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Medellin-based multinational electric power giant EPM announced 12 pm Thursday, May 24 that it finally reached a crucial safety milestone toward eventual completion of its under-construction, 2.4-gigawatt “Hidroituango” hydroelectric dam on the Cauca River, which had been threatened with possible collapse.

Over the past three weeks, EPM hurriedly scrambled to raise the dam height to at least 410 meters above-sea-level – a height that enables excess Cauca River water to flow safely through an engineered spillway near the top, at 401 meters above sea level, or nine meters below the dam height. The spillway hence avoids water overtopping the dam, which could have caused disaster. 

Now, over the next few weeks, EPM will continue raising the dam height, to at least 415 meters, and will move to close two existing water-diversion tunnels, hence enabling repair work to the mechanical room, damaged during a tunnel-blockage emergency, according to the company.

In recent weeks, excess water flowing on the Cauca has been diverted through engineered diversion tunnels as well as the under-construction mechanical room, all of which are located far below the dam.

However, two out of three of the diversion tunnels had been blocked by rocks and dirt (and possibly logs) -- either occasionally or permanently over the past three weeks -- coincidentally during exceptionally heavy rains in April and May. Unfortunately, the third alternative diversion tunnel had already been cemented-in, in anticipation of a normal, scheduled evolution of the construction project.

A previously undetected geological fault near the main diversion tunnel might have been exposed to surging Cauca River waters over the past weeks, triggering partial tunnel collapses and Cauca water escape-route blockages, EPM officials said.

Suddenly, on May 13, a temporary blockage in the main diversion tunnel burst free, sending millions of gallons of floodwaters downstream, overflowing banks at the town of Puerto Valdivia, causing damage to several dozen homes and a passenger bridge.

That same diversion tunnel still potentially could suddenly unplug in coming days, causing another, temporary flood surge around Puerto Valdivia -- even after the dam spillway is completed, EPM warned.

Fortunately, EPM already set-up an elaborate earning-warning system, alerting residents downstream of the dam well in advance of any possible flood. Thanks to that system, vulnerable populations had long since moved to safer, higher ground, so no-one was killed or injured in the May 13 incident.

That one-time flood incident and the potential threat of a future dam collapse also had forced nearly 24,000 people -- including some 3,300 in the town of Puerto Valdivia -- to flee to higher ground, where they’ve been living for more than a week now, awaiting cancellation of flood threats.

As a result of the completion of the dam spillway system, only the 3,300 residents of Puerto Valdivia will have to remain in higher-ground shelters for the time being, EPM added today.

Despite the typical inconveniences of temporary displacement, at least the evacuees are receiving free food, water, shelter, beds and medical care, all paid-for and organized by EPM. EPM also will pay-for reconstruction of damaged or destroyed homes as well as related infrastructure.

Still, by averting a dam collapse, EPM avoided a disaster that could have wiped-out everything alongside its path for many miles downstream, threatening homes and lives of as many as 200,000 people.

When the main diversion tunnel plugged 10 days ago, EPM temporarily re-routed the Cauca river overflow through the under-construction mechanical room, providing a safe water escape pathway until the dam-raising construction would reach at least 410 meters.

While this temporary diversion helped avoid a catastrophe, it also has caused as-yet-unspecified damage to the mechanical room. Still, EPM managed to rescue some expensive equipment prior to the re-routing through the mechanical room.

Besides physical damage to the mechanical room, the flooding and blockage incident also will push-back start-up of the first 300-megawatts (MW) of the 2.4-gigawatt hydropower project beyond the initially targeted December 2018 start-up, according to EPM.

Despite these disappointments, Colombia’s national association of power producers (ALCOGEN) issued a bulletin May 10 advising that Colombia won’t be lacking power capacity for at least the next three years -- even if Hidroituango’s start-up is delayed by months or even years (although the latter delay now is seen less likely).

EPM also revealed that it has insurance coverage to help pay for the damage to the mechanical room and related infrastructure, as well as loss-of-income from a likely delay in power sales from Hidroituango.

Aside from relatively minor injuries to five EPM workers during the crisis, no downstream citizens were killed or injured by the temporary surges in Cauca water levels -- thanks to EPM’s well-organized alert-and-rescue operations during the crisis, involving numerous government agencies.

