Grupo Elektra Announces EBITDA of Ps.2,415 Million in 3Q14

Consolidated Revenue Increased 7% to Ps.18,215 Million,
Supported by a 24% Increase in Commercial Business

14% Growth in Consolidated Deposits to Ps.86,701 Million
Generates Solid Perspectives in Financial Business

MEXICO CITY, Oct. 23, 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 third quarter and nine months of 2014.

Consolidated third quarter results

Consolidated revenue totaled Ps.18,215 million, 7% higher than the Ps.17,067 million of the same period last year. Costs and operating expenses were Ps.15,800 million, from Ps.14,404 million for the same period of 2013.

As a result, Grupo Elektra reported EBITDA of Ps.2,415 million, compared with Ps.2,664 million from the previous year's quarter; EBITDA margin was 13% this period.

The company reported net income of Ps.1,836 million, from a net income of Ps.672 million a year ago.

	3Q 2013	3Q 2014	Change
			Ps.	%
Consolidated revenue	$17,067	$18,215	$1,147	7%
EBITDA	$2,664	$2,415	$(249)	-9%
Net result	$672	$1,836	$1,164	---
Net result per share	$2.83	$7.75	$4.92	---
Figures in millions of pesos
As of September 30, 2013, Elektra outstanding shares were 237.3 million and as of September 30, 2014, were 236.9 million.

Revenue

Consolidated revenue grew 7%, as a result of increases of 24% in commercial sales and 1% in financial revenue. 

Commercial sales, of Ps.5,430 million from Ps.4,378 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 by a highly trained sales force under the most competitive market conditions.

The growth of 1% in financial revenues to Ps.12,785 million, compared with Ps.12,690 million last year, is explained mainly by higher revenue from Advance America the largest non-bank provider of cash advance services in the US partially compensated by a decrease in revenue from Banco Azteca Mexico.

Costs and expenses

Consolidated costs for the quarter increased 19% to Ps.8,070 million, from Ps.6,758 million from the previous year. The change mainly derives from a 21% increase in financial cost derived  from the creation of loan loss reserves and an 18% increase in commercial cost.

Sales, administration and promotion expenses grew 1% to Ps.7,730 million. The increase was below the growth of consolidated revenues due to the implementation of strategies that generated operating efficiencies in the quarter.

EBITDA and net result

Consolidated EBITDA was Ps.2,415 million, compared to Ps.2,664 million a year ago.

The most significant change below EBITDA was an increase of Ps.2,186 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 net income of Ps.1,836 million, compared to net income of Ps.672 million a year ago.

Consolidated balance sheet

Loan portfolio and deposits

Banco Azteca Mexico, Advance America and Banco Azteca Latin America's consolidated gross portfolio as of September 30, 2014, was Ps.76,494 million, compared to Ps.77,576 million from the previous year. Consolidated delinquency rate was 8% at the end of the period.

The gross portfolio of Banco Azteca Mexico was Ps.61,656 million, compared to Ps.63,382 million a year ago. The delinquency rate of Banco Azteca Mexico at the end of the quarter was 8%. The non-performing loan portfolio is reserved 1.41 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 third quarter.

The Advance America loan portfolio was Ps.4,598 million, 15% higher than the Ps.3,996 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 14%, to Ps.86,701 million, compared to Ps.76,240 million a year ago. Deposits of Banco Azteca Mexico were Ps.80,802 million, 15% higher than the Ps.70,434 million a year ago. Financial products that satisfy clients in the best way, with world class service, resulted in the increase in deposits. The higher deposit base sets a strong foundation for future financial business growth.

As of September 30, 2014, the capitalization index of Banco Azteca Mexico was 15%. The company considers the index to be at a level that optimizes equity profitability.

Debt

Consolidated debt with cost as of September 30, 2014, was Ps.19,798 million, 12% below Ps.22,543 million of the prior year, mainly as a consequence of debt prepayments of Ps.2,172 million of Banco Azteca Mexico this period.

Consolidated debt at the close of September 2014 was comprised of Ps.18,488 million of the commercial business, and Ps.1,310 million of the financial business. The balance of cash, cash equivalents and marketable securities for the commercial business was Ps.15,822 million at the end of the period; as a result, net debt for the commercial business was Ps.2,666 million.

Expansion

Grupo Elektra currently has 6,951 points of sale, 8% more than the 6,460 from a year ago; the change comes mainly from the addition of 312 Blockbuster stores in the period. 

As previously announced, the company acquired in January 100% of the shares of Blockbuster Mexico, increasing the points of sale of Grupo Elektra's distribution network. 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 Blockbuster stores, Grupo Elektra plans to offer commercial products, in addition to strengthening its current financial services platform, and promote the transformation of the entertainment distribution network. The transition to the new formats has begun, which means costs and expenses, but will generate significant yields in the future.

