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GRUPO ELEKTRA ANNOUNCES REVENUE OF Ps.38,817 MILLION AND EBITDA OF Ps.5,133 MILLION IN THE SECOND QUARTER OF 2022

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Cision

—Strong growth of Grupo Elektra's consolidated gross portfolio; increases 18%, to Ps.149,219 million—

—12% increase in consolidated deposits, to Ps.202,884 million, generates solid perspectives for the financial business, with an optimal cost of funding—

MEXICO CITY, July 26, 2022 /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 2022 financial results.

Second quarter results

Consolidated revenue grew 8% to Ps.38,817 million in the period, compared to Ps.36,068 million in the same quarter of the previous year. Operating costs and expenses were Ps.33,684 million, from Ps.30,983 million in the same period of 2021.

As a result, EBITDA was Ps.5,133 million, compared to Ps.5,085 million a year ago. Operating income was Ps.2,672 million this quarter, from Ps.3,062 million in the same period of 2021.

The company reported a net loss of Ps.1,764 million, compared to a profit of Ps.6,948 million a year ago.


2Q 2021

2Q 2022

Change




Ps.

%






Consolidated revenue

$36,068

$38,817

$2,749

8 %






EBITDA

$5,085

$5,133

$47

1 %






Operating profit

$3,062

$2,672

$(390)

-13 %






Net result

$6,948

$(1,764)

$(8,712)

----






Net result per share

$30.50

$(7.81)

$(38.31)

----






Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of June 30, 2021, Elektra* outstanding shares were 227.8 million and as of June 30, 2022, were 225.9 million.

Revenue

Consolidated revenue increased 8% in the period, as a result of an 11% growth in financial income and a 4% increase in commercial revenue.

The increase in financial income — to Ps.22,171 million, from Ps.20,014 million in the previous year — largely reflects a 14% increase in revenue from Banco Azteca México — which further strengthens its solid financial margin— in the context of dynamic growth of the gross credit portfolio in the period, which improves the well-being of millions of families and the growth of businesses.

The increase in sales of the commercial business — to Ps.16,646 million, from Ps.16,054 million a year ago — is largely the result of strong growth in sales from Italika motorcycles — which strengthen the productivity of businesses and the mobility of families —, home appliances — which boost the quality of life in households — and income related to electronic money transfers, in the context of growing transfer flows from the United States to Mexico, which contribute to the well-being and progress of millions of families.

Costs and expenses

Consolidated costs for the quarter were Ps.17,801 million, practically unchanged compared to Ps.17,753 million from the previous year. This is explained by a 4% decrease in the financial cost — derived from a lower creation of allowance for credit risks, partially offset by higher interest paid, in line with rising market rates — and a 2% increase in the commercial cost, consistent with higher income from merchandise sales.

Sales, administration and promotion expenses were Ps.15,883 million, from Ps.13,230 million a year ago, as a result of higher personnel and operating expenses in the period. The increase is related to the development of supply logistics strategies that will further strengthen the product distribution process, to promptly meet the growing demand for world-class merchandise by millions of families, both on the sales floor and through the company's omnichannel operations.

Additionally, expense increases come from systems development to additionally promote high efficiency standards, both in digital banking — which currently has more than 17 million users that grow dynamically — and in omnichannel sales — with higher levels of security, comfort and time savings — as well as higher personnel and maintenance expenses, in the context of a solid expansion of points of contact, which allow maximizing the customer's shopping experience.

EBITDA and net result

EBITDA was Ps.5,133 million, from Ps.5,085 million the previous year. The company reported operating income of Ps.2,672 million, compared to Ps.3,062 million in the same quarter of 2021.

The most important variation below EBITDA was a reduction of Ps.12,025 million in other financial results, which reflects a 10% loss this quarter in the market value of the underlying financial instruments held by the company — and which does not imply cash flow — compared to gain of 18% a year ago.

Consistent with the results of the quarter, a reduction of Ps.3,709 million in the tax provision was recorded in the period.

Grupo Elektra reported a net loss of Ps.1,764 million, from a profit of Ps.6,948 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 on the situation of 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.36,379 million as of June 30, 2022, compared to Ps.32,185 million of the previous year. During the quarter, the company issued short-term Certificados Busatiles for Ps.1,500 million and obtained bank loans for Ps.1,800 million.

The balance of cash and cash equivalents was Ps.5,891 million, from Ps.10,355 million in the previous year.

As of June 30, 2022, the company's stockholders' equity was Ps.96,327 million, and the ratio of stockholders' equity to total liabilities was 1.25 times.











As of June 30 2021

As of June 30 2022

Change

Ps.

