengthen high standards of digital banking efficiency —which currently has more than five million users and is growing rapidly.

The company anticipates that the development of these initiatives, will further boost the firm performance of the financial and commercial businesses in the future, with solid profitability.

EBITDA and net result

The EBITDA of the company decreased 13% to Ps.4,014 million this quarter. Operating income declined 42% to Ps.2,255 million, from Ps.3,895 million for the same quarter of 2018.

The most significant change below EBITDA was a positive variation of Ps.5,803 million in other financial results, which reflects a 20% appreciation this quarter— compared to a 6% increase a year ago— in the market value of underlying assets of financial instruments held by the company, and does not imply cash flow.

Congruent with the positive variation of other financial results, an increase of Ps.1,050 million in the provision of taxes line registered during the period.

Grupo Elektra reported net income of Ps.5,697 million, compared to a net income of Ps.3,678 million a year ago.

Unconsolidated Balance Sheet

A pro forma exercise of the balance sheet of Grupo Elektra is presented, to allow the visualization of the non-consolidated financial situation— excluding the net assets of the financial business, whose investment is valued under the equity method in this case.

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

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

Corresponding with this, debt with cost was Ps.25,384 million as of June 30, 2019, compared to Ps.21,930 million in the previous year.

The growth in the debt balance is derived mainly from the issuance of Certificados Bursátiles for Ps.2,500 million in the quarter, which were issued in order to continue with stimulus to capital investments related to improvement and growth of the distribution infrastructure and operations of the company.

During the last twelve months, 88 new Elektra stores were opened, 67 existing stores were remodeled, a new Italika motorcycle distribution centre was opened, and investments were made in systems development to optimize Banco Azteca and Tiendas Elektra operations.

The balance of cash and cash equivalents was Ps.29,117 million, from Ps.24,917 million from previous year. As a result, the net cash balance —excluding the amount of debt with cost as of June 30, 2019— was favorable at Ps.3,733 million, compared to a positive figure of Ps.2,987 million a year ago.

The company's equity increased 31% to Ps.92,182 million, while the ratio of stockholders' equity to total liabilities was 1.5 times at the close of the quarter.

  As of June
30, 2018
As of June
30, 2019
  Change
  Ps.               
%
         
         
Cash & marketable fin. instr. $24,917 $29,117 $4,200  17%
Inventories $10,462 $9,914 ($549) -5%
Other current assets $2,084 $2,868 $784  38%
Financial instruments $17,841 $16,529 ($1,312) -7%
Accounts receivables $20,159 $44,283 $24,124  ---
Investments in shares $31,847 $34,601 $2,754  9%
Fixed assets $5,833 $7,846 $2,014  35%
Right of use asset  --- $8,252 $8,252   
Other assets $1,471 $2,029 $558  38%
Total assets $ 114,615
$ 155,439
$ 40,825   36 %
         
Short-term debt $8,908 $4,058 ($4,850) -54%
Leasing  --- $736 $736 ---
Other short-term liabilities $17,057 $17,355 $298 2%
Long-term debt $13,022 $21,326 $8,304 64%
Leasing  --- $7,601 $7,601 ---
Other long-term debt $5,131 $12,180 $7,049 ---
Total liabilities $ 44,119
$ 63,257
$ 19,138   43 %
Stakeholder´s equity $ 70,496
$ 92,182
$ 21,686
31 %
Liabilities and equity $ 114,615
$ 155,439
$ 40,824
36 %

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, 2019 grew 13% to Ps.106,956 million, from Ps.94,503 million for the previous year. The consolidated delinquency rate was 3.6% at the end of the period, compared to 4.6% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 17% to Ps.90,860 million, from Ps.77,931 million a year ago.

The delinquency rate for the bank at the end of the quarter was 3%, in comparison with 4.2% for the previous year.  Despite the solid increase of the gross loan portfolio, the balance of the past due loans decreased to Ps.2,761 million, from Ps.3,296 million a year ago, as a result of robust strategies to further strengthen asset quality.

The past-due loan portfolio is reserved 2.6 times, which reflects a past-due portfolio of Ps.2,761 million, in comparison to allowance for credit risks of Ps.7,288 million in the balance sheet as of June 30, 2019.

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 second quarter.

Grupo Elektra consolidated deposits were Ps.140,603 million, 16% higher than the Ps.121,090 million a year ago. Deposits of Banco Azteca Mexico were Ps.137,891 million, 16% higher than the Ps.118,489 million a year ago. 

As of June 30, 2019, the capitalization index of Banco Azteca Mexico was 16.53%.

