Grupo Elektra Announces 13% EBITDA Growth to Ps.5,442 Million In 4Q19

Wednesday, 26. February 2020 04:06

—Consolidated revenue increases 15% to Ps.33,477 million
as a result of the firm dynamism in both commercial and financial revenues—

—26% growth in consolidated deposits to Ps.154,977 million,
generates solid perspectives for the financial division—

—Consolidated gross loan portfolio grows 14% to Ps.110,898 million—

MEXICO CITY, Feb. 25, 2020 (GLOBE NEWSWIRE) -- Grupo Elektra, S.A.B. de C.V. (BMV: ELEKTRA*; Latibex: XEKT), Latin America’s leading specialty retailer and financial services company, and the largest non-bank provider of cash advance services in the United States, today announced fourth quarter 2019 and full year 2019 financial results.

Consolidated Fourth Quarter Results

Consolidated revenue was Ps.33,477 million in the period, 15% above the Ps.29,182 million for the same quarter of the previous year. Costs and operating expenses were Ps.28,035 million, from Ps.24,373 million for the same period of 2018.

As a result, Grupo Elektra reported EBITDA of Ps.5,442 million, in comparison with Ps.4,809 million of the previous year’s quarter; EBITDA margin was 16% for the period. 

Operating profit was Ps.3,567 million this quarter, from Ps.3,948 million in the same period of 2018.

On a pro forma basis — without considering the application of IFRS 16 standard, which was adopted as of 2019, as previously detailed — in the fourth quarter of 2019 EBITDA for the period was Ps.4,515 million and operating profit was Ps.3,349 million.

The company reported net income of Ps.1,532 million, compared to net income of Ps.5,913 million a year ago.

 4Q 20184Q 2019 Change
   Ps.%
     
Consolidated revenue$29,182$33,477$4,29615%
     
EBITDA  $4,809$5,442$63413%
     
Operating profit$3,948
$3,567
$(381)
-10
%
      
Net result$5,913$1,532$(4,381)-74%
     
Net result per share$25.99$6.71$(19.28)-74%
     
Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. 
As of December 31, 2018, Elektra* outstanding shares were 227.5 million and as of December 31, 2019, were 228.4 million.

Revenues

Consolidated revenue increased 15%, as a result of an 18% growth in commercial sales and a 12% increase in financial revenues.

The increase in commercial division sales — to Ps.13,976 million, up from Ps.11,811 million last year — largely results from a solid increase in sales of Italika motorcycles — thanks to its innovative, safe models, which provide efficient transportation alternatives in fuel use and reduce travel times — as well as notable performance in telephony and appliances, commercialized in the most competitive market conditions.

The commercial business sales have added additional momentum with the launch of a new store format with a larger exhibition space that includes an extensive merchandise and services selection to satisfy an increasing number of customers.  Similarly, Omnichannel operations — with the online store www.elektra.com.mx, which sells thousands of products at unparalleled prices from any device and at any time — further strengthens the performance of the division.

The increase in financial revenue — to Ps.19,501 million, from Ps.17,370 million the previous year — mainly reflects revenue growth of 13% at Banco Azteca Mexico, in the context of a strong rise in the gross portfolio and a notable dynamism in deposits.

Costs and expenses

Consolidated costs for the quarter were Ps.14,849 million, from Ps.12,189 million in the previous year, as a result of a 27% increase in financial costs — which reflects the higher interest paid, in the context of solid deposits growth, as well as the creation of loan loss reserves — and the 19% increase in commercial costs, congruent with the increase in commercial income.

Sales, administration, and marketing expenses grew 8% to Ps.13,186 million as a result of increases in both personnel and operating expenses. The growth of expenses is related to the implementation of both marketing and specialized customer service structures — which focuses on substantially boosting bank deposits, as well as the credit portfolio, with strong quality standards, the development of institutional and governmental banking that increases and diversifies Banco Azteca’s top line, and an increasingly competitive structure in Afore Azteca, which allowed a 48% growth in assets under management in the year, to Ps.110,112 million as of December 31, 2019, and increase the client base 44% to 4.5 million, from 3.1 million a year ago.

Likewise, there is an impact on expenses coming from the development of systems to further strengthen the high standards of efficiency of digital banking — which currently has more than seven million users who made more than 670 million transactions during the year from the digital application, with higher levels of comfort, security and time savings — the Omnichannel sales efforts, and the maintenance expenses of the company's infrastructure, which includes the new Elektra stores.

