Grupo Elektra Announces Record EBITDA of Ps. 1.0 Billion for 1Q05,
up 19% YoY - Record Revenues of Ps. 7.2 Billion for 1Q05, up 27%
YoY - MEXICO CITY, April 21 /PRNewswire-FirstCall/ -- Financial
Highlights: Ps. Million Change 1Q04 1Q05 $ % Consolidated Revenues
5,661 7,185 1,525 26.9% Gross Profit 2,444 3,274 830 33.9% EBITDA
863 1,027 164 19.0% Net Income 429 519 90 20.9% EPS (pesos per
share) (1) 1.80 2.13 0.34 18.7% EPS (US$ per ADR) * 0.64 0.76 0.12
18.7% (1) Calculation based on 238,774,000 Elektra* (59,694,000 ADR
equivalent) weighted average at March 31, 2004 and 243,069,000
Elektra* (60,767,000 ADR equivalent) weighted average outstanding
at March 31, 2005. *Ps. 11.17 per US$ Grupo Elektra S.A. de C.V.
(BMV: ELEKTRA*; NYSE: EKT; Latibex: XEKT), Latin America's leading
specialty retailer, consumer finance and banking and financial
services company, reported today its financial results for the
first quarter of 2005. Javier Sarro, CEO of Grupo Elektra said,
"Our 1Q05 results showed excellent consolidated revenues and a
strong cash generation. Going into the remainder of the year, we
expect an increased participation of the financial division in
sales and earnings. We also anticipate that our new stores and new
products offered at our stores could boost growth in merchandise
sales. Furthermore, we will continue implementing strategies to
ease the pressure on the gross margin of these revenues." Carlos
Septien, Banco Azteca's CEO, commented "Banco Azteca continues to
show an outstanding growth across all financial products and
services. Our business has been supported a strong infrastructure
in order to cater to an increasing customer base, through more than
1,400 bank branches across Mexico." 1Q05 Financial Highlights
Consolidated Revenues Total consolidated revenues increased 26.9%
YoY from Ps. 5.7 billion in 1Q04 to Ps. 7.2 billion in 1Q05, the
highest level reached in a first quarter. This result is explained
by: * A solid 71.2% increase YoY in financial revenues from Banco
Azteca, growth largely attributable to the promotional campaigns
implemented through the quarter that increased the number of credit
applications at our stores, new desks at third party channels; 12
new stand-alone branches; and the success of our mobile sales force
(Comercializadora) in attracting new customers. * A 7.7% YoY growth
in merchandise sales boosted by new, relocated and remodeled
stores; and by the addition of new merchandise including an
exclusive brand Blue Light; LCD monitors, ATV (All Terrain
Vehicles) and recreational motorcycles, and portable DVD's.
Finally, we are also reaping the benefits of our continued
aggressive pricing and promotional strategies, and our door-to-door
sales initiative. * A 26.9% YoY growth in money transfer revenues;
* A 146.9% YoY growth in other income, which includes revenues from
Milenia, Afore Azteca, Seguros Azteca, and from our credit
operations in Latin America. The YoY in this revenue line is
explained by the favorable results registered in our two newest
business units (Afore and Seguros Azteca) and the encouraging
results in our Latin-American operations. * 154 net new stores and
a 17.4% YoY growth in the exhibition surface area. Consolidated
Revenues Ps. Million Change 1Q04 1Q05 $ % Total Revenues 5,661
7,185 1,525 26.9% Merchandise 3,968 4,273 305 7.7% Money Transfer
192 244 52 26.9% Banco Azteca 1,370 2,344 975 71.2% Other 131 324
193 146.9% EBITDA Consolidated EBITDA reached Ps. 1.0 billion a
19.0% YoY increase from Ps. 862.8 million in 1Q04. During the
quarter, the growth in operating expenses was partially offset by
higher consolidated revenues and a 239 basis points higher
consolidated gross margin. Consolidated EBITDA margin reached
14.3%, 95 basis points lower than the 15.2% reported in 1Q04.
