Grupo Elektra Announces 21% EBITDA Growth to Ps.1,666 Million in 3Q10

-Notable asset quality strength; consolidated delinquency rate decreases seven percentage points, to 6.3%-

-Banco Azteca Mexico's gross loan portfolio increases 10%, to Ps.22,882 million-

-Banco Azteca Mexico totals more than 10 million savings accounts-

Oct 28, 2010, 21:17 ET from Grupo Elektra, S.A. de C.V.

MEXICO CITY, Oct. 28 /PRNewswire-FirstCall/ -- 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 third quarter of 2010.

"We achieved a double digit increase in revenue, due to the remarkable demand for our world-class products, together with growing financial incomes. At the same time, we were able to significantly lower our financial costs, achieving an outstanding performance of the EBITDA and increasing Grupo Elektra's profitability", commented Carlos Septien, General Director of Grupo Elektra and Banco Azteca. "The solid trajectory of the financial cost comes from a continued strengthening of our balance sheet, which reflects a proper risk management that represents less preventive credit reserve requirements."

Consolidated third quarter results

Consolidated revenue was Ps.11,159 million, 10% higher than the Ps.10,147 million of the prior year. Costs and operating expenses were Ps.9,494 million, compared to Ps.8,767 million in the same period of a year ago.

Grupo Elektra reported EBITDA of Ps.1,666 million, 21% higher than the Ps.1,380 million of the third quarter of 2009. The EBITDA margin was 15% this period, one percentage point higher than 14% on the third quarter of 2009. The company registered a profit of Ps.343 million, compared to net loss of Ps.418 million a year ago.



3Q 2009

3Q 2010

Change




Ps.

%






Consolidated revenue

$10,147

$11,159

$1,012

10%






EBITDA    

$1,380

$1,666

$286

21%






Net result      

$(418)

$343

$762

----






Net result per share

$(1.71)

$1.41

$3.12

----






Figures in millions of pesos.

As of September 30, 2009, Elektra* outstanding shares were 243.4 million and the number of shares as of September 30, 2010, was 242.7 million.



Consolidated revenue

Consolidated revenue increased 10% as the result of a 12% growth in retail sales and an 8% growth in financial income.  

Costs and expenses

Consolidated costs were Ps.5,496 million, compared to Ps.5,189 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.  

The financial costs decreased 7% this quarter due to lower preventive credit reserve requirements, as a result of the strengthening of the consolidated portfolio quality.

Consolidated operating expenses were Ps.3,998 million, compared to Ps.3,578 million for the same period a year ago, as a result of an increase in personnel expenses.

EBITDA and net result

Consolidated EBITDA was Ps.1,666 million, 21% higher compared to Ps.1,380 million reported a year ago; the EBITDA margin for the quarter grew one percentage point, to 15%.

The principal changes below EBITDA were: i) an increase of Ps.1,569 million in other financial expenses —which reflects the valuation of financial instruments that the company holds and don't imply cash flow in the quarter, more favorable compared to a year ago, ii) lowering of interest income of Ps.483 million because of less investments profitability, and iii) a Ps. 413 million increase in tax provision, congruent with the tax rates applicable to the company.

Grupo Elektra reported net profit of Ps.343 million, compared to a Ps.418 million net loss a year ago.

Cash and cash equivalents

As of September 30, 2010, total cash and cash equivalents were Ps.64,201 million, 4% higher than the Ps.61,946 million of the prior year, mainly due to higher investment levels of the retail sales business.  At the end of the quarter, the cash and investments balance for the financial business was Ps.39,034 million, and for the commercial business was Ps.25,165 million.

Consolidated loan portfolio and deposits

As of September 30, 2010, Banco Azteca Mexico and Banco Azteca and Elektrafin Latin America's past due loans decreased 55% to Ps.1,518 million, from Ps.3,386 million for the previous year. The consolidated performing portfolio was Ps.22,787 million, 4% above the  Ps.21,872 million a year ago.

The consolidated delinquency rate reduced seven percentage points, from 13.4% to 6.3% in the period.

As of September 30, 2010, consolidated deposits were Ps.52,070 million, 3% higher than the Ps.50,666 million a year ago.

Financial business

Banco Azteca Mexico

As of September 30, 2010, the past due loan portfolio decreased 44% to Ps.1,211 million, from Ps.2,171 million a year ago, and the performing portfolio grew 16% to Ps.21,671 million. The gross portfolio was Ps.22,882 million, 10% above of Ps.20,848 million from the previous year.