Despite the firm development of the aforementioned initiatives, expenses grew to a lesser extent than consolidated revenues, reflecting strong strategies that drive the operational efficiency of Grupo Elektra.

EBITDA and net result

The EBITDA of the company increased 13% to Ps.5,442 million this quarter. Operating income declined 10% to Ps.3,567 million, from Ps.3,948 million for the same quarter of 2018.

The most significant change below EBITDA was a negative variation of Ps.5,389 million in other financial results, which reflects a 1% depreciation this quarter in the market value of underlying assets of financial instruments held by the company, and does not imply cash flow, in comparison to a 12% increase a year ago.

Congruent with the negative variation of other financial results, a decrease of Ps.2,003 million in the provision of taxes line was registered during the period.

Grupo Elektra reported net income of Ps.1,532 million, compared to a net income of Ps.5,913 million a year ago.

Unconsolidated Balance Sheet

In order to allow the visualization of the non-consolidated financial situation, a pro forma exercise of the balance sheet of Grupo Elektra is presented, excluding the net assets of the financial business, whose investment is valued under the equity method, in this case.

This presentation shows the debt of the company without considering Banco Azteca’s immediate and term deposits, which do not constitute debt with cost for Grupo Elektra. The pro forma balance sheet also does not include the bank's gross loan portfolio.

This proforma exercise provides greater clarity regarding the businesses that makes up the company and allows financial market participants to estimate the value of the company, considering only the relevant debt for such calculations.

In line with the above, debt with cost was Ps.24,686 million as of December 31, 2019, compared to Ps.21,635 million in the previous year.

The growth in the debt balance is derived mainly from the issuance of Certificados Bursátiles for Ps.2,500 million in the previous quarter, which were issued in order to continue with stimulus to capital investments related to improvement and growth of the distribution infrastructure and operations of the company.

In 2019, 60 new Elektra stores were opened, 39 existing stores were remodelled; in addition, the development of systems that optimize the operation of Banco Azteca and Tiendas Elektra was promoted.

The balance of cash and cash equivalents was Ps.20,450 million, from Ps.21,198 million from the previous year. As a result, net debt as of December 31, 2019, was Ps.4,236 million, in compassion with Ps.437 million a year ago.

The company's equity increased 16% to Ps.97,797 million, while the ratio of stockholders' equity to total liabilities was 1.5 times at the close of the quarter.



     
 As of December 31, 2018As of December 31, 2019Change
   Ps.%
     
     
Cash & marketable fin. instr.$21,198$20,450-$748-4%
Inventories$9,375$11,093$1,71818%
Other current assets$3,905$5,478$1,57340%
Financial instruments$26,599$25,820-$779-3%
Accounts receivable$32,122$49,096$16,97453%
Investment share$33,168$34,791$1,6235%
Fixed assets$7,404$8,603$1,19916%
Right of use asset---$8,340$8,340---
Other assets$2,105$1,406-$699-33%
Total assets$135,876$165,076$29,20121%
     
Short-term debt$8,410$3,426-$4,985-59%
Short-term Leasing---$1,399$1,399---
Other short-term liabilities$20,580$19,741-$839-4%
Long-term debt$13,225$21,260$8,03561%
Long-term Leasing---$7,230$7,230---
Other long-term debt$9,088$14,225$5,13757%
Total liabilities$51,304$67,280$15,97631%
Stakeholder´s equity$84,572$97,797$13,22516%
Liabilities and equity$135,876$165,076$29,20121%
 
   Figures in millions of pesos.

Consolidated Balance Sheet

Loan Portfolio and Deposits

Banco Azteca Mexico, Purpose Financial — corporate name for the Advance America brand — and Banco Azteca Latin America’s consolidated gross portfolio as of December 31, 2019 grew 14% to Ps.110,898 million, from Ps.97,579 million for the previous year. The consolidated delinquency rate was 4.2% at the end of the period, compared to 4.1% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 16% to Ps.93,253 million, from Ps.80,346 million a year ago.

The defaulting rate for the bank at the end of the quarter was 3.7%, in comparison with 3.5% for the previous year.  The past-due loan portfolio is reserved 2.27 times, which reflects a past-due portfolio of Ps.3,416 million, in comparison to allowance for credit risks of Ps.7,758 million in the balance sheet, as of December 31, 2019.

