Grupo Elektra Announces Revenues of Ps.30,256 Million and EBITDA of Ps.2,085 Million in 3Q20
- Remarkable dynamism of the commercial business; revenues increased 28% to Ps.13,686 million in the quarter
MEXICO CITY, Oct. 27, 2020 /PRNewswire/ -- 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 third quarter 2020 financial results.
Third Quarter Results
Consolidated revenues grew 2%, to Ps.30,256 million in the period, compared to Ps.29,733 million in the same quarter of the previous year. Operating costs and expenses were Ps.28,171 million, from Ps.25,651 million in the same period of 2019.
As a result, EBITDA was Ps.2,085 million, compared to Ps.4,082 million a year ago. Operating income was Ps.112 million this quarter, from Ps.2,198 million in the same period of 2019.
The company reported a net loss of Ps.1,636 million, compared to a net income of Ps.4,258 million a year ago.
Figures in millions of pesos
Consolidated revenues increased 2%, as a result of a 28% growth in commercial sales, partially offset by a 13% decrease in financial revenues.
The growth in sales of the commercial business — to Ps.13,686 million, from Ps.10,725 million a year ago— is largely the result of a solid increase in sales of Italika motorcycles — which boosts business productivity and the mobility of thousands of families — telephony and computing — that strengthen the connectivity of more and more users — as well as appliances and mattresses, which effectively satisfy the needs of thousands of families and are commercialized in the most competitive market conditions.
Sales from the commercial business were further boosted with the development of new stores under a larger surface format, which includes a wide variety of merchandise and services, 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 strengthened business performance, in a context of growing online transactions, given the health contingency.
The reduction in financial income — to Ps.16,570 million, from Ps.19,008 million in the previous year — reflects lower interests earned in the period, within the framework of deterioration in economic performance indicators, as a consequence of the health emergency.
Costs and Expenses
Consolidated costs for the quarter were Ps.14,808 million, from Ps.12,791 million from the previous year. The growth in costs is explained by a 29% increase in the commercial cost, in line with the strong growth in merchandise sales, partially offset by a 2% reduction in the financial cost, largely derived from lower interests paid, in line with decreasing market rates.
Selling, administrative and marketing expenses grew 4% to Ps.13,363 million as a result, mainly, of higher personnel expenses — in the framework of extraordinary disbursements for operating restructurings given the new economic context — and expenses related to the protection of employees and customers' health, partially offset by lower advertising expenses.
EBITDA and net result
EBITDA was Ps.2,085 million, from Ps.4,082 million from the previous year. The company reported operating income of Ps.112 million, compared to Ps.2,198 million in the same quarter of 2019.
The main variations below EBITDA were the following:
A negative variation of Ps.6,259 million in the other financial results line, which reflects a depreciation of 5% this quarter in the market value of underlying assets of financial instruments held by the company — which does not imply cash flow — in comparison to an 11% gain a year ago.
Congruent with the operating results for the quarter, there was a reduction of Ps.2,773 million in the tax provision in the period.
Grupo Elektra reported net loss of Ps.1,636 million, compared to a net income of Ps.4,258 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 make up the company and allows financial market participants to estimate the value of the company, considering only the relevant debt for such calculations.
Consistent with this, debt with cost was Ps.25,731 million as of September 30, 2020, compared to Ps.24,614 million in the previous year. The balance of cash and cash equivalents was Ps.5,358 million, from Ps.5,427 million from the previous year. As a result, net debt as of September 30, 2020 was Ps.20,373 million, compared to Ps.19,187 million a year ago.
As of September 30, 2020, the company's stockholders 'equity was Ps.94,100 million, and the stockholders' equity to total liabilities ratio was 1.4 times.
Consolidated Balance Sheet
Loan Portfolio and Deposits
Banco Azteca Mexico, Purpose Financial and Banco Azteca Latin America's consolidated gross portfolio as of September 30, 2020 grew 7% to Ps.118,026 million, from Ps.110,393 million for the previous year. The consolidated delinquency rate was 5.1% at the end of the period, compared to 4.3% in the previous year.
The gross portfolio of Banco Azteca Mexico grew 7% to Ps.99,396 million, from Ps.93,102 million a year ago. The default rate for the bank at the end of the quarter was 5.1%, in comparison with 3.7% for the previous year, in the context in which a large number of customers from the Bank chose not to resort to official support plans to differ payments, offered by the sector.
The average term of the credit portfolio for principal credit lines — consumer, personal loans, and Tarjeta Azteca — was 64 weeks at the end of the third quarter.
Grupo Elektra's consolidated deposits were Ps.176,535 million, 17% higher than the Ps.150,781 million a year ago. Deposits of Banco Azteca Mexico were Ps.170,634 million, 16% higher than the Ps.146,593 million a year ago.
The ratio of deposits to gross portfolio of 1.7 times, consolidates the solid growth prospects of the Bank, with optimal funding cost.
The Bank's liquidity coverage ratio — total of eligible liquid assets / total net cash out — was 742%, an outstanding figure in the Mexican banking sector.
The estimated capitalization index of Banco Azteca Mexico was 14.92%, level that shows the remarkable financial strength of the institution.
Grupo Elektra currently has 6,945 points of contact, compared to 7,232 units the previous year. The decrease results from the closure of 377 points of contact for Purpose Financial in the United States, in the context of strategies aimed at boosting online credit operations and strengthening the company's operating efficiency.
In Mexico, during the last twelve months, 47 new Elektra stores were opened in strategic locations, with greater surface area, which increases the offer of products and services, and maximizes the customer's shopping experience.
The company has 4,778 storefronts in Mexico at the end of the quarter, 1,521 in the United States, and 646 in Central and South America. The important distribution network allows the company to maintain close contact with customers and grants a superior market positioning in the countries where it operates.
Nine-month consolidated results
Consolidated revenues in the first nine months of the year grew 4% — to Ps.89,021 million, from Ps.85,533 million in the same period of 2019 — as a result of a 15% increase in the commercial business and a 2% reduction in the financial business.
EBITDA was Ps.5,374 million, compared to Ps.13,653 million from the previous year. The decrease is largely due to the credit reserves made by Banco Azteca last March, for 100% of the loan amount of Ps.7,243 million from a borrower that initiated a bankruptcy process (Chapter 11) in the United States, as previously announced.
The company reported an operating loss of Ps.716 million, from an operating profit of Ps.8,360 million a year ago. In the first nine months of 2020, a net loss of Ps.5,032 million was registered, compared to a Ps.14,618 million net income a year ago.
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), Purpose Financial (havepurpose.com), 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 Grupo Elektra and its subsidiaries are presented in documents sent to the securities authorities.
SOURCE Grupo Elektra
Company Codes: Mexico:ELEKTRA, SpanishCats:XEKT
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