The delinquency rate, as of September 30, 2010, descended to 5.3%, compared to 10.4% a year ago. The past-due loan portfolio is reserved 1.4 times, compared to 0.9 times

a year ago.

The company has a deep knowledge of customers and their ability to pay, which combined with effective risk analysis has a positive impact on asset quality.

At the end of the quarter, the bank had a total of 9.3 million active credit accounts; 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 of Banco Azteca Mexico were Ps.51,029 million at the end of the quarter, 2% more than the Ps.49,974 million of the previous year. At the end of the period, the bank had a total of 10.4 million active savings and deposit accounts, a 30% increase from the 8 million accounts at the end of the same period a year ago.

As of September 30, 2010, the capitalization index of Banco Azteca was 15.2%. 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.4,831 million, 11% higher compared to Ps.4,370 million reported a year ago. The financial cost for the bank during the quarter was Ps.1,064 million, 3% less than the Ps.1,094 million reported the previous year, derived principally from a lower estimation of credit risk.

Seguros Azteca

Grupo Elektra's insurance companies —Seguros Azteca and Seguros Azteca Danos— reported revenue of Ps.344 million in the quarter and EBITDA of Ps.77 million, total assets of Ps.2,163 million as of September 30, 2010, 18% superior than Ps.1,828 million of the previous year, and shareholders' equity of Ps.1,259 million, 27% higher than the Ps.988 million reported a year ago.

Afore Azteca

As of September 30, 2010, Siefore Azteca's assets under management were Ps.11,513 million. Total revenue was Ps.57 million, 12% higher than Ps.51 million a year ago, with an increase in EBITDA of 46%, to Ps.32 million.

Commercial business

Revenue from the commercial business in the quarter was Ps.5,342 million, 12% superior to the Ps.4,749 million reported a year ago.

As of September 30, 2010, total debt with cost of the commercial business was Ps.8,490 million, compared to Ps.7,232 million from the previous year. The net cash of the commercial business —excluding debt— was a positive Ps.16,675 million, 5% higher than the  Ps.15,909 million of September 30, 2009.

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 8.1%.

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.  As of September 30, 2010, Grupo Elektra had 2,018 points of sale, compared to 1,999 a year ago.  There are currently 1,608 points of sale in Mexico, as well as 410 in Central and South America.

Nine month consolidated results

Total consolidated revenue in the first nine months of 2010 was Ps.33,240 million, 5% higher than the Ps.31,695 million a year ago.  The company reported consolidated EBITDA of Ps.5,073 million, 15% superior to Ps.4,414 million for the same period a year ago;  the EBITDA margin in the first nine months of 2010 was 15%, one percentage point above that of the prior year.  Grupo Elektra registered net loss of Ps.1,904 million, compared to net income of Ps.1,284 million a year ago, mainly due to a higher depreciation this period in the valuation of financial instruments that the company holds, which doesn't imply cash flow, compared to the prior year.



9M 2009

9M 2010

Change




Ps.

%






Consolidated revenue

$31,695

$33,240

$1,545

5%






EBITDA    

$4,414

$5,073

$659

15%






Net result      

$1,284

$(1,904)

$(3,188)

----






Net result per share

$5.28

$(7.85)

$(13.13)

----






Figures in million of pesos.

As of September 30, 2009, Elektra* outstanding shares were 243.4 million and the number of shares as of September 30, 2010, was 242.7 million.



Company Profile:

Grupo Elektra (www.grupoelektra.com.mx) is Latin America's leading financial services company focused on the mass market. The Group operates more than 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 TV 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.

Investor Relations

Bruno Rangel

Grupo Salinas

Tel. +52 (55) 1720 9167

jrangelk@gruposalinas.com.mx


Carlos Casillas

Grupo Elektra S.A. de C.V.

