Grupo Elektra S.A. XEKT

—Operating income increased 21%, to Ps.3,237 million in the period—

—Consolidated revenue grows 14%, to Ps.44,274 million driven by firm dynamism in financial income—

—The consolidated gross portfolio increases 13%, to Ps.168,443 million—

—11% increase in consolidated deposits, to Ps.224,588 million, reaffirms solid prospects for the financial business—

MEXICO CITY, July 25, 2023 /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 second quarter 2023 results.

Second Quarter Results

Consolidated revenue grew 14% to Ps.44,274 million in the period, compared to Ps.38,817 million in the same quarter of the previous year. Operating costs and expenses were Ps.38,638 million, from Ps.33,684 million in 2022.

As a result, EBITDA was Ps.5,636 million, 10% higher compared to Ps.5,133 million a year ago. Operating income was Ps.3,237 million, 21% above Ps.2,672 million in the same period of 2022.

The company reported net income of Ps.4,944 million, compared to net loss of Ps.1,764 million a year ago.

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.           
As of June 30, 2022, Elektra* outstanding shares were 225.9 million and as of June 30, 2023, were 221.1 million.

Revenue

Consolidated revenue increased 14% in the period, as a result of 21% growth in financial revenue and 5% rise in commercial sales.

The increase in financial income — to Ps.26,806 million, from Ps.22,171 million the previous year — reflects, to a large extent, a 28% increase in the income of Banco Azteca México — which further strengthens its solid financial margin — within the framework of dynamic growth of the gross credit portfolio in the period, which promotes the well-being of millions of families and the development of businesses.

The growth in revenue from the commercial business — to Ps.17,469 million, from Ps.16,646 million a year ago — results to a large extent from the growth in sales of Italika motorcycles — which strengthens business productivity and family mobility — as well as appliances —which promotes the quality of life in households.

Costs and expenses

Consolidated costs for the quarter were Ps.22,081 million, compared to Ps.17,801 million for the previous year. The growth is explained by a 56% increase in the financial cost — derived from the greater creation of credit preventive reserves, in the context of solid dynamism of the consolidated gross portfolio, as well as higher interest paid, in line with higher market rates — and an 8% increase in the commercial cost, congruent with the growth in income from the sale of merchandise.

Selling, administrative and promotional expenses increased 4% to Ps.16,557 million, from Ps.15,883 million a year ago, as a result of higher personnel and maintenance expenses.

Expenses grew to a lesser extent than consolidated revenue, which is the result of solid strategies that drive Grupo Elektra's operating efficiency, together with strict budgets throughout the organization — in the context of measures to rationalize structures and optimize processes.

EBITDA and net result

EBITDA was Ps.5,636 million, from Ps.5,133 million the previous year. The company reported an operating income of Ps.3,237 million, compared to Ps.2,672 million in the same quarter of 2022.

The main variations below EBITDA were the following:

Ps.228 million reductions in other expenses, due to impairment of Purpose Financial's intangible assets in the second quarter of 2022, congruent with the company's performance and financial outlook a year ago.

Positive variation of Ps.8,751 million in other financial results, which reflects a 13% increase this quarter in the market value of the underlying financial instruments held by the company — and which does not imply cash flow — compared to a loss of 10% a year ago.

Consistent with the results of the quarter, an increase of Ps.2,846 million was recorded in the provision for taxes in the period.

Grupo Elektra reported a net income of Ps.4,944 million, from a net loss of Ps.1,764 million a year ago.

Unconsolidated Balance Sheet

A proforma balance sheet exercise of Grupo Elektra is presented, which allows knowing the non-consolidated financial situation, excluding the net assets of the financial business, whose investment is valued in this case under the participation method.

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. Also, the pro forma balance sheet does not include the bank's gross loan portfolio.

This provides greater clarity about the different businesses that make up the company and allows financial market participants to make estimates of the value of the company, considering only the relevant debt for said calculations.

Consistent with this, the debt with cost was Ps.38,277 million as of June 30, 2023, compared to Ps.36,379 million in the previous year. The growth of the debt balance is mainly related to the issuance of Certificados Busatiles, partially offset by payments of international bonds and amortization of bank loans.

The balance of cash and cash equivalents was Ps.11,357 million, from Ps.5,891 million the previous year. The growth is congruent with reduction in the balance of inventories, resulting from solid efficiencies in the company's supply logistics.

As of June 30, 2023, the company's stockholders' equity was Ps.91,199 million, and the ratio of stockholders' equity to total liabilities was 1.1 times.

Figures in millions of pesos.

Consolidated Balance Sheet

Loan Portfolio and Deposits

The consolidated gross portfolio of Banco Azteca México, Purpose Financial and Banco Azteca Latin America as of June 30, 2023, grew 13%, to Ps.168,443 million, from Ps.149,219 million the previous year. The consolidated delinquency rate was 5.6% at the end of the period, compared to 4.2% the previous year.

Banco Azteca México's gross portfolio balance increased 14% to Ps.163,398 million, from Ps.143,262 million a year ago. The Bank's delinquency rate at the end of the quarter was 5.2%, compared to 3.6% a year earlier.

Grupo Elektra's consolidated deposits grew 11%, to Ps.224,588 million, from Ps.202,884 million a year ago. Banco Azteca México's traditional deposits were Ps.224,264 million, 12% above the Ps.199,360 million of the previous year.

The ratio of traditional deposits to the gross portfolio of Banco Azteca México was 1.4 times, which allows solid growth of the Bank, with optimal funding cost.

The Bank's liquidity coverage ratio — computable liquid assets / total net cash outflow — was 1,076%, an outstanding figure in the Mexican banking sector.

The capitalization ratio of Banco Azteca México was 15.08%.

Infrastructure

Grupo Elektra currently has 6,260 contact points, compared to 6,165 units the previous year. The increase results from the net opening of 172 contact points in Mexico and 38 in Central America, partially offset by the closure of 115 Purpose Financial units in the United States — in the context of strategies aimed at promoting online credit operations and strengthening the operating efficiency of this company.

The number of contact points of Grupo Elektra in Mexico, at the end of the quarter, is 4,946, in the US, 902, and in Central America, 412. The important distribution network provides the company with proximity to the client and closeness in service and generates a superior market position in the countries in which it operates.

Six-month consolidated results

Consolidated revenue in the first six months of the year grew 13%, to Ps.86,494 million, from Ps.76,349 million registered in the same period of 2022, driven by a 22% growth in sales of the financial business and 2% in commercial business sales.

EBITDA was Ps.11,794 million, compared to Ps.10,754 million of the previous year. The company reported operating income of Ps.7,004 million, from Ps.5,278 million a year ago.

In the first six months of 2023, a net income of Ps.5,403 million was recorded, compared to a net loss of Ps.6,379 million a year ago. The change reflects higher operating results this period, as well as gains in the market value of the underlying financial instruments held by the company — and which does not imply cash flow — compared to a reduction the previous year.

Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.           
As of June 30, 2022, Elektra* outstanding shares were 225.9 million and as of June 30, 2023, were 221.1 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 6,000 points of contact in Mexico, the United States, Guatemala, Honduras, and Panama.

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 well-being; 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 (irtotalplay.mx; 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.

 

 

 

 

 

 

 

 

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