Grupo Elektra Announces 10% EBITDA Growth to Historical Maximum of Ps.1,864 Million in 1Q11

MEXICO CITY, April 26, 2011 /PRNewswire/ -- Grupo Elektra, S.A. de C.V. (BMV: ELEKTRA*; Latibex: XEKT), Latin America's leading financial services company and specialty retailer, reported today its financial results for the first quarter of 2011.

"We achieved a historical maximum in EBITDA for a first quarter, thanks to outstanding income in both the financial and commercial businesses," said Grupo Elektra and Banco Azteca CEO Carlos Septien. "The strength of the commercial business is related to our superior offer of products and services that impulse the quality of life of millions of families; while the growth of the financial business is the result of a remarkable dynamism in credit, which increases the purchasing power of our clients under the most competitive terms."

"The expansion of the financial business was congruent with a growing strength of our assets. The delinquency rate of Banco Azteca Mexico decreased to 3.7%, two percentage points below that of last year and the lowest level since 2006, thanks to effective risk management and deep knowledge of our market," added Mr. Septien.

Consolidated First Quarter Results

Consolidated revenue was Ps.12,628 million, compared to Ps.10,755 million for the same quarter last year. Costs and operating expenses were Ps.10,764 million, compared to Ps.9,061 million in the same period of 2010.

Grupo Elektra reported EBITDA of Ps.1,864 million, a historical maximum for a first quarter, and 10% higher than the Ps.1,693 million of the first quarter from last year. The EBITDA margin was 15% this period.  The company registered net income of Ps.421 million, 25% above the  Ps.336 million a year ago.

Consolidated Revenue

Consolidated revenue grew 17%, to Ps.12,628 million, as a result of a 20% growth in the financial business and a 14% growth in commercial sales.

Costs and Expenses

Consolidated costs were Ps.6,568 million, in comparison to Ps.5,386 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 the goods sold.  

Consolidated operating expenses were Ps.4,196 million, compared to Ps.3,675 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.1,864 million, 10% higher than the Ps.1,693 million reported a year ago; the EBITDA margin for the quarter was 15%.

The principal change below EBITDA was an increase of Ps.86 million in other financial expenses, as a result of the lower valuation of financial instruments owned by the company —which does not imply cash flow.

Grupo Elektra reported net income of Ps.421 million, 25% higher than the Ps.336 million a year ago.

Cash and Cash Equivalents

As of March 31, 2011, total cash and cash equivalents were Ps.61,900 million, compared to Ps.61,848 million for the prior year.  At the end of the quarter, the cash and investments balance for the financial business was Ps.33,581 million, and for the commercial business was Ps.28,319 million.

Consolidated Loan Portfolio and Deposits

Banco Azteca Mexico and Banco Azteca and Elektrafin Latin America's past due loans decreased 22%, to Ps.1,352 million as of March 31, 2011, from Ps.1,723 million for the previous year. The consolidated gross portfolio was Ps.30,959 million, 26% higher compared to Ps.24,642 million a year ago.

The consolidated delinquency rate reduced more than two percentage points, from 7% to 4.4% in the period.

As of March 31, 2011, consolidated deposits were Ps.50,815 million, compared to Ps.50,636 million a year ago.

Financial Business

Banco Azteca Mexico

The past due loan portfolio decreased 22% in the period to Ps.1,070 million as of March 31, 2011, from Ps.1,367 million a year ago, while the performing loan portfolio grew 29%, to Ps.28,081 million.  The gross portfolio was Ps.29,151 million, 26% above the Ps.23,133 million from the previous year.

The consolidated delinquency rate, as of March 31, 2011, descended to 3.7%, compared to 5.9% a year ago. The past-due loan portfolio is reserved 1.5 times, above the 1.3 times from the previous year.

The company performs 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 9.9 million active credit accounts, 11% above of 9.2 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 first quarter.

Deposits of Banco Azteca Mexico were Ps.52,836 million at the end of the quarter, 3% more than the Ps.51,489 million of the previous year. At the end of the period, the bank had a total of 11.4 million active savings and deposit accounts, a 22% increase from the 9.3 million accounts at the end of the same period a year ago.

As of March 31, 2011, the estimated capitalization index of Banco Azteca was 13.4%. The company considers the index to be at a level that optimizes equity profitability.

During the first quarter, revenue from Banco Azteca Mexico was Ps.5,944 million, 23% higher than Ps.4,838 million reported a year ago. The financial cost for the bank during the quarter was Ps.779 million.

Seguros Azteca

Grupo Elektra's insurance companies —Seguros Azteca and Seguros Azteca Danos— reported added revenue of Ps.334 million in the quarter and EBITDA of Ps.78 million, total assets of Ps.2,957 million as of March 31, 2011 —40% above the previous year—, and shareholders' equity of Ps.1,414 million —31% higher than the Ps.1,083 million reported a year ago.

Afore Azteca

As of March 31, 2011, Afore Azteca's assets under management were Ps.10,883 million. Total revenue was Ps.54 million, 3% higher than a year ago, and EBITDA grew 41%, to Ps.35 million.

Commercial Business

Revenue from the commercial business in the quarter was Ps.5,792 million, 14% superior to the Ps.5,068 million reported a year ago.

As of March 31, 2011, total debt with cost of the commercial business was Ps.11,051 million. Net cash for the commercial business —excluding debt— was a positive Ps.17,268 million, compared to a positive balance of Ps.17,385 million as of March 31, 2010.

The total debt of the commercial business is denominated in pesos, in line with most of the earnings of the company, with a weighted average interest rate of 7.8%.

Expansion

The company has a large distribution network, which allows us to stay close to customers and provides a superior market position in Mexico and Latin America.  Grupo Elektra currently has 2,311 points of sales, compared to 2,001 a year ago.  There are currently 1,879 points of sale in Mexico, as well as 432 in Central and South America.

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 2,000 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