 


Medellin-based e-commerce, logistics, warehouse, document security, billing and customer-communications specialist Cadena announced May 17 that its full-year 2017 earnings before interest, taxes, depreciation and amortization (EBITDA) rose 40% year-on-year, with EBITDA margin at 13.4%.

Sales also rose to COP$184 billion (US$63 million), while billings for innovative services rose 22% year-on-year, according to the company.

Cadena credited the EBITDA improvement to the launch of innovative digital products and services last year -- and it expects further net growth this year of around 12%.

Besides aiming to transform its businesses via “100% technology,” Cadena also is reorganizing its business units into four divisions, plus opening two new logistics/distribution centers this year -- in addition to the four existing centers -- which will enable deliveries to all municipalities in Colombia.

“Since we launched our company more than 30 years ago, we had never imagined that we were going to convert ourselves into a completely digital operation,” added Cadena president Juan Manuel del Corral.

“We have evolved from having 100% of our sales via paper products, to the situation today where more than 60% of our sales come from digital services and logistics,” he added.

Thanks to this digital conversion, 22% of all billings in 2017 came from new businesses, which enabled Cadena to occupy strategic market niches as well as add 14 new products, according to the company.

Cadena now has 1,800 employees, four logistics plants, a network of 594 vendors, and a technology infrastructure that enables analysis of more than 2 billion data items each month for more than 740 private and public-sector clients, according to the company.

“With the development of e-commerce platforms, Cadena will become one of the biggest providers of this service and a major ally of the business sector of Colombia,” according to the company.

Among Cadena’s big corporate clients: Une, DirectTV, Telefonica, Tigo, Comcel, ETB, EPM, Emcali, Comfenalco, Comfama, Colsubisido, Carrefour, Exito, Proteccion, Porvenir, Colseguros, Colpatria, Santander, Sudameris, BBVA, Banco de Bogota, Grupo Bancolombia, Coomeva, Metro de Medellin, Nutresa, Sura, ICETEX, ICFES, Copa Airlines, Argos, Postobon, Imusa, Grupo Familia, Hewlett-Packard, Invesa, Procter & Gamble, Camara de Commercio de Medellin, Banco de Occidente, AV Villas, Davivienda, Citibank, Helm Bank and HSBC.


Medellin-based insurance, pensions and finance giant Grupo Sura announced May 15 that its first quarter (1Q) 2018 consolidated profit fell 23.5% year-on-year, to COP$310 billion (US$108.5 million).

Consolidated revenues for the company also dropped 2.2% year-on-year, to COP$4.76 trillion (US$1.66 billion).

Despite the corporate-wide dip in revenues and profits, “positive performance of Suramericana’s and Sura Asset Management's operations partly offset the impact of market volatility on the yields of the investments,” according to the company.

“This external effect was reflected in lower yields for the company’s own investment portfolios that back up the insurance and pensions business, and was also a sharp contrast to this indicator’s positive performance a year ago."

Those investment yields fell by 47% year-on-year, to COP$253 billion (US$88.7 million), according to the company.

“In addition, Suramericana’s decision not to participate in the pension D&S [disability and survivorship] insurance business in Colombia to focus on other solutions more aligned with its strategies also led to lower consolidated revenue,” according to Sura.

Nevertheless, Suramericana enjoyed consolidated revenue growth of 3.6 % year-on-year, hitting COP$3.36 trillion (US$1.17 billion). Suramericana also saw 2.8 % growth in retained premiums, “due significantly to the performance in Chile and Mexico, and the positive dynamics of the health operations in Colombia,” according to Sura.

“This growth came together with a lower claims rate and higher efficiencies, which translated into underwriting profits that improved 31% [year-on-year] compared to the first quarter of 2017.”

Meanwhile, the Sura Asset Management division – which administers pensions, savings, and investments – saw a 6% increase in revenue from commissions in the mandatory-pension business and an even-better 9.7% revenue boost in the voluntary-pension business.

In that division, 82% of its managed pension funds had returns that were “higher than the average for the markets where they operate,” according to Sura. As a result, that division closed 1Q 2018 with COP$393 trillion (US$141 billion) in managed assets, covering 19.2 million clients.

