Grupo Elektra Announces 9% EBITDA Growth to Historical Maximum of Ps.1,865 Million in 2Q11

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MEXICO CITY, July 18, 2011 /PRNewswire/ -- Grupo Elektra, S.A.B. de C.V. (BMV: ELEKTRA*; Latibex: XEKT), Latin America's leading financial services company and specialty retailer, reported today its financial results for the second quarter of 2011.

"We achieved a historical maximum in EBITDA for a second quarter, thanks to the firm expansion in consolidated revenue together with our solid operation," said Grupo Elektra and Banco Azteca CEO Carlos Septien.  "The higher top line was largely derived from our financial business, which grew 40%, mainly supported by a notable increase in our credit portfolio. We also reported increased merchandise sales thanks to stronger demand for our products that improve the quality of life of millions of families in Mexico, Central and South America."

"Regarding our balance sheet, asset strength was further enhanced this period; gross loan portfolio constantly grew while non performing loans decreased substantially, as a result the non-performing loan ratio decreased two percentage points to 2.9%, its lowest level in five years", added Mr. Septien.

Consolidated second quarter results

Consolidated revenue was Ps.14,195 million, up from Ps.11,326 million for the same quarter last year.  Costs and operating expenses were Ps.12,330 million, compared to Ps.9,613 million in the same period of 2010.

Grupo Elektra reported EBITDA of Ps.1,865 million, a historical maximum for a second quarter, and 9% higher than the Ps.1,714 million from the second quarter of last year. The EBITDA margin was 13% this period.  The company registered net income of Ps.3,886 million, compared to a Ps.2,583 million loss a year ago.

Consolidated revenue

Consolidated revenue grew 25%, to Ps.14,195 million, as a result of a solid 40% growth in the financial business and a 10% growth in commercial sales.

Costs and expenses

Consolidated costs were Ps.7,738 million, compared to Ps.5,804 million from a year ago.  

Consolidated costs include financial cost — which represents the creation of loan-loss reserves and interest paid to depositors on savings — as well as sales cost, which mainly represents the cost of goods sold.  

Operating expenses were Ps.4,592 million, compared to Ps.3,809 million for the same period a year ago; the change is mainly explained by increases in personnel expenses, in the context of growing operations of the company.

EBITDA and net result

Consolidated EBITDA was Ps.1,865 million, 9% higher than the Ps.1,714 million reported a year ago; the EBITDA margin for the quarter was 13%.

The principal change below EBITDA was an increase of Ps.8,527 million in other financial expenses, as a result of a more favorable valuation this quarter of financial instruments owned by the company —which does not imply cash flow.

Grupo Elektra reported net income of Ps.3,886 million, compared to the Ps.2,583 million loss a year ago.

Cash and cash equivalents

As of June 30, 2011, total cash and cash equivalents were Ps.59,735 million, compared to Ps.65,492 million for the prior year.  At the end of the quarter, the cash and investments balance for the financial business was Ps.31,921 million, and for the commercial business was Ps.27,814 million.

Consolidated loan portfolio and deposits

Banco Azteca Mexico and Banco Azteca and Elektrafin Latin America's past due loans decreased 17%, to Ps.1,266 million as of June 30, 2011, from Ps.1,521 million for the previous year.  The consolidated gross portfolio was Ps.34,155 million, 40% higher than Ps.24,379 million a year ago.

The consolidated delinquency rate reduced more than two percentage points, from 6.2% to 3.7% in the period.

As of June 30, 2011, consolidated deposits were Ps.50,293 million, compared to Ps.51,251 million a year ago.

Financial business

Banco Azteca Mexico

The past due loan portfolio decreased 20% in the period to Ps.925 million as of June 30, 2011, from Ps.1,152 million a year ago, while the performing loan portfolio grew 43%, to Ps.31,011 million.  The gross portfolio was Ps.31,936 million, 39% above the Ps.22,904 million from the previous year.

