Grupo Elektra Announces 12% Increase in EBITDA to Ps.2,104 Million in 2Q14

Operating Income grows 16% to Ps.1,427 million in the quarter

Consolidated revenue increases 6% to Ps.18,265 million, supported by an 11% expansion of the commercial business

MEXICO CITY, July 24, 2014 (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, reported today its financial results for the second quarter of 2014.

Consolidated second quarter results

Consolidated revenue totaled Ps.18,265 million, 6% higher than the Ps.17,249 million of the same period last year. Costs and operating expenses were Ps.16,161 million from Ps.15,372 million for the same period of 2013.

Grupo Elektra reported EBITDA of Ps.2,104 million, 12% above the Ps.1,876 million of the previous year's quarter; EBITDA margin was 12% this period, a percentage point above the second quarter of 2013. Operating income grew 16%, to Ps.1,427 million this period.

The company reported a net loss of Ps.1,114 million, from a net loss of Ps.1,124 million a year ago.

	2Q 2013	2Q 2014	Change
			Ps.	%
Consolidated revenue	$ 17,249	$ 18,265	$ 1,017	6%
EBITDA	$ 1,876	$ 2,104	$ 228	12%
Net result	$ (1,124)	$ (1,114)	$ 10	1%
Net result per share	$ (4.74)	$ (4.72)	$ (0.02)	1%
Figures in millions of pesos
As of June 30, 2013, Elektra outstanding shares were 237.2 million and as of June 30, 2014, were 235.8 million.

Revenue

Consolidated revenue grew 6%, as a result of increases of 11% in commercial sales and 4% in financial revenues.

Commercial sales, of Ps.5,597 million from Ps.5,045 million last year, increased as a result of strategies that generate growing customer satisfaction through an optimal mix of merchandise on the sales floor, which is offered in the most competitive market conditions by a professional sales force.

The growth of 4% in financial revenues to Ps.12,668 million, compared to Ps.12,204 million last year, is explained mainly by a 5% increase of Banco Azteca Mexico income to Ps.8,830 million, from Ps.8,403 million in the same quarter a year ago.

Costs and expenses

Consolidated costs for the quarter grew 13% to Ps.7,783 million, from Ps.6,880 million the previous year. The change derives from individual increases of 13% in both commercial and financial costs.

The commercial cost grew in line with the performance of revenues of the business. Meanwhile, the increase in financial cost resulted from the creation of loan loss reserves, as well as more interest paid to savers as a result of a strong increase in traditional deposits.

Consolidated operating expenses decreased 1% to Ps.8,378 million in the period, as a result of strategies that generate operating efficiencies during the quarter.

EBITDA and net result

Consolidated EBITDA grew 12% to Ps.2,104 million, compared to Ps.1,876 million a year ago; EBITDA margin for the quarter was 12%, above the 11% of the same period last year.

Operating income was Ps.1,427 million, 16% higher than the Ps.1,225 million of the previous year.

The most significant change below EBITDA was a positive variation of Ps.381 million in other financial results, as a consequence of an improvement in the market value of the underlying assets of financial instruments owned by the company which does not imply cash flowcompared to last year.

Grupo Elektra reported a net loss of Ps.1,114 million, from a net loss of Ps.1,124 million a year ago.

Consolidated balance sheet

Loan portfolio and deposits

Banco Azteca Mexico, Advance America the largest non-bank provider of cash advance services in the US and Banco Azteca Latin America's consolidated gross portfolio as of June 30, 2014, was Ps.77,204 million, compared to Ps.77,085 million from the previous year. Consolidated delinquency rate was 8.1% at the end of the period, the same as a year ago.

The gross portfolio of Banco Azteca Mexico was Ps.63,382 million, compared to Ps.62,892 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 7.9%. The non-performing loan portfolio is reserved 1.35 times. The average term of the credit portfolio for principal credit lines consumer, personal loans and Tarjeta Azteca was 61 weeks at the end of the second quarter.