Liabilities decreased by 2.8%, to COP$41.58 trillion (US$14.95 billion), thanks to a reduction of COP$201.9 billion (US$69 million) in financial liabilities. “The behavior of assets and liabilities was reflected in a 4.2% reduction in equity, to COP$25 trillion (US$9 billion),” according to the company.


Medellin-based highway and buildings construction specialist Construcciones El Condor announced this month that its first quarter (1Q) 2018 net profits plunged 86% year-on-year, to COP$17.3 billion (US$5.9 million), down from COP$124 billion (US$43 million) in 1Q 2017.

Earnings before interest, taxes, depreciation and amortization (EBITDA) likewise fell sharply, to COP$34 billion (US$11.7 million), from COP$165 billion (US$57 million) in 1Q 2017.

However, construction EBITDA improved year-on-year, from COP$34 billion (US$11.7 million) in 1Q 2018 versus COP$13.7 billion (US$4.7 million) in 1Q 2017. Gross income likewise improved by 15.3% year-on-year, to COP$269.7 billion (US$93 million), up from COP$234 billion (US$81 million) in 1Q 2017.

Construction backlog is now equivalent to three years of contracts – although dipping year-on-year by COP$198 billion (US$68 million) in 1Q 2018, to COP$2.2 trillion (US$761 million), the company explained.

El Condor continues to make progress on key projects including the “Concession La Pintada” in Antioquia, now 38% complete, including the “Mulatos” tunnel and pilings for the new bridge crossing the Cauca river at the town of La Pintada.

Likewise, the “Tunel del Oriente” tunnels linking Medellin to the Jose Maria Cordoba international aiport at Rionegro are now more than 77% complete, with El Condor having invested more than COP$519 billion (US$179 million) in the project to-date, according to the company.


Exito 1Q 2018 Net Income Rises Year-on-Year

Wednesday, 16 May 2018 14:18 Written by

Medellin-based multinational retail giant Grupo Exito announced May 15 that its first quarter (1Q) 2018 net profits rose year-on-year to COP$9.98 billion (US$3.5 million), up COP$17.5 billion (US$6 million) from the COP$7.6 million (US$2,600) net loss posted in 1Q 2017.

Operating income also rose 6.3% year-on-year, to COP$13.7 trillion (US$4.78 billion), the company reported.

Recurring earnings before interest, taxes, depreciation and amortization (EBITDA) rose 7.2% year-on-year, to COP$693 billion (US$242 million), excluding the impact of a 4% appreciation of the Colombian peso during the period.

Among 1Q 2018 highlights: a 25% growth in wholesale sales by Exito’s “Grupo Pão de Açúcar” (GPA) division in Brazil, which includes stores under the “Assaí” brand name. Exito added 21 new stores in Brazil over the past year, boosting customer-count by 12%.

“The solid growth of 7.5% in sales in local currency in the food segment allowed GPA to assume the leadership of that business in Brazil, accompanied by a satisfactory level of profitability, with a recurring EBITDA of COP$502 billion [US$175 million] and an increase of 12.6% in Colombian pesos,” according to Exito.

“This figure is even more important if one takes into account that in Brazil, deflation of food [prices] in households during the first quarter was 4%, which directly impacts sales.”

As for the Colombian home market, retail sales are showing a “gradual” recovery from recession last year, up a tiny 0.1%, according to Exito. However, e-commerce and home-delivery sales in Colombia are showing relatively strong growth, up 34.8% year-on-year.

Recurring EBITDA in Colombia came-in at COP$107 billion (US$37 million) with an EBITDA margin of 4%, the result of relatively low inflation which impacts sales results.

“Complementary” businesses in Colombia including the “Éxito” credit-card business, the “Seguros Éxito” insurance business, the “Viajes Éxito” travel business, a money-transfer-service business, and the commercial real-estate business collectively grew by a total 31.2%, according to Exito.

In addition, its alliance with the “Rappi” home-delivery service resulted in a 300% jump in deliveries year-on-year in Colombia.

The “cash and carry” format offered at its growing “Surtimayorista” chain in Colombia now operates through nine stores, with sales up 138% year-on-year. “Stores converted to the ‘Surtimayorista’ brand have multiplied sales nearly twice and units [of products] sold have grown 74%. In 2018 the company plans to open at least eight more” of the warehouse-type stores, according to Exito.