The average term of the credit portfolio for principal credit lines — consumer, personal loans, and Tarjeta Azteca — was 63 weeks at the end of the fourth quarter.

Grupo Elektra’s consolidated deposits were Ps.154,977 million, 26% higher than the Ps.123,463 million a year ago. Deposits of Banco Azteca Mexico were Ps.151,184 million, 24% higher than the Ps.122,182 million a year ago. 

As of December 31, 2019, the capitalization index of Banco Azteca Mexico was 15.06%.

Infrastructure

Grupo Elektra currently has 7,250 storefronts, compared to 7,269 units a year ago.

In 2019, 60 new Elektra stores were opened at strategic locations throughout Mexico, with larger exhibition areas; which increase the offering of products and services and maximize customer shopping experiences.

The company has 4,781 storefronts in Mexico, 1,826 in the United States, and 643 in Central and South America. The extensive distribution network allows the company to maintain close contact with customers and grants a superior market positioning in the countries where it operates.

Twelve Month Results

Total consolidated revenue in 2019 grew 15% to Ps.119,010 million, from Ps.103,876 million for 2018, boosted by 17% and 13% growth in commercial and financial businesses, respectively.

EBITDA was Ps.19,095 million, 6% higher than the Ps.18,065 million for the same period a year ago; the EBITDA margin for 2019 was 16%. Operating profit decreased 21% to Ps.11,945 million.

The company reported net income of Ps.16,151 million, 10% higher to the net income of Ps.14,742 million a year ago. The change mainly results from a higher appreciation this period in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to the prior year

    2018   2019  Change
   Ps.%
      
Consolidated revenue$103,876$119,010$15,13415%
      
EBITDA  $18,065$19,095$1,030  6%
      
Operating profit
$15,077
$11,945
$(3,133)
-21
%
      
Net result $14,742 $16,151$1,40810%
      
Net result per share$64.80$70.71$5.919%
      
Figures in millions of pesos 
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. 
As of December 31, 2018, Elektra* outstanding shares were 227.5 million and as of December 31, 2019, were 228.4 million.

Company Profile:

Grupo Elektra is Latin America’s leading financial services company and specialty retailer and the largest non-bank provider of cash advance services in the United States.  The group operates more than 7,000 points of contact in Mexico, the United States, Guatemala, Honduras, Panama and Peru.

Grupo Elektra is a Grupo Salinas company (www.gruposalinas.com), a group of dynamic, fast growing, and technologically advanced companies focused on creating economic value through market innovation and goods and services that improve standards of living; social value to improve community wellbeing; and environmental value by reducing the negative impact of its business activities. 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. These companies include TV Azteca (www.TVazteca.com; www.irtvazteca.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), Punto Casa de Bolsa (www.puntocasadebolsa.mx), Totalplay (www.totalplay.com.mx) and Totalplay Empresarial (totalplayempresarial.com.mx). TV Azteca and Grupo Elektra trade shares on the Mexican Stock Market and in Spain’s' Latibex market. Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders. Grupo Salinas has no equity holdings. The group of companies shares 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 concepts about the future that involve risks and uncertainty that may cause actual results to differ materially from those projected. Other risks that may affect TV Azteca and its subsidiaries are presented in documents sent to the securities authorities.

Investor Relations:

Bruno Rangel
Grupo Salinas
Tel. +52 (55) 1720-9167
jrangelk@gruposalinas.com.mx
 Rolando Villarreal
Grupo Elektra, S.A.B. de C.V.
Tel. +52 (55) 1720-9167
rvillarreal@gruposalinas.com.mx

Press Relations:
Luciano Pascoe
Tel. +52 (55) 1720 1313 ext. 36553
lpascoe@gruposalinas.com.mx



GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
            
            
 4Q18 4Q19 Change
            
Financial income  17,370 60%   19,501 58%   2,131 12%
Commercial income  11,811 40%   13,976 42%   2,165 18%
Income  29,182 100%   33,477 100%   4,296 15%
            
Financial cost  4,201 14%   5,335 16%   1,134 27%
Commercial cost  7,988 27%   9,514 28%   1,526 19%
Costs  12,189 42%   14,849 44%   2,660 22%
            