Infrastructure

Grupo Elektra currently has 7,145 storefronts, compared to 7,317 units a year ago. The reduction is mainly due to a decrease in the number of branches of financial services, made in order to optimize the profitability of the financial business infrastructure.

Meanwhile, during the last twelve months, 88 new Elektra stores were opened at strategic locations throughout Mexico, with larger exhibition areas, which increase the offering of products and services and maximize customer shopping experiences.

The company has 4,640 storefronts in Mexico, 1,916 in the United States, and 589 in Central and South America. The extensive distribution network allows the company to maintain close contact with customers, granting superior market positioning in the countries where it operates.

Sale of Banco Azteca El Salvador

During the quarter, the company announced the sale of all of Banco Azteca El Salvador's shares to Grupo Perinversiones, S.A. de C.V.

For 10 years, Banco Azteca El Salvador offered financial services to sectors of society that were ignored by traditional banking, providing enhanced access to banking and credit to large segments of the population that, in turn, helped to boost the development of the country.

Currently, Grupo Elektra focusses its efforts on markets that strengthen its solid business model —with exceptional financial and commercial operations— which allows to  advance the well-being and progress of the communities where it has a presence.

Six months consolidated results

Total consolidated revenue in the first six months of the year grew 13% to Ps.55,800 million, from Ps.49,204 million for the same period of 2018, boosted by 13% and 14% growth in both financial and commercial businesses, respectively.

EBITDA was Ps.9,571million, up 7% compared to Ps.8,983 million last year; EBTIDA margin of the first six months of 2019 was 17%.  Operating profit decreased 19% to Ps.6,192 million in the period.

The company reported net income of Ps.10,360 million, compared to net income of Ps.2,386 million a year ago, mainly due an appreciation this period in the market value of underlying financial instruments that the company holds, which do not imply cash flow, compared to depreciation the prior year.

    6M 2018   6M 2019   Change
      Ps. %
         
Consolidated revenue $49,204 $ 55,800 $ 6,596   13 %
EBITDA   $8,983 $ 9,571 $ 588   7 %
Operating profit $7,629 $ 6,162 ($ 1,466 ) -19 %
Net result  $2,386 $ 10,360 $ 7,973   ---
Net result per share $10.51 $ 45.36 $ 34.85   ---
         

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.       
As of June 30, 2018, Elektra* outstanding shares were 227.1 million and as of June 30, 2019, were 228.4 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, Panama and Peru.

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 improve community wellbeing; and environmental value by reducing the negative impact of 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 (totalplayempresarial.com.mx). TV Azteca and Grupo Elektra trade shares on the Mexican Stock Market and in Spain’s' 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.

Except for historical information, the matters discussed in this press release are concepts about the future that involve risks and uncertainty that may cause actual results to differ materially from those projected. Other risks that may affect TV Azteca and its subsidiaries are presented in documents sent to the securities authorities.

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
Tel. +52 (55) 1720 1313 ext. 36553
lpascoe@gruposalinas.com.mx

                     
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
                     
                     
    2Q18   2Q19   Change  
                     
  Financial income   15,798   62 %     17,955   62 %     2,157   14 %  
  Commercial income   9,547   38 %     10,944   38 %     1,398   15 %  
  Income   25,344   100 %     28,899   100 %     3,554   14 %  
                     
  Financial cost   3,806   15 %     4,784   17 %     978   26 %  
  Commercial cost   6,013   24 %     7,379   26 %     1,366   23 %  
  Costs   9,819   39 %     12,163   42 %     2,344   24 %  
                     
  Gross income   15,526   61 %     16,736   58 %     1,210   8 %  
                     
  Sales, administration and promotion expenses   10,927   43 %     12,722   44 %     1,795   16 %  
                     
  EBITDA     4,599   18 %     4,014   14 %     (585 ) -13 %  
                     
  Depreciation and amortization   707   3 %     1,031   4 %     324   46 %  
                     
  Depreciation right of use asset   -   0 %     734   3 %     734   ----  
                     
  Other income, net   (3 ) 0 %     (6 ) 0 %     (3 ) -84 %  
                     
  Operating income   3,895   15 %     2,255   8 %     (1,640 ) -42 %  
                     
  Comprehensive financial result:                  
    Interest income   188   1 %     324   1 %     136   72 %  
    Interest expense   (491 ) -2 %     (922 ) -3 %     (431 ) -88 %  
    Foreign exchange gain (loss), net   982   4 %     (88 ) 0 %     (1,071 ) -109 %  
    Other financial results, net   614   2 %     6,417   22 %     5,803   ----  
      1,294   5 %     5,730   20 %     4,437   ----  
                     