Meanwhile, “the real estate business continues to be dynamic thanks to a good level of occupation of its shopping centers and galleries. The ‘Viva Envigado’ and ‘Viva Tunja’ shopping centers under construction have scheduled openings for the second half of 2018 and the construction works are progressing by 77% and 64%, respectively,” according to Exito.

Corporate-wide synergies between Colombia, Brazil, Uruguay and Argentina store operations are seen likely to deliver US$120 million in contribution to EBITDA for full-year 2018, according to Exito.

“Thanks to the implementation of the Colombian textile model in 61 points of sale in Brazil, Uruguay and Argentina, through our Didetexco division, we have become the ninth-biggest exporter of textiles from Colombia,” Exito added.

Meanwhile, in Uruguay, Exito store sales rose 8.5% year-on-year as measured in local currency, helped by summer-season demand, improvement in textile sales and the “Fresh Market” format, according to the company.

In Argentina, Éxito continues to benefit from its comercial real-estate business, with about 170,000 square meters of rentable space, the company added.

Éxito now has 1,554 retail food stores, including 561 in Colombia, 878 in Brasil, 86 in Uruguay and 29 in Argentina, according to the company.


Medellin-based electric power, cement, construction and highway/airport concessionaire Grupo Argos announced May 15 that its first quarter (1Q) 2018 net profits jumped 53% year-on-year, to COP$210 billion (US$73 million).

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) rose 9% year-on-year, to COP$941 billion (US$328 million), while EBITDA margin hit 28%, 272 basis points higher than in 1Q 2017.

The latest results “include stability of consolidated revenues of COP$3.3 trillion [US$1.1 billion] and growth in all other areas, reaching an operating profit of COP$607 billion [US$211 million], 23% more than in the same period of 2017, the result of the operational efficiencies in all its businesses,” according to Argos.

“Three significant advances are highlighted: First, in the process of deepening our investment in the [highway/airport] concessions business, the Odinsa delisting from the Colombian Stock Exchange was carried out, which will allow the subsidiary to have a more flexible and attractive capital structure. for the global market.

“Secondly, the simplification and strengthening of the capital structure of the energy business was completed, with the issuance of Celsia shares and the sale of the shares in [power producer] Epsa, which leaves an increasingly clear portfolio for the market.

“Finally, Cementos Argos' disinvestment plan continued with two important operations: the sale at the beginning of the year of 13 concrete-block plants in the U.S. [netting Argos US$50 million] and the divestment of three self-generating power plants in Colombia for US$58 million.”

“Our portfolio profitability strategy has given us very good results for our shareholders since, for the third consecutive quarter, all our businesses delivered positive contributions,” added Grupo Argos president Jorge Mario Velásquez.

Revenue and EBITDA gains in the latest quarter “are mainly explained by the sale of the shares of [Colombia power producer] Epsa, which generated a non-recurring income of COP$655 billion [US$228 million]. If we exclude the effects of this operation, revenues show an increase of 10% and a 23% increase in EBITDA,” the company added.

Odinsa Results

During the latest quarter, “an arbitration award in favor of Odinsa stands out -- in the case of the [highway] concession of the Autopistas del Café -- which, in addition to us maintaining the administration [of the concession] until 2027, confirms the good performance of the company. Likewise, the private initiative for the new Cartagena airport was presented, with estimated investments of more than US$600 million,” according to Argos.

As for its Bogota international airport concession, “it is worth noting the increase in passengers at the El Dorado airport, from 7.6 million to 7.9 million, and the stable behavior of daily vehicular traffic of 75,100 vehicles, very similar to the 75,400 recorded in the same period of 2017. These operating results have allowed Odinsa to have revenues of COP$184 billion [US$64 million], 1% more than in the first quarter of last year,” the company added.

Cementos Argos Results

“During the first three months of this year, Cementos Argos announced the use of tires as an alternative fuel source at the Cartagena [cement] plant. The efficiencies achieved by the ‘BEST’ program have allowed to reach an EBITDA of COP$371 billion [US$129 million], 31% more than in the same quarter of the previous year, and the improvement of the EBITDA margin in all the regional areas, to achieve a 19% margin,” according to Argos.