Gross income  16,993 58%   18,629 56%   1,636 10%
            
Sales, administration and promotion expenses  12,184 42%   13,186 39%   1,002 8%
            
EBITDA   4,809 16%   5,442 16%   634 13%
            
Depreciation and amortization  839 3%   1,143 3%   303 36%
            
Depreciation right of use asset  -  0%   744 2%   744 ----
            
Other expense (income), net  21 0%   (11) 0%   (32) ----
            
Operating income  3,948 14%   3,567 11%   (381) -10%
            
Comprehensive financial result:           
  Interest income  361 1%   261 1%   (99) -28%
  Interest expense  (610) -2%   (947) -3%   (338) -55%
  Foreign exchange gain (loss), net  376 1%   (415) -1%   (791) ----
  Other financial results, net  4,925 17%   (463) -1%   (5,389) ----
   5,052 17%   (1,564) -5%   (6,616) ----
            
Participation  in  the  net  income of           
CASA and other associated companies  (22) 0%   305 1%   326 ----
            
Income before income tax  8,979 31%   2,308 7%   (6,671) -74%
            
Income tax  (2,742) -9%   (739) -2%   2,003 73%
            
Income before discontinued operations  6,237 21%   1,569 5%   (4,668) -75%
            
Result from discontinued operations   (247) -1%   (2) 0%   245 99%
            
Impairment of intangible assets  (76) 0%   (34) 0%   42 55%
            
Consolidated net income   5,913 20%   1,532 5%   (4,381) -74%



GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
            
            
 12M18 12M19 Change
            
Financial income65,429 63% 74,015 62% 8,585 13%
Commercial income38,447 37% 44,996 38% 6,549 17%
Income  103,876 100%   119,010 100% 15,134 15%
            
Financial cost15,426 15% 19,597 16% 4,171 27%
Commercial cost25,219 24% 30,155 25% 4,935 20%
Costs  40,646 39%   49,752 42% 9,106 22%
            
Gross income  63,230 61%   69,258 58% 6,028 10%
            
Sales, administration and promotion expenses  45,165 43%   50,163 42% 4,998 11%
            
EBITDA   18,065 17%   19,095 16% 1,030 6%
            
Depreciation and amortization2,998 3% 4,248 4% 1,251 42%
            
Depreciation right of use asset- 0% 2,901 2% 2,901 ----
            
Other (income) expense, net(10) 0% 0 0% 10 ----
            
Operating Income  15,077 15%   11,945 10% (3,133) -21%
            
Comprehensive financial result:           
  Interest income876 1% 1,250 1% 374 43%
  Interest expense(2,023) -2% (3,630) -3% (1,607) -79%
  Foreign exchange loss, net(76) 0% (425) 0% (349) ----
  Other financial results, net7,770 7% 13,339 11% 5,569 -72%
   6,547 6%   10,534 9% 3,986 -61%
            
Participation  in  the  net  income of           
CASA and other associated companies(188) 0% 303 0% 492 ----
            
Income before income tax  21,436 21%   22,782 19% 1,345 6%
            
Income tax(6,371) -6% (6,738) -6% (367) -6%
            
Income before discontinued operations  15,065 15%   16,043 13% 978 6%
            
Result from discontinued operations (247) 0% 160 0% 406 ----
            
Impairment of intangible assets(76) 0% (52) 0% 24 32%
            
Consolidated net income   14,742 14%   16,151 14% 1,408 10%



 GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEET
 MILLIONS OF MEXICAN PESOS
           
 Commercial Financial Grupo CommercialFinancialGrupo   
 BusinessBusinessElektra BusinessBusinessElektra        Change
           
 At December 31, 2018 At December 31, 2019  
           
Cash and cash equivalents  8,407  17,776  26,183   4,379  21,635  26,014   (169)-1%
           
Marketable financial instruments  22,645  56,382  79,027   16,071  79,964  96,035   17,00822%
           
Performing loan portfolio  -   63,229  63,229   -   73,150  73,150   9,92116%
Total past-due loans  -   3,694  3,694   -   4,117  4,117   42311%
Gross loan portfolio  -   66,923  66,923   -   77,267  77,267   10,34415%
           
Allowance for credit risks  -   8,025  8,025   -   8,602  8,602   5777%
           
Loan portfolio, net  -   58,898  58,898   -   68,665  68,665   9,76717%
           
Inventories  9,375  -  9,375   11,093  -  11,093   1,71818%
           
Other current assets   20,462  10,132  30,594   14,548  8,231  22,780   (7,814)-26%
           