The Advance America loan portfolio was Ps.4,035 million, 11% higher than the Ps.3,638 million a year ago. More dynamism in the operations of the company is expected with the successful launch of title loans in a growing number of points of sale in the U.S.

Grupo Elektra consolidated deposits grew 11%, to Ps.85,027 million, compared to Ps.76,803 million a year ago. Deposits of Banco Azteca Mexico were Ps.79,800 million, 13% higher than the Ps.70,756 million a year ago. Financial products that satisfy clients in the best way, with world class service, resulted in the increase in deposits.

As of June 30, 2014, the capitalization index of Banco Azteca Mexico was 13.9%. The company considers the index to be at a level that optimizes equity profitability.

Debt

Consolidated debt with cost as of June 30, 2014, was Ps.19,173 million, 15% below Ps.22,535 million of the prior year, mainly as a consequence of debt prepayments of Ps.2,172 million of Banco Azteca Mexico this quarter.

Consolidated debt at the close of July 2014 was comprised of Ps.17,273 million of the commercial business, and Ps.1,901 million of the financial business. The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.14,783 million at the end of the period; as a result, net debt for the commercial business was Ps.2,490 million.

Expansion

Grupo Elektra currently has 6,872 points of sale, 5% more than the 6,517 from a year ago; the change comes from the addition of 326 Blockbuster stores at the beginning of 2014. 

As previously announced, the company acquired 100% of the shares of Blockbuster Mexico in January, which added points of sale to the distribution network of Grupo Elektra. The Blockbuster stores are located in 108 cities throughout the country, mainly in the B and C demographic areas, which will expand the customer base of the company. In the new locations, Grupo Elektra plans to offer commercial products, in addition to strengthening its current financial services platform, and promote the transformation of the digital entertainment distribution network.

Grupo Elektra has 3,804 points of sale in Mexico, 2,440 in the United States, and 628 in Central and South America. The wide distribution network allows the company to keep its proximity and closeness to clients; granting superior market positioning in the countries where it operates.

Six months results

Total consolidated revenue in the first six months of the year was Ps.35,523 million, 2% higher than the Ps.34,701 million for the same period of 2013, boosted by a 6% growth from the commercial business.

EBITDA was Ps.4,666 million, compared to Ps.4,930 million for the same period a year ago; the EBITDA margin in the first six months of 2014 was 13%. The company registered a consolidated net loss of Ps.1,289 million, compared to a loss of Ps.1,706 million a year ago, mainly due an improvement 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.

	6M 2013	6M 2014	Change
			Ps.	%
Consolidated revenue	$ 34,701	$ 35,523	$821	2%
EBITDA	$ 4,930	$ 4,666	($264)	-5%
Net result	$ (1,706)	$ (1,289)	$417	24%
Net result per share	$ (7.19)	$ (5.47)	$1.72	24%
Figures in millions of pesos
As of June 30, 2013, Elektra outstanding shares were 237.2 million and as of June 30, 2014, were 235.8 million.

Company Profile:

Grupo Elektra (www.grupoelektra.com.mx) 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 over 6,000 points of sale in Mexico, USA, Brazil, Guatemala, Honduras, Peru, Panama 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.

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
	2Q13		2Q14		Change
Financial income	12,204	71%	12,668	69%	465	4%
Commercial income	5,045	29%	5,597	31%	552	11%
Income	17,249	100%	18,265	100%	1,017	6%
Financial cost	3,396	20%	3,855	21%	458	13%
Commercial cost	3,484	20%	3,928	22%	444	13%
Costs	6,880	40%	7,783	43%	903	13%
Gross income	10,368	60%	10,483	57%	114	1%
Sales, administration and promotion expenses	8,492	49%	8,378	46%	(114)	-1%
Depreciation and amortization	651	4%	677	4%	27	4%
Operating expenses	9,143	53%	9,056	50%	(87)	-1%
Operating income	1,225	7%	1,427	8%	202	16%
EBITDA	1,876	11%	2,104	12%	228	12%
Comprehensive financial result:
Interest income	212	1%	88	0%	(125)	-59%
Interest expense	(380)	-2%	(387)	-2%	(7)	-2%
Foreign exchange gain, net	191	1%	33	0%	(157)	-83%
Other financial results, net	(2,942)	-17%	(2,560)	-14%	381	13%
	(2,918)	-17%	(2,826)	-15%	92	3%
Other expense, net	(3)	0%	(269)	-1%	(266)	----
Participation in the net income of
CASA and other associated companies	57	0%	48	0%	(9)	-16%
Loss before income tax	(1,639)	-10%	(1,620)	-9%	19	1%
Income tax	491	3%	507	3%	15	3%
Loss before discontinued operations	(1,148)	-7%	(1,114)	-6%	34	3%
Loss from discontinued operations	24	0%	-	0%	(24)	----
Consolidated net loss	(1,124)	-7%	(1,114)	-6%	10	1%

