Grupo Elektra Announces Record EBITDA Of Ps. 1.1 Billion For 2Q05, Up 17%

Grupo Elektra Announces Record EBITDA Of Ps. 1.1 Billion For
2Q05, Up 17%
- Revenues up 18% to Ps. 7.6 Billion for 2Q05 -



MEXICO CITY, July 25  /PRNewswire-FirstCall/ -- 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 second quarter of 2005.

  Highlights

  * The collection rate of Banco Azteca continues at the same excellent
    historic level that defines Grupo Elektra's standard, approximately
    97% as of June 30, 2005.

  * On June 1, Circulo de Credito, S.A. de C.V. received authorization
    from the Ministry of Finance to start operations as the new credit
    information bureau for individuals in Mexico.

  Financial Highlights:

  Millions of Pesos of constant purchasing power as of June 30, 2005.

                                   Change                         Change
                 2Q04    2Q05     $      %      6M04    6M05     $      %
  Consolidated
   Revenues     6,456   7,645   1,190  18.4%   12,117  14,831  2,714  22.4%
  Gross Profit  2,835   3,441     605  21.4%    5,280   6,715  1,435  27.2%
  EBITDA          990   1,159     170  17.1%    1,853   2,186    333  18.0%
  Net Income      262     352      89  34.0%      846     870     24   2.9%
   EPS
   (pesos per
    share) (1)   1.10    1.44    0.33  30.1%     3.56    3.55  (0.00)(0.1%)
   EPS
   (US$
    per ADR) *   0.41    0.53    0.12  30.1%     1.32    1.32  (0.00)(0.1%)

  (1) Calculation based on 244,876,000 Elektra* (61,219,000 GDSs equivalent)
      weighted average at June 30, 2005 and  237,716,000 Elektra*(59,429,000
      GDSs equivalent) weighted average outstanding at June 30, 2004.
  *Ps. 10.77 per US$



Javier Sarro, CEO of Grupo Elektra said, "Our second quarter financial results
were consistent with the outlook we provided for 2005. We are very enthusiastic
that the overall business expansion translated into solid earnings growth and
further improvements in profitability and bottom line."

Carlos Septien, Banco Azteca's CEO said, "We are delighted with Banco Azteca's
strong financial results, which exceeded our expectations. Banco Azteca
represents an optimal alternative to grant reliable consumer credit for
millions of families who have been able to increase their purchasing power and
improve their quality of life though access to high quality products and
services. Likewise, we are transforming the Mexican banking system with our
unique products and services, and principally, the savings culture in a large
under attended segment of the population."

  Financial Division

  Banco Azteca


For 2Q05, Banco Azteca reported net income of Ps. 122.0 million, 28.4% higher
than the net income of Ps. 95.0 million for 2Q04.

As of June 30, 2005, the estimated capitalization index of Banco Azteca was
11.3%, flat when compared with the index of June 2004. The capitalization index
exceeds the 8.0% minimum required by Mexican regulators.

Gross Credit Portfolio

Banco Azteca's total gross credit portfolio increased 76.9%, reaching Ps. 13.0
billion from Ps. 7.4 billion at the end of 2Q04. The average term of the credit
portfolio at the end of the 2Q05, was 54 weeks. At the end of 2Q05, we had a
total of 4.5 million active accounts, representing a 38.7% increase from 2Q04.
The collection rate of Banco Azteca continues at the same excellent historic
level that defines Grupo Elektra's standard, approximately 97% as of June 30,
2005.

Savings Accounts and Term Deposits

Net deposits increased 74.5% to Ps. 22.5 billion in 2Q05 from Ps. 12.9 billion
in 2Q04, and the total number of accounts rose to 6.8 million.

Afore Azteca

For 2Q05, Afore Azteca reported a net income of Ps. 1.0 million from a net
income of Ps. 5.0 million for 2Q04. As of June 30, 2005, Siefore Azteca reached
Ps. 4.2 billion in net assets under management, and yielded an 8.67% return.

Seguros Azteca

For the fifth consecutive quarter, Seguros Azteca recorded a positive net
income; this time of Ps. 37.0 million, from a net income of Ps. 7.0 million in
2Q04.

Circulo de Credito

On June 1, Circulo de Credito, S.A. de C.V. received authorization from the
Ministry of Finance to start operations as the new credit information bureau
for individuals in Mexico. Grupo Elektra partnered with Banco Afirme, S.A.,
Coppel, S.A. de C.V., Grupo Chedraui, S.A. de C.V., and two other private
investors to create Circulo de Credito.  Each partner of the new credit bureau
has 18% equity stake with the exception of the two private investors who each
has a 14% equity stake. The new credit bureau primarily intends to obtain,
manage and send information on the credit history of individuals.

Commercial Division

Commercial division revenues decreased 1.0%, due primarily to lower merchandise
revenues that result from the closing of certain stores that did not reach our
profitability standards. However, Latin American operations continued to show
favorable results.

Total Debt and Net Debt

At the end of 2Q05, the commercial division's total debt with cost was Ps. 3.6
billion, 8.5% lower compared with Ps. 3.9 billion at the end of 2Q04.  Net debt
at the commercial division decreased to a negative amount of Ps. 576.3 million
in 2Q05 from Ps. 1.1 billion in 2Q04.