Total current assets  60,890  143,187  204,077   46,091  178,496  224,586   20,50910%
           
Financial instruments  16,745  282  17,027   25,820  266  26,086   9,05953%
           
Performing loan portfolio  -   30,397  30,397   -   33,059  33,059   2,6629%
Total past-due loans  -   259  259   -   572  572   312120%
Gross loan portfolio  -   30,656  30,656   -   33,631  33,631   2,97510%
           
Allowance for credit risks  -   760  760   -   1,455  1,455   69591%
           
Loan portfolio  -   29,896  29,896   -   32,176  32,176   2,2798%
           
Other non-current assets   2,836  188  3,023   27,598  189  27,787   24,764819%
Investment in shares  1,933  -   1,933   2,050  -   2,050   1166%
Property, furniture, equipment and          
  investment in stores, net  7,404  4,918  12,323   8,603  7,243  15,847   3,52429%
Intangible assets  633  6,694  7,327   697  6,714  7,412   841%
Right of use asset  -   -   -    8,340  2,050  10,390   10,390----
Other assets  1,472  310  1,782   709  586  1,294   (488)-27%
TOTAL ASSETS  91,913  185,476  277,389   119,908  227,720  347,628   70,23925%
           
           
Demand and term deposits  -  123,463  123,463   -  154,977  154,977   31,51426%
Creditors from repurchase agreements  -  6,237  6,237   -  13,536  13,536   7,299117%
Short-term debt  8,410  63  8,473   3,370  245  3,615   (4,858)-57%
Leasing  -  -   -    1,399  936  2,335   2,335----
Short-term liabilities with cost  8,410  129,763  138,174   4,769  169,694  174,463   36,28926%
           
Suppliers and other short-term liabilities  17,380  10,063  27,443   16,082  13,496  29,578   2,1358%
Short-term liabilities without cost  17,380  10,063  27,443   16,082  13,496  29,578   2,1358%
           
Total short-term liabilities  25,790  139,827  165,617   20,851  183,191  204,041   38,42523%
           
Long-term debt  12,478  2,586  15,065   19,312  2,020  21,332   6,26742%
Leasing  -  -   -    7,230  1,103  8,333   8,333----
Long-term liabilities with cost  12,478  2,586  15,065   26,542  3,122  29,664   14,60097%
           
Long-term liabilities without cost  9,088  3,048  12,136   14,225  1,900  16,125   3,98933%
           
Total long-term liabilities  21,566  5,634  27,201   40,767  5,022  45,790   18,58968%
           
TOTAL LIABILITIES  47,356  145,461  192,817   61,618  188,213  249,831   57,01430%
           
TOTAL STOCKHOLDERS' EQUITY  44,557  40,015  84,572   58,290  39,507  97,797   13,22516%
           
           
LIABILITIES + EQUITY  91,913  185,476  277,389   119,908  227,720  347,628   70,23925%



 INFRASTRUCTURE    
            
 4Q18 4Q19        Change
            
Points of sale in Mexico           
Elektra 1,113 15% 1,142 16% 29 3%
Salinas y Rocha 44 1% 38 1% (6) -14%
Banco Azteca1,809 25% 1,838 25% 29 2%
Freestanding branches1,652 23% 1,763 24% 111 7%
Total  4,618 64%   4,781 66% 163 4%
            
Points of sale in Central and South America           
Elektra 171 2% 172 2% 1 1%
Banco Azteca385 5% 378 5% (7) -2%
Freestanding branches95 1% 93 1% (2) -2%
Total  651 9%   643 9% (8) -1%
            
Points of sale in North America           
Purpose Financial2,000 28% 1,826 25% (174) -9%
Total  2,000 28%   1,826 25% (174) -9%
            
TOTAL  7,269 100%   7,250 100% (19) 0%
            
            
            
            
Floor space (m²)  1,703 100%   1,761 100% 58 3%
            
            
            
Employees           
Mexico64,620 82% 74,154 83% 9,534 15%
Central and South America8,655 11% 9,671 11% 1,016 12%
North America5,685 7% 5,058 6% (627) -11%
Total employees  78,960 100%   88,883 100% 9,923 13%

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