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 first quarter 2022 financial results.
First quarter results
Consolidated revenue grew 20% to Ps.37,532 million in the period, compared to Ps.31,385 million in the same quarter of the previous year. Operating costs and expenses were Ps.31,911 million, from Ps.25,951 million in the same period of 2021.
As a result, EBITDA was Ps.5,622 million, compared to Ps.5,435 million a year ago. Operating income was Ps.2,606 million this quarter, from Ps.3,493 million in the same period of 2021.
Revenue
Consolidated revenue increased 20% in the period, as a result of a 21% growth in financial income and an 18% increase in commercial sales.
The increase in financial income — to Ps.21,715 million, from Ps.18,002 million in the previous year — reflects a 33% increase in revenue from Banco Azteca México, in the context of strong growth in the gross loan portfolio in the period, which boosts the well-being of millions of families and the progress of thousands of businesses.
The increase in sales of the commercial business — to Ps.15,817 million, from Ps.13,383 million a year ago — reflects solid growth in motorcycle sales — which strengthen the productivity of businesses and the mobility of families — home appliances — which promotes well-being in a growing number of households — and telephony, which is commercialized with optimal customer service, in the most competitive conditions.
Costs and expenses
Consolidated costs for the quarter grew 23%, to Ps.16,791 million, from Ps.13,601 million in the previous year, as a result of a 25% increase in commercial costs — consistent with higher revenues from the sale of merchandise — and a 20% increase in the cost of the financial business, largely due to rise in the allowance for credit risks —given the strong growth of the gross loan portfolio in the period — as well as higher interest paid, in line with rising market rates.
Selling, administration and promotion expenses were Ps.15,120 million, from Ps.12,350 million a year ago, as a result of higher operating and advertising expenses, in the context of the development of initiatives that will further boost the company’s growth prospects.
EBITDA and net result
EBITDA was Ps.5,622 million, from Ps.5,435 million the previous year. The company reported operating income of Ps.2,606 million, compared to Ps.3,493 million in the same quarter of 2021.
The main variations below EBITDA were as follows:
Ps.805 million of other expenses, compared to other income of Ps.87 million a year ago, due to impairment of intangible assets of Purpose Financial this period, consistent with the company’s financial performance and outlook.
Ps.9,903 million decrease in other financial results, which reflects a 17% 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 a gain of 4% a year ago.
Consistent with the results of the quarter, a decrease of Ps.3,055 million was registered in the tax provision in the period.
Grupo Elektra reported a net loss of Ps.4,615 million, from a net income of Ps.3,048 million in the same quarter of the previous year.
Unconsolidated Balance Sheet
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 pro forma 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, the debt with cost was Ps.32,525 million as of March 31, 2022, compared to Ps.34,802 million of the previous year.
During the second quarter of 2021, Ps.2,030 million of Certificados Bursatiles Fiduciarios were amortized in advance. The amount corresponded to the unpaid balance of the DINEXCB 16 issues — for Ps.1,350 million due in 2023 with a rate of TIIE + 2.8% — and DINEXCB 16–2 for Ps.680 million, due in 2026 with a fixed rate of 8.8%.
The balance of cash and cash equivalents was Ps.6,691 million, from Ps.17,230 million in the previous year. As a result, net debt as of March 31, 2022 was Ps.25,834 million, compared to Ps.17,572 million a year ago.
Loan Portfolio and Deposits
As of January 1, 2022, in accordance with current regulations, Banco Azteca México adopted NIIF-9 (‘Financial Instruments’) and NIIF-16 (‘Leases’), contained in the International Financial Reporting Standards (IFRS) to report its financial statements.
The main changes this quarter, as a result of the adoption, are: (i) growth of the balance of the consumer credit portfolio of Ps.11,950 million (registered at amortized cost under the effective interest rate method); (ii) increase in the balance of the allowance for credit risks for Ps.2,375 million, (recognition of the expected loss instead of the loss incurred for its calculation); (iii) increase in right-of-use assets and lease liabilities; as well as (iv) increase in the amount of accumulated results for Ps.6,261 million, derived from the recording of the previous effects. As a result of the aforementioned changes, the capitalization ratio at the end of the period grew by approximately 191 basis points.
The consolidated gross portfolio of Banco Azteca México, Purpose Financial and Banco Azteca Latin America as of March 31, 2022, grew 17%, to Ps.142,964 million, from Ps.122,091 million in the previous year. The consolidated delinquency rate was 4.6% at the end of this period, compared to 3.4% the previous year.
Banco Azteca México’s gross portfolio balance increased 29% to Ps.135,721 million, from Ps.105,396 million a year ago. The Bank’s delinquency rate at the end of the quarter was 4.2%, compared to 3.4% a year earlier.
Grupo Elektra’s consolidated deposits grew 3%, to Ps.195,383 million, compared to Ps.189,105 million a year ago. Banco Azteca México’s traditional deposits were Ps.192,166 million, from Ps.190,614 million 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.
The estimated capitalization ratio of Banco Azteca México was 16.54%.
Infrastructure