Celsia Results

In the Celsia energy division, “a positive balance included the start of the operation of the Yumbo solar [photovoltaic] farm. With respect to [over-all power plant] results, the company reached an EBITDA of COP$290 billion [US$101 million], 20% more than in the same period of the previous year, and an EBITDA margin of 34%. These results were achieved thanks to the increase in generation by 18%, and by 11% in power sales,” according to Argos.

Real Estate, Pactia Results

During 1Q 2018, the Grupo Argos urban-development division accumulated property deeds totaling 90,000 square meters, and the division realized revenues of COP$10 billion (US$3.5 million) from the sale of lots. “In addition, in the [commercial] real-estate rental business, we highlight the positive results of Pactia which closed the quarter with assets under management of COP$3.4 trillion [US$1.18 billion], and a gross leasable area of 719,000 square meters, growing 40% year-on-year,” according to Argos.


Medellin-based banking giant Bancolombia announced May 15 that its first-quarter (1Q) 2018 net profit dipped 14% year-on-year, to COP$522 billion (US$181.7 million).

Gross loans in 1Q 2018 grew 4.1% when compared to 1Q 2017 “and decreased by 1.1% during the quarter,” according to Bancolombia.

“This annual growth shows moderation in the credit demand in Colombia, as well as an appreciation of the COP [Colombia peso] against the US dollar by 3.6% during the last twelve months. Peso-denominated loans grew 11.1% when compared to 1Q 2017.”

Net interest income dipped 4.1% year-on-year, to COP$2.51 trillion (US$873.7 million).

“This slowdown in net interest income is explained by the adoption of IFRS 9 [international accounting standards] during 2018, which caused a reduction of COP$102 billion [US$35 million] during the quarter. Also, the appreciation of the COP against the US dollar during the last twelve months impacted the number,” the company added

Net fees rose 8.8% year-on-year, “mainly driven by an increase in fees related to credit and debit cards, bancassurance, payments and collections, as well as trust services,” according to Bancolombia.

Provision charges were COP$875 billion (US$304 million) and the coverage ratio for 90-day past due loans was 173.6%, according to the company.

“Provision charges increased by 13.0% when compared to 1Q 2017 and decreased by 5.9% compared to 4Q 2017,” according to Bancolombia. “These provisions allow us to maintain a solid coverage ratio amid a challenging environment,” the company added.

As of March 31, 2018, Bancolombia’s assets totaled COP$200.9 trillion (US$69.9 billion), up 2.1% year-on-year.

“During the [latest] quarter, the COP appreciated 6.8% versus the US dollar and over the past 12 months, it appreciated 3.6%,” the company noted. “The increase in total assets during the quarter is largely explained by the growth in reverse repurchase agreements and derivative financial instruments.”

Also as of March 31, 2018, Bancolombia operations via Banco Agricola in El Salvador, Banistmo in Panama and BAM in Guatemala, represented 24% of total gross loans.

“Gross loans denominated in currencies other than COP, originated by our operations in Central America and the offshore operation of Bancolombia Panama as well as the US dollar-denominated loans in Colombia, accounted for 32% [of total loans] and decreased by 6.9% during 1Q 2018 (when expressed in COP), explained mainly by the reduction of the loan portfolio in dollars in Colombia and the appreciation of the COP against the US dollar during the quarter,” according to the company.

At the end of 1Q 2018, Bancolombia’s liabilities totaled COP$177.7 trillion (US$61.8 billion), “decreasing by 1.0% from the end of 4Q 2017 and increasing by 1.8% compared to 1Q 2017” according to the company,.

“Deposits by customers totaled COP$130 trillion [US$45 billion] or 73.2% of liabilities at the end of 1Q 2018, decreasing by 1.4% during the [latest] quarter and increasing by 4.5% over the last 12 months. The net loans to deposits ratio was 115.0% at the end of 1Q 2018,” the company added.

“Bancolombia’s funding strategy during the last months has been to reduce the average life of time deposits and promote saving and checking accounts in the consumer segment in order to keep the funding cost at a minimum. The objective is to build and maintain ample liquidity and reduce the sensitivity of the balance sheet to cuts in interest rates,” according to the company.