%











Cash and cash equivalents

$10,355

$5,891

(4,464)

(43 %)

Marketable financial instruments

34,697

34,915

218

1 %

Inventories

16,972

23,602

6,630

39 %

Accounts receivables

58,924

46,480

(12,444)

(21 %)

Other current assets

3,361

4,062

701

21 %

Investments in shares

37,288

37,779

491

1 %

Fixed assets

7,090

9,075

1,985

28 %

Right of use assets

8,779

9,523

744

8 %

Other assets

1,433

1,870

436

30 %






Total assets

$178,900

$173,198

(5,703)

(3 %)






Short-term debt

$14,539

$14,905

367

3 %

Suppliers

6,462

9,257

2,796

43 %

Other short-term liabilities

12,934

16,532

3,598

28 %

Long-term debt

17,646

21,474

3,828

22 %

Differed taxes

12,373

3,180

(9,193)

(74 %)

Other long-term debt

11,248

11,522

274

2 %






Total liabilities

$75,200

$76,871

1,670

2 %






Stakeholder´s equity

$103,700

$96,327

(7,373)

(7 %)






Liabilities and equity

$178,900

$173,198

(5,703)

(3 %)










Figures in millions of pesos

Consolidated Balance Sheet

Loan Portfolio and Deposits

As detailed in the previous quarter, starting on January 1, 2022, Banco Azteca México adopted IFRS-9 ('Financial Instruments') and IFRS-16 ('Leases'), contained in the International Financial Reporting Standards (IFRS) to report their financial statements. These changes implied: growth in its portfolio, in the reserve for credit risks and in the accumulated results (IFRS-9) and a growth in the assets for rights of use and in the liabilities for leases (IFRS-16), when compared to figures for 2021.

The consolidated gross portfolio of Banco Azteca México, Purpose Financial and Banco Azteca Latin America as of June 30, 2022, grew 18%, to Ps.149,219 million, from Ps.126,674 million in the previous year.

Banco Azteca México's gross portfolio balance increased 32% to Ps.143,262 million, from Ps.108,858 million a year ago. The Bank's delinquency rate at the end of the quarter was 3.6%, compared to 3.8% a year earlier.

Grupo Elektra's consolidated deposits grew 12%, to Ps.202,884 million, from Ps.180,695 million a year ago. Banco Azteca México's deposits were Ps.199,360 million, 12% above the Ps.177,723 million of the previous year.

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

Banco Azteca México's capitalization ratio as of June was 15.49%, a level that accounts for the institution's notable financial strength.

Infrastructure

Grupo Elektra currently has 6,165 points of contact, compared to 6,400 units the previous year. The decrease derives mainly from the closure of 294 Purpose Financial points of contact in the United States — in the context of strategies aimed at boosting online credit operations and strengthening the company's operational efficiency.

In Mexico, in the last twelve months, 29 new Elektra stores were opened in strategic locations, with a format that offers an optimal mix of merchandise and services, and allows maximizing the customer's shopping experience.

The company has 4,774 storefronts in Mexico at the end of the quarter, 1,017 in the United States, and 374 in Central 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.

Six-month consolidated results

Consolidated revenue in the first six months of the year grew 13%, to Ps.76,349 million, from Ps.67,453 million registered in the same period of 2021, driven by a 15% growth in financial income and a 10% growth in commercial business sales.

EBITDA was Ps.10,754 million, compared to Ps.10,520 million in the previous year. The company reported operating income of Ps.5,278 million, from Ps.6,556 million a year ago.

In the first six months of 2022, a net loss of Ps.6,379 million was recorded, compared to a net income of Ps.9,997 million a year ago. The change reflects a decrease in the market value of the underlying financial instruments held by the company — and which does not imply cash flow — compared to gain in the previous year.


6M 2021

6M 2022

Change




Ps.

%






Consolidated revenue

$67,453

$76,349

$8,896

13 %






EBITDA

$10,520

$10,754

$234

2 %






Operating profit

Net result

$6,556

$9,997

$5,278

$(6,379)

$(1,278)

$(16,376)

-19%

----






Net result per share

$43.88

$(28.24)

$(72.12)

----






Figures in millions of pesos
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
As of June 30, 2021, Elektra* outstanding shares were 227.8 million and as of June 30, 2022, were 225.9 million.

Alvaro Calderón is appointed CFO

Grupo Elektra appointed Alvaro Alberto Calderón Jiménez, CFO of the company.

Mr. Calderón has more than 20 years of experience in financial planning and administration in important organizations, where he has achieved superior efficiencies in costs and expenses, as well as optimization of purchasing processes and logistics. Since 2018, he has held the position of CFO of Banco Azteca Mexico, where he has been responsible for the implementation of accounting process models, which generate solid advances in effective management control.

Alvaro Calderón has a degree in public accounting from La Salle University; he has a MBA from the Instituto Tecnológico y de Estudios Superiores de Monterrey, and the Executive Management D1 Program from the IPADE.