Grupo Elektra has 3,882 points of sale in Mexico, 2,432 in the United States, and 637 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.

Nine months consolidated results

Total consolidated revenue in the first nine months of the year was Ps.53,737 million, 4% higher than the Ps.51,769 million for the same period of 2013, boosted by 12% growth in the commercial business.

EBITDA was Ps.7,081 million, compared to Ps.7,594 million for the same period a year ago; the EBITDA margin in the first nine months of 2014 was 13%. The company registered consolidated net income of Ps.547 million, compared to a loss of Ps.1,034 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. 

	9M 2013	9M 2014	Change
			Ps.	%
Consolidated revenue	$51,769	$53,737	$1,968	4%
EBITDA	$7,594	$7,081	$(513)	-7%
Net result	$(1,034)	$547	$1,581	---
Net result per share	$(4.36)	$2.32	$6.68	---
Figures in millions of pesos
As of September 30, 2013, Elektra outstanding shares were 237.3 million and as of September 30, 2014, were 236.9 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
	3Q13		3Q14		Change
Financial income	12,690	74%	12,785	70%	95	1%
Commercial income	4,378	26%	5,430	30%	1,052	24%
Income	17,067	100%	18,215	100%	1,147	7%
Financial cost	3,731	22%	4,502	25%	771	21%
Commercial cost	3,027	18%	3,568	20%	541	18%
Costs	6,758	40%	8,070	44%	1,312	19%
Gross income	10,309	60%	10,144	56%	(165)	-2%
Sales, administration and promotion expenses	7,646	45%	7,730	42%	84	1%
Depreciation and amortization	737	4%	705	4%	(32)	-4%
Operating expenses	8,383	49%	8,435	46%	52	1%
Operating income	1,927	11%	1,710	9%	(217)	-11%
EBITDA	2,664	16%	2,415	13%	(249)	-9%
Comprehensive financial result:
Interest income	17	0%	89	0%	72	----
Interest expense	(460)	-3%	(342)	-2%	119	26%
Foreign exchange loss, net	(65)	0%	(72)	0%	(6)	-10%
Other financial results, net	(1,043)	-6%	1,143	6%	2,186	----
	(1,552)	-9%	818	4%	2,370	----
Other income (expense), net	9	0%	(12)	0%	(21)	----
Participation in the net income of CASA and other associated companies	(23)	0%	62	0%	85	----
Income before income tax	361	2%	2,578	14%	2,217	----
Income tax	(59)	0%	(743)	-4%	(683)	----
Income before discontinued operations	302	2%	1,836	10%	1,534	----
Result from discontinued operations	370	2%	-	0%	(370)	----
Consolidated net income	672	4%	1,836	10%	1,164	----

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
MILLIONS OF MEXICAN PESOS
	9M13		9M14		Change
Financial income	37,258	72%	37,557	70%	299	1%
Commercial income	14,511	28%	16,181	30%	1,670	12%
Income	51,769	100%	53,737	100%	1,968	4%
Financial cost	10,280	20%	11,954	22%	1,674	16%
Commercial cost	10,108	20%	10,959	20%	851	8%
Costs	20,388	39%	22,913	43%	2,525	12%
Gross income	31,381	61%	30,824	57%	(557)	-2%
Sales, administration and promotion expenses	23,787	46%	23,743	44%	(44)	0%
Depreciation and amortization	2,044	4%	2,038	4%	(6)	0%
Operating expenses	25,830	50%	25,781	48%	(49)	0%
Operating Income	5,550	11%	5,043	9%	(507)	-9%
EBITDA	7,594	15%	7,081	13%	(513)	-7%
Comprehensive financial result:
Interest income	278	1%	304	1%	26	9%
Interest expense	(1,260)	-2%	(1,106)	-2%	154	12%
Foreign exchange (loss) gain, net	(243)	0%	45	0%	287	----
Other financial results, net	(6,586)	-13%	(3,405)	-6%	3,181	48%
	(7,810)	-15%	(4,162)	-8%	3,648	47%
Other income (expense), net	15	0%	(287)	-1%	(302)	----
Participation in the net income expense of CASA and other associated companies	32	0%	73	0%	41	----
(Loss) income before income tax	(2,213)	-4%	667	1%	2,879	----
Income tax	795	2%	(119)	0%	(915)	----
(Loss) income before discontinued operations	(1,417)	-3%	547	1%	1,965	----
Result from discontinued operations	383	1%	-	0%	(383)	----
Consolidated net (loss) income	(1,034)	-2%	547	1%	1,581	----