“In the last months, Bancolombia has generated capital organically due to the appropriation of earnings in March 2018 and to the efficient allocation of capital in different products. The annual increase in the RWA [risk-weighted assets indicator] is mainly explained by the growth in the loan book, as well as the market risk,” the company added.


Medellin-based synthetic textiles specialist Enka Colombia announced May 11 that its first quarter (1Q) 2018 net income fell to COP$1.7 billion (US$591,000), down from COP$4.2 billion (US$1.4 million) in 1Q 2017.

Operating income for 1Q 2019 rose 8.4% year-on-year, to COP$91.9 billion (US$32 million), but earnings before interest, taxes, depreciation and amortization (EBITDA) fell to COP$5 billion (US$1.7 million), down from COP$6.8 billion (US$2.3 million ) in 1Q 2017.

The Colombian domestic market accounted for 54% of 1Q 2018 sales, while Brazil took the number-two spot at 22%; the USA market was a distant third at 5% and Argentina fourth at 4%.

Volume (in tons) of sales dipped 2.5% year-on-year “mainly because of fewer sales of recycled products” as feedstocks.

The rising value of the Colombian peso versus the U.S. dollar during the latest quarter slightly mitigated the decline in EBITDA and net income, as a large portion of corporate sales are indexed to the U.S. dollar, Enka added.

Net debt at the end of 1Q 2018 was a relatively modest 1.9-times EBITDA, although not as good as the 1.6-times index in 1Q 2017, the company added.

Sales in the domestic market rose 5% (in Pesos) while export sales rose 12% year-on-year, led by technical thread exports to the U.S. and Canada, “EKOFibras” recycled fiber sales to Brazil and the development of filament textile sales to Argentina, according to Enka.
As a result, the export markets accounted for 46% of sales, up from 45% in 1Q 2017.

“Green” and recycled “EKOFibras” fiber sales grew 16% year-on-year, accounting for 33% of corporate sales, according to the company. Meanwhile, sales of “EKOPET” recycled textiles are at 100% of production capacity, with the company now focused upon boosting collection of waste-plastic bottle feedstocks.

Textile filament sales rose 12% year-on-year, mainly due to a 28% jump in export sales, while domestic sales were flat. However, a government measure aimed at thwarting contraband textile imports should help improve domestic sales in coming months, the company added.

The year 2018 is starting on a positive note thanks to restrictions on low-quality Chinese recycled product imports, the new Brazil free-trade agreement and a crackdown on contraband clothing, Enka added.

By third-quarter 2018, Enka expects to start-up a new plant that can reprocess waste plastic bottle-tops and labels into fibers. On a parallel front, Enka continues to work toward a second-quarter 2019 start-up of a modernized “EKOFibras” plant, which will boost productivity and quality of fibers produced from waste plastic bottles.

Proposed legislation in the Colombian Congress that would require plastic recycling also could boost prospects for Enka in future years, the company added.


Colombia’s national statistics agency (Departamento Administrativo Nacional de Estadistica, DANE) announced May 15 that first quarter (1Q) gross domestic product (“PIB” in Spanish initials) grew by 2.2%, a big improvement over the 1.7% PIB growth in 1Q 2017.

The finance/insurance sector topped every other sector at 6.1% PIB growth, followed by 5.9% growth in public administration/defense; 5.6% growth in professional, technical and scientific activities; entertainment/recreation at 4%; wholesale/retail commerce at 3.9%; communications/information sector at 3.1%; and real-estate activity at 2.9% (see chart, above).

Explaining the decline in the construction sector, the sharpest drop was in residential/nonresidential building (down 9.2%), followed by an 8.2% drop in civil engineering and a 6.4% drop in highway/railroad construction, according to DANE.

The dip in the mining sector was blamed mainly on a 17.5% drop in metals mining. However, the oil-and-gas sector saw a slight (0.8%) increase in 1Q 2018 PIB.

The decline in industrial manufacturing was blamed mainly on a 4.6% drop in textile manufacturing and a 4.2% drop in finished metals production.