EBITDA & Operating Profit Ps. Million Change 1Q04 1Q05 $ %
EBITDA 863 1,027 164 19.0% Operating Profit 607 720 114 18.6%
Operating Expenses During the quarter, operating expenses grew
41.6% YoY, from Ps. 1,586.9 million in 1Q04 to Ps. 2,247.5 million
in 1Q05. The increase in operating expenses was mainly the result
of: * 154 net new stores (170 openings and 16 closings), 9
remodeled and 2 relocated stores. * Higher compensation for our
employees, in line with our plan based on contribution. * Hiring
and training of new employees for our financial division and our
door-to-door sales force, which is reflected in a 23.3% YoY
increase in headcount, from 23,114 employees at the end of 1Q04 to
28,510 employees in 1Q05. * Higher advertising expenses from our
new business units. Operating Profit Operating income increased by
18.6% YoY as depreciation and amortization expenses increased 22.4%
YoY. This increase is attributable to the growth in fixed assets in
both the retail and financial division as a consequence of our
expansion, remodeling and relocation plans. Net Income Our solid
operating performance, coupled with a 18.5% YoY decrease in the
comprehensive cost of financing, as well as a Ps. 11.7 million gain
from our equity participation in Comunicaciones Avanzadas, led to a
net income of Ps. 518.8 million in 1Q05, 20.9% higher than the Ps.
429.3 million net income of 1Q04. Retail Division Highlights Store
Formats During 1Q05, Grupo Elektra opened 101 new Elektra stores in
Mexico YoY, 10 new Elektra stores in Latin America, and relocated
or remodeled another 11 Elektra stores in Mexico, Guatemala and
Honduras. Also through the year, we closed 11 Salinas y Rocha
stores and 5 Bodega de Remates stores that did not meet our
profitability standards. In addition, during the quarter we
operated 58 stores under our new Elektricity store format.
Merchandise revenues by format showed a consistent growth rate for
Elektra, with a 10.2% YoY increase. However, revenues for Salinas y
Rocha and Bodega de Remates reported YoY decreases of 10.8% and
0.9%, respectively, due to the stores closed when compared to the
1Q04. Additionally, our Elektricity format has shown a great
acceptance amongst our clients, registering a 521.2% YoY revenue
growth. CAPEX Capital expenditures in the first quarter were Ps.
423.3 million, principally from store openings. International
Operations Our Latin American operations (Guatemala, Honduras and
Peru) continue showing excellent results. During the 1Q05, revenues
in this region registered an increase of 48.1% YoY. On March 1,
2005, Grupo Elektra announced the start of operations of its first
banking subsidiary outside Mexico, Banco Azteca (Panama), S.A. in
Panama City. In accordance with Panamanian regulation, Grupo
Elektra has fully funded the US$10 million required capitalization.
The Company plans to build an infrastructure of Banco Azteca
(Panama), where there are already four branches in operation and
approximately 300 loans have been placed. Electronic Money
Transfers Dinero Express: our intra-Mexico electronic money
transfer business continues to show excellent results triggered by
its successful marketing efforts. Revenues increased 33.6% YoY to
Ps. 114.0 million in the 1Q05 from Ps. 85.3 million in the 1Q04.
Also during the quarter, we transferred the equivalent of Ps. 1.7
billion through 1.5 million transactions, representing YoY
increases of 45.0% and 34.5%, respectively. Western Union: Revenues
from our agency relationship with Western Union increased 21.6% YoY
to Ps. 130.0 million in the 1Q05 from Ps. 106.9 million in the
1Q04. Revenues were boosted by a 24.4% YoY growth in the number of
transfers and by a 37.5% YoY growth in the amount transferred.
Banco Azteca For 1Q05, Banco Azteca reported a net income of Ps.
201.5 million, 24.4% higher than the net income of Ps. 162.0
million for 1Q04. The 71.2% YoY increase in financial revenues was
offset by a 73.9% YoY increase in Banco Azteca's costs, as
interests paid on deposits and funding, loan-loss provisions, and
operating expenses grew 243.6%, 4.4%, and 60.7% YoY, respectively.
