Grupo Elektra Announces 20% EBITDA Growth to Historical Maximum of Ps.2,001 Million in 3Q11

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MEXICO CITY, Oct. 27, 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 third quarter of 2011.

"We achieved a historical maximum in EBITDA for a third quarter, as a result of outstanding growth in the company's consolidated revenue, together with continuous operations efficiency," said Grupo Elektra and Banco Azteca CEO Carlos Septien.  "The momentum in revenue growth is a result of 69% growth in the financial business, within the context of significant expansion in the credit portfolio, as well as from the dynamism in the sale of products as millions of families seek our superior goods and world class services."

"Our assets quality grew stronger during the quarter, Banco Azteca Mexico delinquency rate shrank more than a percentage point, to 3.7% to the end of the period, as a consequence of our thorough market knowledge and effective risk analysis," added Mr. Septien.

Consolidated third quarter results

Consolidated revenue was Ps.15,691 million, up 41% from Ps.11,159 million for the same quarter last year.  Costs and operating expenses were Ps.13,690 million, compared to Ps.9,494 million in the same period of 2010.

Grupo Elektra reported EBITDA of Ps.2,001 million, a historical maximum for a third quarter, and 20% higher than the Ps.1,666 million for the same period of last year. The EBITDA margin was 13% this quarter.  The company registered net income of Ps.14,577 million, compared to Ps.343 million a year ago.

Consolidated revenue

Consolidated revenue grew 41%, to Ps.15,691 million, as a result of a remarkable 69% growth in the financial business and a 9% growth in commercial sales.

Costs and expenses

Consolidated costs were Ps.8,771 million, compared to Ps.5,496 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.4,919 million, compared to Ps.3,998 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.2,001 million, 20% higher than the Ps.1,666 million reported a year ago; the EBITDA margin for the quarter was 13%.

The most significant change below EBITDA was an increase of Ps.19,042 million in other financial income, as a result of a more favorable valuation this quarter of financial instruments owned by the company -which does not imply cash flow. That change was partially offset by a Ps.5,595 increase in tax provision, congruent with the company's fiscal obligations.

Grupo Elektra reported net income of Ps.14,577 million, compared to the Ps.343 million a year ago.

Cash and cash equivalents

As of September 30, 2011, total cash and cash equivalents were Ps.63,932 million, compared to Ps.64,201 million for the prior year.  At the end of the quarter, the cash and investments balance for the financial business was Ps.32,205 million, and for the commercial business was Ps.31,727 million.

Consolidated loan portfolio and deposits

Banco Azteca Mexico and Banco Azteca and Elektrafin Latin America's consolidated gross portfolio was Ps.38,675 million, 59% higher than Ps.24,305 million a year ago. The consolidated past due loans were Ps.1,781 million, compared to Ps.1,518 million a year ago.

The consolidated delinquency rate was 4.6% at the end of the period, compared to 6.3% from last year.

As of September 30, 2011, consolidated deposits were Ps.53,359 million, 5% above the Ps.50,872 million a year ago.

Financial business

Banco Azteca Mexico

The gross portfolio was Ps.35,586 million, 56% higher than the Ps.22,882 million a year ago. The non-performing loan portfolio was Ps.1,332 million at the end of the period, compared to Ps.1,211 million from last year.

The bank's delinquency rate as of September 30, 2011 was 3.7%, more than a percentage point bellow the 5.3% a year ago. The non-performing loan portfolio is reserved 1.7 times, above the 1.4 times from the previous year.

The company does effective risk analysis, and has thorough 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 12.2 million active credit accounts, 31% above the 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 58 weeks at the end of the third quarter.

Deposits from clients of Banco Azteca Mexico were Ps.54,823 million at the end of the quarter, 7% more than the Ps.51,029 million of the previous year. At the end of the period, the bank had a total of 12.3 million active savings and deposit accounts, an 18% increase from the 10.4 million accounts at the end of the same period a year ago.

As of September 30, 2011, the estimated capitalization index of Banco Azteca was 12.7%. The company considers the index to be at a level that optimizes equity profitability.

During the third quarter, revenue from Banco Azteca Mexico was Ps.8,573 million, 77% higher than the Ps.4,831 million reported a year ago. The financial cost for the bank during the quarter was Ps.2,036 million.

Seguros Azteca

Grupo Elektra's insurance companies -Seguros Azteca and Seguros Azteca Danos- reported combined revenue of Ps.324 million in the quarter and EBITDA of Ps.126 million.  Total assets as of September 30, 2011 were Ps.2,585 million, 19% above the previous year; and shareholders' equity was Ps.1,560 million, 24% higher than the Ps.1,259 million reported a year ago.

Afore Azteca

As of September 30, 2011, Afore Azteca's assets under management were Ps.11,322 million. Total revenue was Ps.49 million, and EBITDA was Ps.30 million.

Commercial business

Revenue from the commercial business in the quarter was Ps.5,841 million, 9% above the Ps.5,342 million reported a year ago.

As of September 30, 2011, total debt with cost of the commercial business was Ps.14,824 million.  Net cash for the commercial business - excluding debt- was a positive Ps.16,903 million, compared to a positive balance of Ps.16,675 million as of September 30, 2010.  

Expansion

Grupo Elektra currently has 2,611 points of sale, compared to 2,018 a year ago. This change is mainly due to the increase in the number of Financial Services Stores, as part of the company's strategy to strengthen this business segment.  There are 2,139 points of sale in Mexico, and 472 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.

Nine months results

Total consolidated revenue in the first nine months of 2011 was Ps.42,514 million, 28% higher than the Ps.33,240 million a year ago.  The company reported EBITDA of Ps.5,730 million, 13% above the Ps.5,073 for the same period a year ago; the EBITDA margin in the first nine months of 2011 was 13%.  The company registered consolidated net income of Ps.18,883 million, compared to a loss of Ps.1,904 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 2,600 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.