  Consolidated Financial Results

  Consolidated Revenues


Consolidated revenues increased 18.4% to Ps. 7.6 billion in 2Q05 from Ps. 6.5
billion in 2Q04.

EBITDA

Consolidated EBITDA reached Ps. 1.1 billion, a 17.1% increase from Ps. 989.9
million in 2Q04. During the quarter, the growth in operating expenses was
offset by higher consolidated revenues and a 110 basis points higher
consolidated gross margin, from 43.9% in 2Q04 to 45.0% in 2Q05. Consolidated
EBITDA margin reached 15.2%, 10 basis points lower than the 15.3% reported in
2Q04.

Operating Expenses

During the quarter, operating expenses grew 24.8% to Ps. 2.6 billion in 2Q05
from Ps. 2.1 billion in 2Q04. The increase in operating expenses was mainly the
result of hiring and training of employees; door-to-door sales initiatives;
increased operations from 137 net new stores; and higher advertising expenses
from our new business units.

Comprehensive Cost of Financing

The commercial division comprehensive cost of financing for 2Q05 was Ps. 609.3
million, 59.9% higher when compared with the Ps. 381.1 million in 2Q04. The
difference in the cost of financing is explained by:

  * A Ps. 330.5 million loss in equity swaps operations explained by the
    impact of the implementation of Mexican accounting Bulletin C-10 on the
    Company's position in equity swaps. Bulletin C-10, "Derivative
    Financial Instruments and Coverage Operations" of Mexican GAAP states
    that realized and unrealized gains and losses on interest rate swaps
    and options, on foreign exchange options and forward contracts, are
    recognized in the income statement of the period and are included in
    the comprehensive cost of financing; and
  * An increase in FX losses of Ps. 147.3 million in the period.

  These were partially offset by:
  * A Ps. 159.8 million decrease in interest expense resulting from a lower
    level of debt with cost this quarter largely due to the four years in
    advance redemption of the full amount of the 12% US$275 million Senior
    Notes due in 2008;
  * A Ps. 5.1 million increase in interest income; and
  * A Ps. 3.4 million increase in monetary gains.



On a proforma basis, excluding the Ps. 330.5 million loss in equity swaps
operations, the comprehensive cost of financing in 2Q05 was Ps. 278.7 million,
7.0% lower compared with the proforma Ps. 299.7 million of 2Q04.

Operating Profit

During the quarter, operating income increased 11.7% despite a 30.8% growth in
depreciation and amortization. The rise in D&A results from increased fixed
assets in both the commercial and the financial divisions.

Net Income

Our positive operating performance, coupled with a Ps. 276.3 million gain from
our equity participation in Comunicaciones Avanzadas, partially offset by the
increase in the comprehensive cost of financing, led to a net income of Ps.
351.5 million in 2Q05, 34.0% higher than the Ps. 262.3 million net income of
2Q04.

On a proforma basis, excluding the Ps. 330.5 million loss in equity swaps
operations in the comprehensive cost of financing in 2Q05, net income for 2Q05
was Ps. 682.1 million, 98.5% higher when compared with the proforma Ps. 343.7
million of 2Q04.

CAPEX

Capital expenditures in the first half of 2005 were Ps. 593.3 million,
principally due to our expansion and the purchases of communications equipment.

Cash and Cash Equivalents

Total cash and cash equivalents rose 89.0% to Ps. 17.9 billion in 2Q05 from Ps.
9.5 billion in 2Q04, comprised of a 48.8% increase to Ps. 4.2 billion from the
commercial division and a 106.1% growth to Ps. 13.7 billion from the financial
division in line with the increase in customer deposits.

Consolidated Gross Loan Portfolio

Total consolidated gross loan portfolio increased 75.6% to Ps. 13.6 billion in
2Q05 from Ps. 7.8 billion at the end of 2Q04. Collection rate for the credit
portfolio remained at 97%.

Equity

Consolidated equity grew 10.4% to Ps. 7.9 billion in 2Q05 from Ps. 7.2 billion
in 2Q04.

Company Profile:

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
approximately 1,400 Banco Azteca branches located within its stores, as a
stand-alone, and in other channels in Mexico and Panama. Banking and financial
services include loans, electronic money transfer services, extended
warranties, demand deposits, pension-fund management, insurance, and credit
information services.

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.

   Contacts:
   Esteban Galindez, CFA,
   Director of Finance and I.R.
   Grupo Elektra S.A. de C.V.
   Tel. [phone]
   Fax. [phone]
   

   Bruno Rangel
   Director of Investor Relations
   Grupo Salinas
   Tel. [phone]
   Fax [phone]
   

DATASOURCE: Grupo Elektra, S.A. de C.V.



CONTACT:  Esteban Galindez, CFA, Director of Finance and I.R. of Grupo

Elektra S.A. de C.V., [phone], Fax: [phone],

; or Bruno Rangel, Director of Investor Relations of

Grupo Salinas, [phone], or Fax: [phone],

 



Web site:  http://www.grupoelektra.com.mx/

Copyright