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
	6M13		6M14		Change
Financial income	24,568	71%	24,772	70%	204	1%
Commercial income	10,133	29%	10,751	30%	618	6%
Income	34,701	100%	35,523	100%	821	2%
Financial cost	6,549	19%	7,452	21%	903	14%
Commercial cost	7,081	20%	7,391	21%	310	4%
Costs	13,630	39%	14,843	42%	1,213	9%
Gross income	21,071	61%	20,679	58%	(392)	-2%
Sales, administration and promotion expenses	16,141	47%	16,013	45%	(128)	-1%
Depreciation and amortization	1,307	4%	1,333	4%	27	2%
Operating expenses	17,448	50%	17,346	49%	(101)	-1%
Operating Income	3,624	10%	3,333	9%	(290)	-8%
EBITDA	4,930	14%	4,666	13%	(264)	-5%
Comprehensive financial result:
Interest income	261	1%	216	1%	(45)	-17%
Interest expense	(799)	-2%	(765)	-2%	35	4%
Foreign exchange (loss) gain, net	(177)	-1%	117	0%	294	----
Other financial results, net	(5,543)	-16%	(4,548)	-13%	995	18%
	(6,259)	-18%	(4,981)	-14%	1,278	20%
Other income (expense), net	6	0%	(275)	-1%	(281)	----
Participation in the net income expense of
CASA and other associated companies	55	0%	11	0%	(44)	-80%
Loss before income tax	(2,574)	-7%	(1,912)	-5%	662	26%
Income tax	855	2%	623	2%	(232)	-27%
Loss before discontinued operations	(1,719)	-5%	(1,289)	-4%	431	25%
Loss from discontinued operations	13	0%	-	0%	(13)	----
Consolidated net loss	(1,706)	-5%	(1,289)	-4%	417	24%