Over-all, Colombia’s economic output had a value of COP$210 trillion (US$73 billion) in 1Q 2018, up from COP$207.8 trillion (US$72 billion) in 1Q 2017 (as measured in constant 2015 Colombian pesos), according to DANE.


Medellin-based software whiz-kids Jorge Soto and Santiago Villegas just won recognition in the prestigious “Endeavor Entrepreneurs” competition at Endeavor’s 79th “International Selection Panel” (ISP) in Louisville, Kentucky.

Soto, the chief executive officer (CEO) of Medellin accounting software pioneer Alegra, and Villegas, the chief technology officer (CTO) of the company, competed globally against dozens of start-ups to join 13 other companies in the Endeavor winners circle this month.

“’Endeavor Entrepreneurs’ gain access to comprehensive customized services, including introductions to local and international business mentors and volunteers from Fortune 500 consulting firms who will help them address key needs,” according to global startup-promotion organization Endeavor.

“Endeavor Entrepreneurs have had a significant track record of creating hundreds of thousands of jobs, generating billions of dollars in revenues, and building sustainable growth models in their home countries,” the organization added in a May 10 announcement.

Explaining the award announcement, Endeavor cited Alegra’s clever niche: “Small businesses should not have big bookkeeping problems, and yet, 95% of the US$6 billion Latin American micro, small and medium enterprise (MSME) market still manages invoices and administration by hand.

“In 2017, Colombian and Costa Rican governments followed the lead of seven other Latin American governments including Mexico, Brazil, and Peru, by mandating that all businesses, irrespective of industry and size, must issue 100% of their invoices electronically by 2019. In January 2018, Panama followed suit with a pilot program; in April 2018, the Dominican Republic did the same.”

Responding to these challenges, “Alegra is alleviating a major pain point for 25,000 daily active users in nine countries by providing an easy-to-use, cloud-based software for Latin American MSMEs to efficiently manage their businesses under these new regulatory standards,” Endeavor noted.

Alegra History, Expansion Plans

Asked to elaborate on the company’s origins and evolution, Alegra told Medellin Herald that CEO Soto is an administrative-engineering graduate from Medellin’s Escuela de Ingenieria Antioquia (EIA) University, as well as a political science student.

“In his career as an entrepreneur, Soto created five companies -- and in some of these he failed, but he knew how to get up and take advantage of the experience gained. Thus, he discovered the needs of companies and created his sixth venture, Alegra.com, a software in the cloud for small-business administration.

“Soto realized from experience that one problem that small business owners have in common is how to invoice and keep accounts. Thus, he was given the task of finding a solution:

“First he tried Excel, but found that the margins are unbalanced, the invoice numbers are duplicated and in general it becomes chaotic. Then he used a traditional accounting software and found that these are complicated, expensive systems, made for the [professional] accountant and most are more than 20 years old.

“The third option was to use foreign software, but since it was not adapted to the legislation and requirements of the local [Colombia] tax authority, this generated inconveniences and more work. These options did not solve the needs of administration of the micro and small companies.

“With this idea, the team of Alegra got together to start working on the project, and after a year of development they went on the market in January 2013. The reception was very good from the first month -- and since then they have not stopped growing.

“After one year of the launch in Colombia -- and already with a number of important users who had validated the product -- they thought of scaling up to other countries. So, in 2014, they released versions for Panama, Mexico and the Dominican Republic, where they found very similar situations, and where Alegra solved the same problems.

“Today, five years after going on the market, Alegra has 120,000 registered companies on its platform, a presence in 16 countries, and a team that makes the platform and service better every day.

“Unlike other startup ventures, Alegra has not been part of any incubator or accompaniment process, which has enabled them to grow autonomously without having to resort to funds or venture capital to leverage growth.

“The next objectives of the company are to launch versions for the countries that are missing from the Latin American region, such as Argentina, then continue with countries in Africa and Southeast Asia, as Alegra seeks to be the first and best option for small businesses in developing countries,” according to the company.


Page 6 of 37

NEW GUIDE "Avifauna de Colombia" (link by clicking on book)

SILLETEROS PARADE 2016 by JOHN AND DONNA STORMZAND (click to enlarge)

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About Medellin Herald

Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

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Medellín Photo Galery

Medellin, contrasting colors and styles by Gabriel Buitrago
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