Tel. +52 (55) 1720 0041

cjcasillas@gruposalinas.com.mx




Press Relations

Tristan Canales

Grupo Salinas

Tel. +52 (55) 1720-1441

tcanales@gruposalinas.com.mx


Daniel McCosh

Grupo Salinas

Tel. +52 (55) 1720-0059

dmccosh@gruposalinas.com.mx




GRUPO ELEKTRA, S.A. DE C.V. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

MILLIONS OF MEXICAN PESOS




















3Q09


3Q10


Change










Financial Revenue

5,398

53%


5,817

52%


419

8%

Commercial Revenue

4,749

47%


5,342

48%


593

12%

Total Revenue

10,147

100%


11,159

100%


1,012

10%










Financial Cost

1,933

19%


1,797

16%


(136)

-7%

Commercial Cost

3,256

32%


3,698

33%


443

14%

Total Cost

5,189

51%


5,496

49%


307

6%










Gross Profit

4,958

49%


5,664

51%


705

14%










Selling, General & Administrative Expenses

3,578

35%


3,998

36%


419

12%

Depreciation and Amortization

482

5%


519

5%


37

8%

Total Operating Expenses

4,061

40%


4,517

40%


456

11%










Operating Income

898

9%


1,147

10%


249

28%










EBITDA

1,380

14%


1,666

15%


286

21%










Financing Result:









    Interest income

974

10%


491

4%


(483)

-50%

    Interest expense

(314)

-3%


(251)

-2%


63

20%

    Gain (loss) in Foreign exchange

186

2%


(59)

-1%


(245)

----

    Monetary loss

-

0%


-

0%


-

n.a.

    Other financial expenses

(2,538)

-25%


(969)

-9%


1,569

62%


(1,693)

-17%


(788)

-7%


905

53%










Other expenses

(7)

0%


(5)

0%


2

29%










(Loss) income before taxes

(802)

-8%


354

3%


1,156

----










Provision for taxes

339

3%


(75)

-1%


(413)

----










Equity in income of CASA (TV Azteca)

66

1%


64

1%


(3)

-4%










Discontinued operations

(22)

0%


-

0%


22

----



















Net (loss) income

(418)

-4%


343

3%


762

----



GRUPO ELEKTRA, S.A. DE C.V. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

MILLIONS OF MEXICAN PESOS




















9M09



9M10



Change











Financial Revenue

17,366

55%


17,373

52%


8

0%

Commercial Revenue

14,329

45%


15,867

48%


1,538

11%

Total Revenue

31,695

100%


33,240

100%


1,545

5%










Financial Cost

6,746

21%


5,778

17%


(969)

-14%

Commercial Cost

9,674

31%


10,908

33%


1,234

13%

Total Cost

16,421

52%


16,686

50%


265

2%










Gross Profit

15,274

48%


16,554

50%


1,280

8%










Selling, General & Administrative Expenses

10,860

34%


11,481

35%


621

6%

Depreciation and Amortization

1,433

5%


1,495

4%


63

4%

Total Operating Expenses

12,293

39%


12,976

39%


683

6%










Operating Income

2,981

9%


3,578

11%


597

20%










EBITDA

4,414

14%


5,073

15%


659

15%










Financing Result:









    Interest income

1,481

5%


886

3%


(595)

-40%

    Interest expense

(852)

-3%


(822)

-2%


31

4%

    Gain (loss) in Foreign exchange

25

0%


(167)

-1%


(193)

----

    Monetary loss

-

0%


-

0%


-

n.a.

    Other financial expenses

(1,858)

-6%


(6,063)

-18%


(4,205)

----


(1,203)

-4%


(6,166)

-19%


(4,963)

----










Other expenses

(37)

0%


(41)

0%


(4)

-10%










Income (loss) before taxes

1,740

5%


(2,630)

-8%


(4,370)

----










Provision for taxes

(367)

-1%


610

2%


978

----










Equity in income of CASA (TV Azteca)

40

0%


115

0%


75

----










Discontinued operations

(128)

0%


-

0%


128

----





































Net Income (loss)

1,284

4%


(1,904)

-6%


(3,188)

----



GRUPO ELEKTRA, S.A. DE C.V. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

MILLIONS OF MEXICAN PESOS




Commercial Business

Financial Business

Grupo Elektra

Commercial Business

Financial Business

Grupo Elektra













At September 30, 2009



At September 30, 2010


Change











Cash

837

11,689

12,526

859

11,570

12,430

(97)

-1%










Marketable Securities and investments

22,304

27,116

49,420

24,306

27,464

51,771

2,351

5%










Performing Loan Portfolio

1,029

20,842

21,872

287

22,501

22,787

916

4%

Total Past-due Loans

1,003

2,383

3,386

107

1,411

1,518

(1,868)