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 September 30, 2013			At September 30, 2014
Cash and cash equivalents	2,755	15,754	18,510	2,736	16,226	18,963	453	2%
Marketable financial instruments	22,461	15,891	38,352	13,086	29,509	42,595	4,243	11%
Performing loan portfolio	-	52,330	52,330	-	52,597	52,597	267	1%
Total past-due loans	-	5,453	5,453	-	5,819	5,819	366	7%
Gross loan portfolio	-	57,783	57,783	-	58,417	58,417	634	1%
Allowance for credit risks	-	8,128	8,128	-	8,901	8,901	773	10%
Loan portfolio, net	-	49,655	49,655	-	49,515	49,515	(139)	0%
Inventories	5,901		5,901	6,249		6,249	348	6%
Other current assets	4,026	6,190	10,216	3,887	5,676	9,562	(654)	-6%
Total current assets	35,142	87,491	122,634	25,958	100,927	126,884	4,251	3%
Financial instruments	-	-	-	10,042	222	10,264	10,264	----
Performing loan portfolio	-	19,605	19,605		17,744	17,744	(1,861)	-9%
Total past-due loans	-	188	188		332	332	144	77%
Loan portfolio	-	19,793	19,793	-	18,077	18,077	(1,716)	-9%
Other non-current assets	4,728	2	4,730	3,100	0	3,101	(1,629)	-34%
Investment in shares	3,923	-	3,923	4,394		4,394	471	12%
Property, furniture, equipment and investment in stores, net	4,552	2,873	7,425	4,645	2,821	7,467	41	1%
Intangible assets	625	6,865	7,490	628	6,707	7,334	(155)	-2%
Other assets	688	209	897	703	628	1,331	435	48%
TOTAL ASSETS	49,658	117,233	166,891	49,471	129,381	178,852	11,961	7%
Demand and term deposits		76,240	76,240		86,701	86,701	10,461	14%
Creditors from repurchase agreements		2,430	2,430		3,817	3,817	1,387	57%
Short-term debt	3,725	2,325	6,051	2,244	161	2,405	(3,646)	-60%
Short-term liabilities with cost	3,725	80,996	84,721	2,244	90,680	92,924	8,202	10%
Suppliers and other short-term liabilities	6,062	6,389	12,451	8,713	6,521	15,234	2,783	22%
Short-term liabilities without cost	6,062	6,389	12,451	8,713	6,521	15,234	2,783	22%
Total short-term liabilities	9,787	87,385	97,172	10,957	97,201	108,158	10,986	11%
Long-term debt	14,788	1,704	16,492	16,244	1,149	17,393	901	5%
Long-term liabilities with cost	14,788	1,704	16,492	16,244	1,149	17,393	901	5%
Long-term liabilities without cost	7,684	1,378	9,062	4,851	1,580	6,431	(2,631)	-29%
Total long-term liabilities	22,472	3,082	25,554	21,095	2,729	23,824	(1,731)	-7%
TOTAL LIABILITIES	32,259	90,467	122,726	32,051	99,930	131,982	9,255	8%
TOTAL STOCKHOLDERS' EQUITY	17,399	26,766	44,165	17,420	29,451	46,871	2,706	6%
LIABILITIES + EQUITY	49,658	117,233	166,891	49,471	129,381	178,852	11,961	7%

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES
INFRASTRUCTURE
	3Q13		3Q14		Change
Points of sale in Mexico
Elektra (1)	975	15%	998	14%	23	2%
Salinas y Rocha (1)	55	1%	55	1%	-	0%
Freestanding branches	2,337	36%	2,517	36%	180	8%
Blockbuster	-	0%	312	4%	312	100%
Total	3,367	52%	3,882	56%	515	15%
Points of sale in Central and South America
Elektra (1)	210	3%	215	3%	5	2%
Freestanding branches	418	6%	422	6%	4	1%
Total	628	10%	637	9%	9	1%
Points of sale in North America
Advance America	2,465	38%	2,432	35%	(33)	-1%
Total	2,465	38%	2,432	35%	(33)	-1%
TOTAL	6,460	100%	6,951	100%	491	8%
(1) Each store has a Banco Azteca branch.
Floor space (m²)
Elektra Mexico	837,424	52%	848,912	49%	11,487	1%
Elektra Central and South America	149,761	9%	151,891	9%	2,130	1%
Salinas y Rocha	58,995	4%	58,995	3%	-	0%
Freestanding branches	239,343	15%	241,603	14%	2,260	1%
Advance America	337,745	21%	333,184	19%	(4,561)	-1%
Blockbuster	-	0%	104,954	6%	104,954	100%
TOTAL	1,623,268	100%	1,739,539	100%	116,271	7%
Employees
Mexico	61,064	77%	61,676	77%	612	1%
Central and South America	12,071	15%	11,269	14%	(802)	-7%
North America	6,522	8%	6,947	9%	425	7%
Total employees	79,657	100%	79,892	100%	235	0%

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