Administration and Finance of Banco Azteca Mexico will be lead by Juan Carlos Reyes Soto, who in the last four years has coordinated solid Financial and Budget Planning and Control strategies in Grupo Salinas companies, further boosting their results. He has more than 20 years of proven experience in finance, accounting, and management at leading institutions.

Mr. Reyes Soto is a CPA from the Instituto Tecnológico y de Estudios Superiores de Monterrey, with a MBA in finance from the same institution and a master's degree in banking and finance from Universidad Pompeu Fabra in Barcelona, Spain.

Mauro Aguirre Regis, who was the CFO of Grupo Elektra, has been appointed Director of Strategic Analysis of Grupo Salinas, from where he will develop important financial strategy projects that will further boost the strong dynamism of the Group´s companies, and their solid profitability.

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 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 (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 Spains' 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.

Investor Relations:

Rolando Villarreal
Grupo Elektra, S.A.B. de C.V.
Tel. +52 (55) 1720-9167
rvillarreal@elektra.com.mx

Bruno Rangel
Grupo Salinas
Tel. +52 (55) 1720-9167
jrangelk@gruposalinas.com.mx

Press Relations:

Luciano Pascoe
Tel. +52 (55) 1720 1313 ext. 36553
lpascoe@gruposalinas.com.mx

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

MILLIONS OF MEXICAN PESOS




































2Q21


2Q22


Change














Financial income

20,014

55 %


22,171

57 %


2,157

11 %



Commercial income

16,054

45 %


16,646

43 %


592

4 %



Income

36,068

100 %


38,817

100 %


2,749

8 %














Financial cost

6,117

17 %


5,897

15 %


(220)

-4 %



Commercial cost

11,636

32 %


11,905

31 %


269

2 %



Costs

17,753

49 %


17,801

46 %


49

0 %














Gross income

18,315

51 %


21,016

54 %


2,701

15 %














Sales, administration and promotion expenses

13,230

37 %


15,883

41 %


2,653

20 %














EBITDA

5,085

14 %


5,133

13 %


47

1 %














Depreciation and amortization

2,033

6 %


2,228

6 %


195

10 %














Other (income) loss, net

(11)

0 %


232

1 %


243

----














Operating income

3,062

8 %


2,672

7 %


(390)

-13 %














Comprehensive financial result:











Interest income

159

0 %


204

1 %


45

28 %



Interest expense

(929)

-3 %


(999)

-3 %


(70)

-8 %



Foreign exchange loss, net

0

0 %


(38)

0 %


(38)

-100 %



Other financial results, net

7,577

21 %


(4,448)

-11 %


(12,025)

----




6,807

19 %


(5,282)

-14 %


(12,089)

----














Participation in the net income of











CASA and other associated companies

72

0 %


94

0 %


22

30 %














Income (loss) before income tax

9,941

28 %


(2,516)

-6 %


(12,457)

----














Income tax

(2,955)

-8 %


754

2 %


3,709

----














Income (loss) before discontinued operations

6,986

19 %


(1,762)

-5 %


(8,748)

----














Result from discontinued operations

(38)

0 %


(2)

0 %


36

95 %














Consolidated net income (loss)

6,948

19 %


(1,764)

-5 %


(8,712)

----













GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

MILLIONS OF MEXICAN PESOS

























6M21


6M22


Change














Financial income

38,015

56 %


43,886

57 %


5,870

15 %



Commercial income

29,438

44 %


32,464

43 %


3,026

10 %



Income

67,453

100 %


76,349

100 %


8,896

13 %














Financial cost

10,476

16 %


11,112

15 %


636

6 %



Commercial cost

20,878

31 %


23,481

31 %


2,603

12 %



Costs

31,353

46 %


34,592

45 %


3,239

10 %














Gross income

36,100

54 %


41,757

55 %


5,658

16 %














Sales, administration and promotion expenses

25,580

38 %


31,003

41 %


5,423

21 %














EBITDA

10,520

16 %


10,754

14 %


234

2 %














Depreciation and amortization

4,062

6 %


4,439

6 %


377

9 %














Other (income) loss, net

(98)

0 %


1,038

1 %


1,136

----














Operating income

6,556

10 %


5,278

7 %


(1,278)

-19 %














Comprehensive financial result:











Interest income

379

1 %


396

1 %


17

4 %



Interest expense

(1,915)

-3 %


(1,947)

-3 %


(31)

-2 %



Foreign exchange gain, net

244

0 %


5

0 %


(239)

-98 %



Other financial results, net

9,110

14 %


(12,818)

-17 %


(21,928)

----




7,818

12 %


(14,364)

-19 %


(22,182)

----














Participation in the net income of











CASA and other associated companies

21

0 %


212

0 %


191

100 %