Grupo Elektra Announces 53% EBITDA Growth,to Historical Maximum of Ps.3,286 Million in 3Q12

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MEXICO CITY, Oct. 25, 2012 /PRNewswire/ -- Grupo Elektra, S.A.B. de C.V. (BMV: ELEKTRA*; Latibex: XEKT), Latin America's leading financial services company and specialty retailer and the largest non-bank provider of cash advance services in the United States, reported today its financial results for the third quarter and the first nine months of 2012 .

"We reached historical EBITDA for a third quarter, resulting from the remarkable dynamism in consolidated revenue and our solid operating efficiency," commented Grupo Elektra and Banco Azteca CEO Carlos Septien. "The expansion in consolidated revenue comes from a 63% increase in financial income, as part of a remarkable growth of the loan portfolio and the increase in sales of goods as a result of growing demand for our attractive offering of world-class products and services."

Consolidated third quarter results

Consolidated income was Ps.18,247 million, up 38% from Ps.13,257 million for the same quarter last year. Costs and operating expenses were Ps.14,961 million, compared to Ps.11,112 million in the same period of 2011.

Grupo Elektra reported EBITDA of Ps.3,286 million, 53% higher than the Ps.2,145 million for the same period of last year; EBITDA margin was 18% this quarter, two percentage points above last year. The company reported a net profit of Ps.1,543 million, compared to a net profit of Ps.14,631 million a year ago.

Income

Consolidated income grew 38%, as a result of a remarkable 63% increase in financial income and a 6% growth in commercial sales.  

Financial income grew to Ps.12,084 million from Ps.7,416 million last year.  Advance America contributed to the increase of financial income with Ps.2,280 million; as previously announced, Grupo Elektra acquired Advance America —the largest non-bank provider of cash advance services in the US— in April of this year, and consolidates the company's results in Grupo Elektra's financial statements.  

The dynamism of Banco Azteca income also contributed with the growth of the financial business. Banco Azteca income increased 32%, to Ps. 8,300 million from Ps. 6,271 million, mainly as a result of an expansion of personal loans, Micronegocio Azteca credits and Presta Prenda.

The growth of commercial income is in the context of greater sales of white goods, electronics, motorcycles and computer sales, among others.  

Costs and expenses

Consolidated costs for the quarter were Ps. 6,902 million, compared to Ps.6,193 million from the previous year. The change mainly derives from a 27% increase in financial cost, to Ps. 2,595 million from Ps. 2,043 million a year ago. The change in financial cost was due to the register of Advance America's costs this period, which totaled Ps. 418 million.

Consolidated operating expenses were Ps. 8,059 million, compared to Ps. 4,919 million the same quarter of the previous year; the increase is due mainly to increases in personnel expenses arising from hiring employees focused on growing and providing better customer service. The increase in expenses also reflects the consolidation of Advance America's expenses this period.

EBITDA and net result

Consolidated EBITDA was Ps. 3,286 million, 53% higher than the Ps. 2,145 million a year ago; the EBITDA margin for the quarter was 18%, two percentage points up from 16% the previous year.

The most significant change below EBITDA was a negative variation of Ps. 18,727 million in other financial results, as a consequence of the valuation of financial instruments owned by the company – which does not imply cash flow – that was less favorable for this quarter, compared to last year.  That change was partially offset by a Ps. 5,298 million decrease in tax provision.

Grupo Elektra reported net income of Ps. 1,543 million, compared to net income of Ps. 14,631 million a year ago.

Consolidated balance sheet

Loan portfolio and deposits

Banco Azteca Mexico and Banco Azteca, Advance America and Elektrafin Latin America's consolidated gross portfolio as of September 30, 2012, was Ps. 67,342 million, 64% higher than the Ps. 41,059 million the previous year, resulting from the growing preference of customers for our credit products, which directly improve their quality of life. Consolidated delinquency rate was 5.9% at the end of the period.

The most significant driver of the consolidated gross portfolio was a 59% growth in the gross portfolio of Banco Azteca Mexico, to Ps. 56,730 million from Ps. 35,586 million. The gross portfolio of Advance America as of September 30, 2012, totaled Ps. 3,549 million.

The delinquency rate of Banco Azteca México at the end of the quarter was 5.1%. The non-performing loan portfolio is reserved 1.7 times, unchanged from the last year.

At the end of the quarter, the bank had a total of 16.5 million active credit accounts, 41% above the 11.7 million from the previous year. The large customer base is an important 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 60 weeks at the end of the third quarter.

Consolidated deposits, as of September 30, 2012, were Ps. 62,140 million, 16% above the Ps. 53,359 million from the previous year.

Banco Azteca Mexico deposits were Ps. 61,167 million, 12% higher than last year. The total number of active savings and deposit accounts of the bank was 15.2 million, an increase of 20% compared to 12.7 million at the end of the same period a year ago.

As of September 30, 2012, the estimated capitalization index of Banco Azteca Mexico was 12.2%. The company considers the index to be at a level that optimizes equity profitability.

Debt

As of September 30, 2012, consolidated total debt with cost was Ps. 20,823 million, of which Ps. 19,015 million correspond to the commercial business, and Ps. 1,808 million to the financial business.

The balance of cash, cash equivalents and marketable securities for the commercial business was Ps. 24,499 million at the end of the period; as a result net cash for the commercial business – excluding debt with cost – was a positive Ps. 5,484 million.

Expansion

Grupo Elektra currently has 6,142 points of sale, compared to 2,611 a year ago. This change is mainly due to the acquisition of Advance America, which adds 2,409 points of sale to the company this period. Additionally, 1,080 Financial Services Stores were opened – as part of the company's strategy to further strengthen this business segment – and 42 Elektra stores.

There are 3,131 points of sale in Mexico, 2,409 in USA and 602 in Central and South America. The company's large distribution network allows us to stay close to customers and provides superior market positioning in the countries where we operate.

Consolidated nine months results

Consolidated total income in the first nine months of 2012 was Ps. 50,401 million, 39% above Ps. 36,330 million the same period of 2011. The EBITDA was Ps. 9,408 million, 50% higher than the Ps. 6,278 million a year ago; the EBITDA margin in the first nine months was 19% compared to 17% the previous year. The company registered a net loss of Ps. 21,478 million, compared to net income of Ps. 19,220 million last year, mainly due to depreciation this period in the market value of underlying financial instruments that the company holds, which doesn't imply cash flow, compared to appreciation 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 6,000 points of sale in Mexico, USA, 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), Advance America (www.advanceamerica.net), 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.