Financial revenues were boosted by our credit promotional
strategies implemented during the quarter: "Buy at 15 months and
pay at 18 months" and "In your credit purchases, receive a Ps. 300
bonus". As of March 31, 2004, the estimated capitalization index of
Banco Azteca was 11.01%, compared to 11.2% at the closing of
December, 2004, and 11.6% on March 31, 2004. All figures exceed the
8.0% minimum capitalization index required by Mexican regulators.
Consumer Loans, Personal Loans and Combined Credit Portfolio. Banco
Azteca's total gross credit portfolio increased 90.4% YoY, reaching
Ps. 11.7 billion from Ps. 6.1 billion at the end of 1Q04. The
average term of the credit portfolio at the end of the 1Q05, was 53
weeks, representing an increase of 1 week when compared to 1Q04 and
1 week less when compared to 4Q04. At the end of 1Q05, we had a
total of 4.2 million active accounts, representing a 33.0% YoY
increase from 3.1 million accounts in 1Q04. Consumer and personal
loans represented 53.6% and 22.4% of the gross credit portfolio at
the end of 1Q05, respectively. The collection rate of Banco Azteca
continues at the same excellent historic level that defines Grupo
Elektra's standard, approximately 97.0% as of March 31, 2005.
Savings Accounts and Term Deposits Net deposits increased 83% YoY,
from Ps. 11.2 billion in 1Q04 to Ps. 20.5 billion in 1Q05.
Year-Over-Year, the total number of accounts rose by 2.5 million to
6.2 million. Afore Azteca For 1Q05, Afore Azteca reported a net
income of Ps. 15.2 million from a net income of Ps. 11.0 million
for 1Q04. As of March 31, 2005, Siefore Azteca reached Ps. 3.2
billion in net assets under management, a 213% increase
Year-Over-Year, and yielded a 6.14% return in the 1Q05. The number
of affiliates reached 92,000 and the number of assignees was
761,000, both as of March 31, 2005. Seguros Azteca For the fourth
consecutive quarter, Seguros Azteca recorded positive net income of
Ps. 31.9 million, from a net loss of Ps. 9.0 million in 1Q04.
Currently Seguros Azteca offers Vidamax (life insurance) on three
products: personal loans, consumer loans and credit sales of
cellular phones. The acceptance of our customers has been
outstanding as 78% of the customers that are granted a personal
loan buy Vidamax, while for consumer and cellular loans the
acceptance is 43% and 51%, respectively. Consolidated Balance Sheet
Cash and Cash Equivalents Total cash and cash equivalents rose to
Ps. 17.2 billion in 1Q05 from Ps. 12.6 billion in 1Q04, comprised
of Ps. 4.8 billion from the retail division and Ps. 12.4 billion
from the financial division. The retail division cash and
equivalents registered a 29.1% YoY decrease, due to the fact that
during the 1Q04, Grupo Elektra placed Ps. 2,600 in long term
unsecured "Certificados Bursatiles", resources that were
subsequently used in April 2004, for the early redemption of our
US$275 million Senior Notes. Cash and equivalents from the
Financial Division increased 111.1% or by Ps. 6.5 billion over the
same period a year ago in line with the growth in customer
deposits. Consolidated Gross Credit Portfolio Total consolidated
gross credit portfolio increased 86.7% YoY to Ps. 12.4 billion in
1Q05 from Ps. 6.6 billion at the end of 1Q04. The retail division's
customer accounts receivable, now comprised only of our credit
operations in Latin America, continued to show encouraging results
as they increased 68.7% YoY to Ps. 521.3 million in 1Q05 from Ps.
309.1 million in 1Q04. Total Debt and Net Debt At the end of 1Q05,
the retail division's total debt with cost was Ps. 3.6 billion,
49.1% lower when compared to Ps. 7.1 billion at the end of 1Q04,
and 0.8% lower when compared to Ps. 3.6 billion of 4Q04. Net debt
at the retail division decreased YoY, from Ps. 349 million in 1Q04
to negative Ps. 1,153 million in 1Q05. On March 1, 2005, Grupo
Elektra successfully placed Ps. 400 million in unsecured short-term
"Certificados Bursatiles". The issue has a total term of 336 days
and yields a rate of TIIE (28 days) plus 200 basis points per
annum. The issue carries an "F2(mex)" credit rating for local
currency issues from Fitch Mexico. The resources obtained are being
used for working capital purposes. Equity For the seventh time in a
row, consolidated equity registered positive growth rates.
