GRUPO ELEKTRA ANNOUNCES 10% EBITDA
GROWTH TO Ps.1,360 MILLION IN 3Q09

-EBITDA margin grows to 13–

–Solid dynamism in consolidated deposits, 21% growth, to Ps.54,211 million –

–Expansion in number of savings accounts, from 6.6 million to 8 million –

Mexico City, October 26, 2009–Grupo Elektra, S.A. de C.V. (BMV: ELEKTRA*; Latibex: XEKT), Latin America’s leading financial services company and specialty retailer, reported today its financial results for the third quarter of 2009.

“We achieved a double digit increase in consolidated EBITDA and enhanced profitability of Grupo Elektra in an adverse economic environment, thanks to strategies to stimulate operational efficiency,” said Carlos Septién, Chief Executive Officer of Grupo Elektra and Banco Azteca.  “We punctually controlled every expense, paying attention to the necessary expenditures to consolidate our market leadership. At the same time, we strengthened the balance and number of savings accounts for increased credit and sales going forward.”

Consolidated Third Quarter Results

Consolidated revenue was Ps.10,110 million, compared to Ps.10,226 million for the same quarter last year.  Costs and operating expenses were Ps.8,751 million, from Ps.8,994 million in the same period of the prior year.

Grupo Elektra reported EBITDA of Ps.1,360 million, 10% more than the Ps.1,233 million of the third quarter of 2008. The EBITDA margin was 13% this period, one percentage point above that of last year.  The company registered a net loss of Ps.418 million, compared to net income of Ps.673 million a year ago.

Cifras en millones de pesos. El número de acciones Elektra* en circulación al 30 de septiembre de 2008 fue de 244.6 millones y al 30 de septiembre de 2009 fue de 243.4 millones. 

Consolidated Revenue

The 1% decrease in consolidated revenue was the result of a 3% decrease in commercial revenue and unchanged financial revenue.

Costs and Expenses

Consolidated costs were Ps.5,220 million, 2% lower than the Ps.5,351 million reported in the same period a year ago. 

Consolidated costs include the financial cost—which represents the creation of loan loss reserves and the interest paid to depositors on savings—and the commercial cost, which mainly represents the cost of goods sold. 

Consolidated operating expenses were Ps.3,531 million, compared to Ps.3,643 million for the same period a year ago.

The minor expenses were due to initiatives to further enhance operating efficiency in each company area, and were achieved amidst solid expansion in Central and South American and Mexico.

EBITDA and Net Result

Consolidated EBITDA was Ps.1,360 million, 10% higher than the Ps.1,233 million reported a year ago; the EBITDA margin for the quarter was 13%, compared to 12% for the previous year.

The principal changes below EBITDA were i) an increase of Ps.1,116 million in other financial expenses—which reflects a loss of 11% in the market value of underlying financial instruments that the company holds and doesn’t imply cash flow, ii) a reduction of Ps.551 million in foreign exchange profit, due to a modest devaluation of the peso this quarter, and iii) a Ps.600 million reduction in tax provisions, due to favorable deferred taxes this period, as a result of the loss of the underlying financial instruments.

The company reported net loss of Ps.418 million compared to net income of Ps.673 million a year ago.

Cash and Cash Equivalents

As of September 30, 2009, total cash and cash equivalents were Ps.61,823 million, 35% higher than the Ps.45,772 million of the prior year, mainly due to higher investment levels of the financial business.  At the end of the quarter, the cash and investments balance for the financial business was Ps.38,682 million, and for the commercial business was Ps.23,141 million.

Consolidated Loan Portfolio

As of September 30, 2009, the gross consolidated portfolio for Banco Azteca Mexico, and Banco Azteca and Elektrafin Latin America was Ps.25,257 million, compared to Ps.25,228 million for the prior year.

Financial Business

Banco Azteca Mexico

During the third quarter, revenue from Banco Azteca Mexico was Ps.4,370 million, compared to Ps.4,746 million reported a year ago. The financial cost for the bank during the quarter was Ps.1,094 million, 40% less compared to Ps.1,832 million reported the previous year. 

As of September 30, 2009, the capitalization index of Banco Azteca was 14.4%. The company considers the index to be at a level that optimizes equity profitability.

The gross portfolio was Ps.20,848 million, compared to Ps.22,281 million reported on September 30, 2008.

At the end of the quarter, the bank registered a total of 9.6 million active credit accounts; the large customer base is an additional strength of the bank that further reduces credit risk. The average term of the credit portfolio for principal credit lines—consumer, personal loans and Tarjeta Azteca—was 61 weeks at the end of the third quarter 2009, unchanged from the prior year.

Deposits of Banco Azteca Mexico were Ps.48,076 million at the end of the third quarter of 2009, 10% more than the Ps.43,846 million of the previous year. At the end of the period, the bank had a total of 8 million active savings and deposit accounts, a 21% increase from 6.6 million accounts at the end of the same period a year ago.

Seguros Azteca

Grupo Elektra’s insurance companies—Seguros Azteca Vida and Seguros Azteca Daños—reported added revenue of Ps.316 million in the quarter, total assets of Ps.1,868 million as of September 30, 2009, and shareholders’ equity of Ps.988 million, 6% higher than the Ps.929 million reported a year ago.

Afore Azteca

As of September 30, 2009, Siefore Azteca’s assets under management were Ps.10,152 million. Total assets were Ps.286 million and shareholders’ equity was Ps.248 million.

Commercial Business

            Revenue from the commercial business in the quarter was Ps.4,712 million, compared to Ps.4,840 million reported a year ago. 

As of September 30, 2009, total debt with cost of the commercial business was Ps.7,237 million, compared to Ps.5,962 million reported a year ago.  The net cash of the commercial business—excluding debt—was a positive Ps.15,904 million, 19% higher compared to a positive balance of Ps.13,318 million as of September 30, 2008.

Of the total debt of the commercial business, 93% is denominated in pesos, in line with most of the earnings of the company, with a weighted average interest rate of 7.7%.  The remaining 7% of the debt denominated in foreign currency is covered with operations on the asset side in the same currency, which minimizes foreign exchange risks.

Expansion
           
The company has a large distribution network, which allows closeness to customers, and provides a superior market position in Mexico and in Latin America.  Grupo Elektra grew 2% to 1,999 points of sale as of September 30, 2009.  Most of the growth came from Central and South America, where points of sale increased 8%, to 442 points of sale; while the number of units in Mexico grew 1%, to 1,557.

Nine Month Consolidated Results
                
Total consolidated revenue for the first nine months of 2009 was Ps.31,515 million, 2% higher than the Ps.30,974 million a year ago.  The company reported EBITDA of Ps.4,270 million, compared to Ps.4,368 million reported in the same period a year ago;  the EBITDA margin in the first nine months of 2009 was 14%, unchanged from the prior year.  Grupo Elektra registered net income of Ps.1,284 million, compared to Ps.2,645 million for the first nine months of 2008.

Figures in million of pesos.
As of September 30, 2008, Elektra* outstanding shares were 244.6 million and the number of shares as of September 30,2009, were 243.4 million.