  Participation  in  the  net  income of                  
  CASA and other associated companies   (218 ) -1 %     (84 ) 0 %     134   61 %  
                     
  Income before income tax   4,970   20 %     7,901   27 %     2,930   59 %  
                     
  Income tax   (1,317 ) -5 %     (2,367 ) -8 %     (1,050 ) -80 %  
                     
  Income before discontinued operations   3,653   14 %     5,534   19 %     1,881   51 %  
                     
  Result from discontinued operations    25   0 %     163   1 %     138   ----  
                     
  Impairment of intangible assets   -   0 %     -   0 %     -   ----  
                     
  Consolidated net income     3,678   15 %     5,697   20 %     2,019   55 %  
                     

 

                     
GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
                     
                     
    6M18   6M19   Change  
                     
  Financial income   31,348   64 %     35,506   64 %     4,157   13 %  
  Commercial income   17,856   36 %     20,294   36 %     2,438   14 %  
  Income   49,204   100 %     55,800   100 %     6,596   13 %  
                     
  Financial cost   7,246   15 %     8,757   16 %     1,511   21 %  
  Commercial cost   11,476   23 %     13,341   24 %     1,865   16 %  
  Costs   18,722   38 %     22,097   40 %     3,376   18 %  
                     
  Gross income   30,482   62 %     33,702   60 %     3,220   11 %  
                     
  Sales, administration and promotion expenses   21,499   44 %     24,131   43 %     2,632   12 %  
                     
  EBITDA     8,983   18 %     9,571   17 %     588   7 %  
                     
  Depreciation and amortization   1,368   3 %     1,986   4 %     617   45 %  
                     
  Depreciation right of use asset   -   0 %     1,425   3 %     1,425   ----  
                     
  Other income, net   (14 ) 0 %     (2 ) 0 %     12   84 %  
                     
  Operating Income   7,629   16 %     6,162   11 %     (1,466 ) -19 %  
                     
  Comprehensive financial result:                  
    Interest income   316   1 %     631   1 %     315   100 %  
    Interest expense   (837 ) -2 %     (1,760 ) -3 %     (923 ) -110 %  
    Foreign exchange gain (loss), net   148   0 %     (196 ) 0 %     (344 ) ----  
    Other financial results, net   (3,743 ) -8 %     9,406   17 %     13,149   ----  
      (4,115 ) -8 %     8,082   14 %     12,197   ----  
                     
  Participation  in  the  net  income of                  
  CASA and other associated companies   (245 ) 0 %     (58 ) 0 %     186   76 %  
                     
  Income before income tax   3,269   7 %     14,186   25 %     10,917   ----  
                     
  Income tax   (886 ) -2 %     (3,990 ) -7 %     (3,104 ) ----  
                     
  Income before discontinued operations   2,383   5 %     10,196   18 %     7,813   ----  
                     
  Result from discontinued operations    3   0 %     164   0 %     161   ----  
                     
  Impairment of intangible assets   -   0 %     -   0 %     -   ----  
                     
  Consolidated net income     2,386   5 %     10,360   19 %     7,973   ----  
                     

 

                       
    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, 2018   At June 30, 2019    
                       
  Cash and cash equivalents   6,268   19,745   26,013     5,420   21,599   27,019     1,006   4 %
                       
  Marketable financial instruments   18,649   56,585   75,235     23,697   74,100   97,797     22,563   30 %
                       
  Performing loan portfolio   -   61,210   61,210     -   76,616   76,616     15,407   25 %
  Total past-due loans   -   4,051   4,051     -   3,682   3,682     (370 ) -9 %
  Gross loan portfolio   -   65,261   65,261     -   80,298   80,298     15,037   23 %
                       
  Allowance for credit risks   -   8,321   8,321     -   8,481   8,481     159   2 %
                       
  Loan portfolio, net  -   56,940   56,940     -   71,818   71,818     14,878   26 %
                       
  Inventories   10,513   -   10,513     9,914   -   9,914     (600 ) -6 %
                       
  Other current assets    7,903   9,607   17,511     28,840   12,617   41,458     23,947   137 %
                       
  Total current assets   43,334   142,877   186,211     67,872   180,133   248,005     61,794   33 %
                       
  Financial instruments   17,841   316   18,157     16,529   271   16,800     (1,357 ) -7 %
                       