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MILLIONS OF MEXICAN PESOS
	Commercial Business	Financial Business	Grupo Elektra	Commercial Business	Financial Business	Grupo Elektra	Change
	At June 30, 2013			At June 30, 2014
Cash and cash equivalents	2,317	16,300	18,617	2,785	15,644	18,429	(188)	-1%
Marketable financial instruments	22,068	14,983	37,051	11,998	24,351	36,349	(703)	-2%
Performing loan portfolio	455	51,237	51,692	-	52,773	52,773	1,081	2%
Total past-due loans	273	5,340	5,613	-	5,875	5,875	262	5%
Gross loan portfolio	728	56,577	57,305	-	58,648	58,648	1,343	2%
Allowance for credit risks	273	7,917	8,190	-	8,670	8,670	480	6%
Loan portfolio, net	455	48,660	49,115	-	49,978	49,978	864	2%
Inventories	6,808		6,808	6,390		6,390	(418)	-6%
Other current assets	7,721	8,405	16,126	3,654	6,459	10,113	(6,013)	-37%
Total current assets	39,369	88,348	127,718	24,828	96,432	121,260	(6,458)	-5%
Financial instruments	-	-	-	9,814	222	10,037	10,037	----
Performing loan portfolio	-	19,183	19,183		18,210	18,210	(973)	-5%
Total past-due loans	-	597	597		345	345	(251)	-42%
Loan portfolio	-	19,780	19,780	-	18,556	18,556	(1,224)	-6%
Other non-current assets	754	0	754	2,418	1	2,418	1,664	----
Investment in shares	3,950	-	3,950	4,420	-	4,420	470	12%
Property, furniture, equipment and
investment in stores, net	4,576	2,890	7,466	4,816	2,839	7,654	188	3%
Intangible assets	626	6,595	7,221	629	6,537	7,166	(55)	-1%
Other assets	736	191	927	659	682	1,341	413	45%
TOTAL ASSETS	50,011	117,805	167,816	47,584	125,268	172,852	5,036	3%
Demand and term deposits		76,803	76,803		85,027	85,027	8,225	11%
Creditors from repurchase agreements		2,314	2,314		2,792	2,792	478	21%
Short-term debt	3,608	3,325	6,933	3,783	493	4,275	(2,658)	-38%
Short-term liabilities with cost	3,608	82,442	86,050	3,783	88,312	92,095	6,045	7%
Suppliers and other short-term liabilities	6,487	7,194	13,681	9,751	6,130	15,881	2,200	16%
Short-term liabilities without cost	6,487	7,194	13,681	9,751	6,130	15,881	2,200	16%
Total short-term liabilities	10,095	89,637	99,732	13,534	94,442	107,976	8,245	8%
Long-term debt	14,495	1,107	15,602	13,490	1,408	14,898	(704)	-5%
Long-term liabilities with cost	14,495	1,107	15,602	13,490	1,408	14,898	(704)	-5%
Long-term liabilities without cost	7,771	1,245	9,016	4,578	1,294	5,872	(3,144)	-35%
Total long-term liabilities	22,265	2,352	24,617	18,068	2,702	20,770	(3,848)	-16%
TOTAL LIABILITIES	32,360	91,989	124,349	31,602	97,144	128,746	4,397	4%
TOTAL STOCKHOLDERS' EQUITY	17,651	25,816	43,467	15,982	28,124	44,106	639	1%
LIABILITIES + EQUITY	50,011	117,805	167,816	47,584	125,268	172,852	5,036	3%

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
INFRASTRUCTURE
	2Q13		2Q14		Change
Points of sale in Mexico
Elektra (1)	968	15%	993	14%	25	3%
Salinas y Rocha (1)	55	1%	55	1%	--	0%
Freestanding branches	2,342	36%	2,430	35%	88	4%
Blockbuster	--	0%	326	5%	326	100%
Total	3,365	52%	3,804	55%	439	13%
Points of sale in Central and South America
Elektra (1)	214	3%	215	3%	1	0%
Freestanding branches	452	7%	413	6%	(39)	-9%
Total	666	10%	628	9%	(38)	-6%
Points of sale in North America
Advance America	2,486	38%	2,440	36%	(46)	-2%
Total	2,486	38%	2,440	36%	(46)	-2%
TOTAL	6,517	100%	6,872	100%	355	5%
(1) Each store has a Banco Azteca branch.
Floor space (m²)
Elektra Mexico	836,625	51%	845,412	49%	8,787	1%
Elektra Central and South America	154,619	9%	151,891	9%	(2,728)	-2%
Salinas y Rocha	58,995	4%	58,995	3%	-	0%
Freestanding branches	245,960	15%	240,234	14%	(5,727)	-2%
Advance America	340,623	21%	334,320	19%	(6,303)	-2%
Blockbuster	-	0%	109,664	6%	109,664	100%
TOTAL	1,636,821	100%	1,740,514	100%	103,693	6%
Employees
Mexico	58,578	76%	62,242	77%	3,664	6%
Central and South America	12,566	16%	11,324	14%	(1,242)	-10%
North America	6,329	8%	6,848	9%	519	8%
Total employees	77,473	100%	80,414	100%	2,941	4%

CONTACT: 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
         Grupo Salinas
         Tel. +52 (55) 1720 1313 ext. 36553
         lpascoe@gruposalinas.com.mx

         Daniel McCosh
         Grupo Salinas
         Tel. +52 (55) 1720-0059
         dmccosh@gruposalinas.com.mx