-55%










Gross Loan Portfolio

2,032

23,225

25,257

394

23,911

24,305

(952)

-4%










Allowance for bad Loans

1,120

2,329

3,450

107

1,964

2,071

(1,378)

-40%










Total Net Loan Portfolio

912

20,895

21,808

287

21,947

22,234

426

2%



















Other Current Assets

10,645

4,610

15,255

9,943

4,280

14,223

(1,032)

-7%










Inventory

3,218


3,218

4,399


4,399

1,181

37%










Current assets

37,916

64,311

102,227

39,794

65,262

105,056

2,829

3%










Investment in Shares

1,723

15

1,738

1,832

12

1,844

106

6%

Goodwill



-



-

-

n.a.

Fixed Assets

5,079

1,464

6,544

4,633

1,372

6,005

(538)

-8%

Other Assets

1,414

7

1,421

1,435

3

1,439

18

1%










TOTAL ASSETS

46,132

65,797

111,929

47,694

66,649

114,344

2,415

2%



















Demand Deposits


50,666

50,666


52,070

52,070

1,404

3%

Repo Operations


3,688

3,688


4,274

4,274

586

16%










Short-Term Bank Debt

3,984

37

4,021

5,632

42

5,674

1,652

41%

Capitalized Lease Obligations

26


26

20

-

20

(6)

-24%

Short-Term Liabilities with Financial Cost

4,011

37

4,048

5,652

42

5,694

1,646

41%










Suppliers and Other Short-Term Liabilities

5,086

4,021

9,107

6,644

3,241

9,885

778

9%

Short-Term Liabilities without Financial Cost

5,086

4,021

9,107

6,644

3,241

9,885

778

9%










Total Short-Term Liabilities

9,097

58,412

67,509

12,296

59,626

71,922

4,413

7%










Long-Term Bank Debt

3,207

1,177

4,384

2,827

(65)

2,762

(1,622)

-37%

Capitalized Lease Obligations

14


14

10


10

(4)

-26%

Long-term Liabilities with Financial Cost

3,221

1,177

4,398

2,838

(65)

2,772

(1,625)

-37%










Long-term Liabilities Without Financial Cost

6,445

(241)

6,204

5,859

(278)

5,581

(624)

-10%










Total Long-Term Liabilities

9,666

936

10,602

8,697

(344)

8,353

(2,249)

-21%










TOTAL LIABILITIES

18,763

59,348

78,111

20,993

59,282

80,275

2,164

3%










Stockholders' Equity

27,369

6,449

33,818

26,701

7,367

34,068

250

1%



















LIABILITIES + EQUITY

46,132

65,797

111,929

47,694

66,649

114,344

2,415

2%



INFRASTRUCTURE






3Q09

3Q10

Change








Points of sale in Mexico







Elektra (1)

           828

41%

           903

45%

         75

9%

Salinas y Rocha (1)

             55

3%

             55

3%

            -

0%

Freestanding Branches (2)

           674

34%

           650

32%

        (24)

-4%

Total

        1,557

78%

        1,608

80%

         51

3%








Points of sale in Latin America







Elektra (3)

           171

9%

           179

9%

           8

5%

Freestanding Branches

           271

14%

           231

11%

        (40)

-15%

Total

           442

22%

           410

20%

        (32)

-7%








TOTAL

        1,999

100%

        2,018

100%

         19

1%






















Floor Space (m2)







Elektra Mexico

    772,180

71%

    807,363

74%

  35,184

5%

Mini Elektra


0%


0%

           -  

n.a.

Elektra Latin America

    148,446

14%

    146,949

13%

   (1,497)

-1%

Salinas y Rocha

      59,614

5%

      59,614

5%

            -

0%

Freestanding Branches

    107,208

10%

      83,690

8%

 (23,518)

-22%

TOTAL

 1,087,448

100%

 1,097,616

100%

  10,168

1%






















Employees







Mexico

      29,062

81%

      30,284

83%

    1,222

4%

Latin America

        6,693

19%

        6,336

17%

      (357)

-5%

Total Employees

      35,755

100%

      36,620

100%

       865

2%

(1) Each store has a Banco Azteca branch.

(2) In 3Q10, includes 45 Bodegas de Remate that continues operating only financial services.

(3) In 3Q10, only 155 Latin America Elektra's store have a Banco Azteca branch.




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



RELATED LINKS

http://www.grupoelektra.com.mx