Particularly, during the 1Q05, equity grew 16.6% YoY from Ps. 6.9
billion in 1Q04 to Ps. 8.1 billion in 1Q05, largely as a result of
the 20.9% YoY increase in net income. We invite you to visit our
corporate website at http://www.grupoelektra.com.mx/ 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. Risks that may affect Grupo Elektra are
identified in its Form 20- F and other filings with the US
Securities and Exchange Commission. As used in this press release,
EBITDA is operating income (loss) before interest expense, taxes,
depreciation and amortization, and adjusted by eliminating monetary
(loss) gain included in our revenues and cost, respectively. In
accordance with Regulation G, issued by the U.S. Securities and
Exchange Commission, reconciliation between net income and EBITDA
is provided in the notes provided in our financial statements.
EBITDA is presented because of the following reasons: * Our
management uses EBITDA as a measure of performance business
allowing us to compare ourselves with our peers' multiples, ratios
and margins derived from EBITDA. It also serves to evaluate and
compensate certain employees. * We believe EBITDA is one of the
tools that we can use to measure our cash-flow generation, because
it excludes some non-cash items as monetary gains or losses,
depreciation and amortization, etc. * EBITDA is also a measure
contained in certain financial covenants of our debt, and
consequently we are required to calculate it in order to verify
compliance with such covenants. * We are aware that EBITDA has
material limitations associated with its use, (i.e., EBITDA, as
defined by us, excludes items such as Discontinued operations, and
includes the Allowance for doubtful accounts, which contains or
does not contain, respectively, portions of cash). However, our
management compensates these material limitations with the use of
our consolidated financial statements and its notes. * We believe
that EBITDA is used by certain investors as one measure of a
company's historical ability to service its debt. EBITDA should not
be considered in isolation or as a substitute for the consolidated
income statements or the consolidated statements of changes in
financial position prepared in accordance with Mexican GAAP (PCGA)
or as a measure of profitability or liquidity. EBITDA is not (a) a
measure determined under PCGA or U.S. GAAP, (b) an alternative to
PCGA or U.S. GAAP operating income (loss) or net income (loss), (c)
a measure of liquidity or cash flows as determined under PCGA or
U.S. GAAP or (d) a measure provided in order to smooth earnings.
EBITDA does not represent discretionary funds. EBITDA, as
calculated by us, may not be comparable to similarly titled
measures reported by other companies. Grupo Elektra - Tradition
with Vision Grupo Elektra is Latin America's leading specialty
retailer, consumer finance and banking services company. Grupo
Elektra sells retail goods and services through its Elektra,
Salinas y Rocha, Bodega de Remates and Elektricity stores and over
the Internet. The Group operates more than 1,000 stores in Mexico,
Guatemala, Honduras and Peru. Grupo Elektra also sells and markets
its consumer finance, banking and financial products and services
through its more than 1,440 Banco Azteca branches located within
its stores, as a stand-alone, and in other channels in Mexico and
Panama. Banking and financial services include consumer credit,
personal loans, money transfers, extended warranties, savings
accounts, term deposits, pension-fund management and insurance.
Investor and Press Inquiries: Rolando Villarreal Head of Investor
Relations Grupo Elektra S.A. de C.V. Tel. +52 (55) 1720-7819 Fax.
+52 (55) 1720-7822 Samantha Pescador Investor Relations Grupo
Elektra S.A. de C.V. Tel. +52 (55) 1720-7819 Fax. +52 (55)
1720-7822 DATASOURCE: Grupo Elektra S.A. de C.V. CONTACT: Investor
and Press Inquiries, Rolando Villarreal, Head of Investor
Relations, Tel. +52-55-1720-7819, or Fax. +52-55-1720-7822, , or
Samantha Pescador, Investor Relations, +52-55-1720-7819, Fax.
+52-55-1720-7822, , both of Grupo Elektra S.A. de C.V. Web site:
http://www.grupoelektra.com.mx/
Copyright