The bank's delinquency rate as of June 30, 2011, decreased to 2.9%, from 5% a year ago. The non-performing loan portfolio is reserved 1.7 times, above the 1.4 times from the previous year.

The company makes effective risk analysis, and has a deep knowledge of its target market and the payment capability of its customers, which translates into strength in the quality of its assets.

At the end of the quarter, the bank had a total of 10.8 million active credit accounts, 16% above of 9.3 million from the previous year.  The large customer base is an additional strength of the bank that further reduces credit risk. The average term of the credit portfolio for principal credit lines —consumer, personal loans and Tarjeta Azteca— was 59 weeks at the end of the second quarter.

Deposits of Banco Azteca Mexico were Ps.53,145 million at the end of the quarter, 2% more than the Ps.52,103 million of the previous year. At the end of the period, the bank had a total of 11.8 million active savings and deposit accounts, a 19% increase from the 9.9 million accounts at the end of the same period a year ago.

As of June 30, 2011, the estimated capitalization index of Banco Azteca was 13.5%. The company considers the index to be at a level that optimizes equity profitability.

During the second quarter, revenue from Banco Azteca Mexico was Ps.7,064 million, 45% higher than Ps.4,876 million reported a year ago. The financial cost for the bank during the quarter was Ps.914 million.

Seguros Azteca

Grupo Elektra's insurance companies —Seguros Azteca and Seguros Azteca Danos— reported combined revenue of Ps.278 million in the quarter and EBITDA of Ps.82 million.  Total assets as of June 30, 2011 were Ps.2,593 million, 22% above the previous year; and shareholders' equity was Ps.1,452 million, 26% higher than the Ps.1,152 million reported a year ago.

Afore Azteca

As of June 30, 2011, Afore Azteca's assets under management were Ps.11,291 million. Total revenue was Ps.50 million, and EBITDA was Ps.32 million, a 19% growth from the Ps.27 million of the prior year.

Commercial business

Revenue from the commercial business in the quarter was Ps.5,978 million, 10% above the Ps.5,457 million reported a year ago.

As of June 30, 2011, total debt with cost of the commercial business was Ps.11,111 million.  Net cash for the commercial business —excluding debt— was a positive Ps.16,703 million, compared to a positive balance of Ps.17,938 million as of June 30, 2010.  

Expansion

Grupo Elektra currently has 2,321 points of sale, compared to 2,013 a year ago.  There are 1,863 points of sale in Mexico, and 458 in Central and South America.  The company's large distribution network allows us to stay close to customers and provides superior market positioning in Mexico and Latin America.

Six month results

Total consolidated revenue in the first six months of 2011 was Ps.26,823 million, 21% higher than Ps.22,081 million a year ago.  The company reported EBITDA of Ps.3,729 million, 9% above the Ps.3,407 for the same period a year ago; the EBITDA margin in the first six months of 2011 was 14%.  The company registered consolidated net income of Ps.4,306 million, compared to loss of Ps.2,247 million a year ago, mainly due to an appreciation this period in the market value of underlying financial instruments that the company holds, which doesn't imply cash flow, compared to depreciation in the prior year.

Company Profile:

Grupo Elektra (www.grupoelektra.com.mx) is Latin America's leading financial services company focused on the mass market. The Group operates over 2,300 points of sale in Mexico, Brazil, Guatemala, Honduras, Peru, Panama, El Salvador and Argentina.  Grupo Elektra also sells and markets its consumer finance, banking and financial products and services through Banco Azteca branches located in Mexico, Brazil, Panama, Guatemala, Honduras, Peru 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 build 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 Azteca (www.irtvazteca.com), Azteca America (www.aztecaamerica.com), Grupo Elektra (www.grupoelektra.com.mx), Banco Azteca (www.bancoazteca.com.mx), Afore Azteca (www.aforeazteca.com.mx), Seguros Azteca (www.segurosazteca.com.mx) and Grupo Iusacell (www.iusacell.com.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.

SOURCE Grupo Elektra, S.A.B. de C.V.