  Performing loan portfolio   -   28,990   28,990     -   26,506   26,506     (2,484 ) -9 %
  Total past-due loans   -   253   253     -   153   153     (100 ) -40 %
  Gross loan portfolio  -   29,242   29,242     -   26,659   26,659     (2,583 ) -9 %
                       
  Allowance for credit risks   -   746   746     -   677   677     (69 ) -9 %
                       
  Loan portfolio   -   28,496   28,496     -   25,982   25,982     (2,515 ) -9 %
                       
  Other non-current assets    1,693   648   2,342     6,026   440   6,466     4,124   176 %
  Investment in shares   1,881   -   1,881     1,772   -   1,772     (109 ) -6 %
  Property, furniture, equipment and                    
    investment in stores, net   5,833   3,675   9,508     7,846   5,360   13,207     3,699   39 %
  Intangible assets   662   6,673   7,336     678   6,677   7,355     19   0 %
  Right of use asset   -   -   -     8,252   2,012   10,263     10,263   ----
  Other assets   809   331   1,141     1,351   505   1,856     715   63 %
  TOTAL ASSETS   72,054   183,018   255,072     110,326   221,380   331,706     76,634   30 %
                       
                       
  Demand and term deposits   -   121,090   121,090     -   140,603   140,603     19,512   16 %
  Creditors from repurchase agreements   -   4,609   4,609     -   13,904   13,904     9,295   202 %
  Short-term debt   8,908   528   9,436     3,943   62   4,004     (5,432 ) -58 %
  Leasing   -   -   -     736   851   1,587     1,587   ----
  Short-term liabilities with cost   8,908   126,227   135,136     4,679   155,419   160,098     24,963   18 %
                       
  Suppliers and other short-term liabilities   15,950   11,112   27,062     15,821   18,945   34,766     7,703   28 %
  Short-term liabilities without cost   15,950   11,112   27,062     15,821   18,945   34,766     7,703   28 %
                       
  Total short-term liabilities   24,858   137,339   162,198     20,500   174,364   194,864     32,666   20 %
                       
  Long-term debt   12,434   1,865   14,299     19,303   2,336   21,639     7,340   51 %
  Leasing   -   -   -     7,601   1,122   8,723     8,723   ----
  Long-term liabilities with cost   12,434   1,865   14,299     26,904   3,458   30,362     16,063   112 %
                       
  Long-term liabilities without cost   5,132   2,948   8,079     12,180   2,118   14,298     6,219   77 %
                       
  Total long-term liabilities   17,566   4,812   22,378     39,084   5,576   44,660     22,282   100 %
                       
  TOTAL LIABILITIES   42,425   142,152   184,576     59,584   179,940   239,524     54,948   30 %
                       
  TOTAL STOCKHOLDERS' EQUITY   29,629   40,866   70,496     50,742   41,440   92,182     21,686   31 %
                       
                       
  LIABILITIES + EQUITY   72,054   183,018   255,072     110,326   221,380   331,706     76,634   30 %
                       

 

                   
    INFRASTRUCTURE      
                   
    2Q18   2Q19   Change
                   
  Points of sale in Mexico                
  Elektra    1,063 15 %     1,117 16 %     54   5 %
  Salinas y Rocha    46 1 %     38 1 %     (8 ) -17 %
  Banco Azteca   1,259 17 %     1,302 18 %     43   3 %
  Freestanding branches   2,304 31 %     2,183 31 %     (121 ) -5 %
  Total   4,672 64 %     4,640 65 %     (32 ) -1 %
                   
  Points of sale in Central and South America                
  Elektra    165 2 %     168 2 %     3   2 %
  Banco Azteca   165 2 %     168 2 %     3   2 %
  Freestanding branches   297 4 %     253 4 %     (44 ) -15 %
  Total   627 9 %     589 8 %     (38 ) -6 %
                   
  Points of sale in North America                
  Advance America   2,018 28 %     1,916 27 %     (102 ) -5 %
  Total   2,018 28 %     1,916 27 %     (102 ) -5 %
                   
  TOTAL   7,317 100 %     7,145 100 %     (172 ) -2 %
                   
                   
                   
                   
  Floor space (m²)   1,614 100 %     1,703 100 %     89   5 %
                   
                   
                   
  Employees                
  Mexico   59,758 80 %     73,149 83 %     13,391   22 %
  Central and South America   8,921 12 %     9,093 10 %     172   2 %
  North America   5,659 8 %     5,392 6 %     (267 ) -5 %
  Total employees   74,338 100 %     87,634 100 %     13,296   18 %

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