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Medellin-based multinational electric power giant EPM reported March 26 that its full-year 2018 net profits rose 4% year-on-year, to COP$2.4 trillion (US$758 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 8% year-on-year, to COP$5.1 trillion (US$1.6 billion), while revenues rose 9%, to COP$16.3 trillion (US$5.1 billion).

The company highlighted the entry-into-service of the gigantic "Aguas Claras" sewage-treatment plant in suburban Bello last year, dramatically reducing contamination of Rio Medellin. The company also boosted clean drinking-water supplies to many more customers in its Colombian markets.

“Thanks to the good results of last year, during 2019 the municipality of Medellín will be able to fund social investment programs worth COP$1.3 trillion,” added EPM, which is 100% owned by Medellin.

“In a difficult year due to the [diversion-tunnel collapse] at the Hidroituango hydroelectric project, the EPM Group nevertheless achieved positive financial results in 2018,” according to the company.

“On the path towards [utilities services] universalization, the EPM Group reached 2018 coverage in energy services and water supply in excess of 96%” in its Colombia service areas, said EPM president Jorge Londoño de la Cuesta.

“In wastewater treatment, we reached 93.3% and, in Medellin, in solid waste we achieved 99.21%, while in [natural] gas we [serviced] 84.63% in the region,” he added.

“In addition, our business group undertook directly and in conjunction with other actors in the country a series of environmental actions that enabled protection of 21,282 hectares of forests in 2018, for an accumulated 57,321 hectares in the period 2016-2018.”

Total assets rose 11% year-on-year, to COP$52.5 trillion (US$16.6 billion), while debt rose 15%, to COP$30.5 trillion (US$9.6 billion), because of “disbursement of credits to finance the general investment plan and the Hidroituango hydroelectric project,” according to the company.


Colombia’s Ministry of Commerce, Industry and Tourism announced March 18 that full-year 2018 foreign direct investment (FDI) in Colombia jumped 20.8% year-on-year, with nearly 20% of that in sectors other-than-petroleum or hydrocarbons.

According to the Minister José Manuel Restrepo Abondan, “a scheme of attractive sectoral tax incentives, strategic priority for internationalization programs, incentives to attract investments in megaprojects, re-established free trade zones and meetings abroad with potential investors interested in Colombia are some of our initiatives to achieve US$11.5 billion FDI in non-mining, nonenergy sectors by2022.”

Citing latest Bank of the Republic statistics, the Ministry noted that FDI in Colombia rose to US$1.44 billion in the first two months of 2019, up from US$1.19 billion in the first two months of 2018. FDI in non-energy sectors has risen 4.6% so far this year, compared to the same period in 2018.

FDI in Medellin

Meanwhile, according to a separate March 20 report from Medellin’s investment promotion agency (Agencia de Cooperacion e Inversion de Medellin y el Area Metropolitana, ACI), local FDI has totaled US$836.6 million from 2016 to 2018, mainly coming from Canada, China, Denmark, El Salvador, Spain, the United States, France, Guatemala, Mexico and Switzerland.

“The interest that the Antioquia capital arouses in the world -- due to its social and urban transformation and constant innovation -- has been the gateway for entrepreneurs and investors to establish themselves in the territory and thus contribute to local development,” according to ACI.

FDI and reinvestment by such companies in metro Medellin is mainly in infrastructure and real estate, manufacturing, high-tech industries, aerospace and life sciences, according to FDI.

“From 2016 to date we have organized 23 ‘Why Medellin?’ events in Argentina, Australia, Brazil, Chile, Spain, the United States, Mexico, New Zealand, Peru, Turkey, Uruguay and Venezuela,” according to ACI.

For full-year 2018, FDI in Medellin topped US$253 million, of which “76% correspond to new investments of national and foreign companies and 24% to organizations that strengthened their confidence in the city by materializing reinvestments,” according to ACI.

The largest number FDI projects in Medellin last year came from the United States with 18% of total investments, followed by France, Spain, Japan, Canada and Argentina. 

Also during 2018, nine ‘Why Medellín?’ events organized by ACI in Peru, Chile, the United States, Mexico and Argentina generated 268 new contacts with companies that see Medellín as a “good opportunity for their expansion plans,” according to ACI.


Colombia’s Vice President Marta Lucia Ramirez announced March 20 that the “Mar 1” highway project linking Medellin westward to Santa Fe de Antioquia -- and eventually to new Atlantic ports -- just won a COP$2.23 trillion (US$754 million) financial close organized by the “Financiera de Desarrollo Nacional” (FDN) financing agency.

On a related front, Vice President Ramirez simultaneously announced that the long-awaited “Puerto Antioquia” ocean freight port near Turbo, Antioquia, just won a 30-year concession.

That US$300 million port project will include construction of new piers and docking facilities for up to-five ocean ships simultaneously; a four-lane divided highway linking the dock area to terminal facilities; and onward highway linkages to the new “Mar 1” and Mar 2” highways that should be completed over the next six years -- hence bringing Medellin much closer to relatively lower-cost global freight transport.

The new port will handle containerized cargo as well as highway vehicles, grains, plantains and bananas, according to project developer PIO Sas, in association with global shipping and port-operator Naviera Francesa CMA CGM S.A., plus major regional banana growers.

Civil works on the project will be undertaken by France-based Eiffage Infraestructuras de Francia along wth Colombia-based Termotecnica Coindustrial.

As for the “Mar 1” financial partners, these include Blackrock; the Interamerican Development Bank (IBD) and IBD Invest; CAF; ICO; the German Development Bank (KFW); Sumitomo Mitsui Banking; and France-based Société Générale, according to FDN.

Mar 1 includes rehabilitation and operation of existing highway between Santa Fe de Antioquia and Peñalisa (71 kilometers); construction and operation of a second lane between Medellín and Santa Fe de Antioquia (43 kilometers); the construction and operation of a 4.6-kilometers-long, parallel tunnel (adjacent to the existing Tunnel de Occidente) linking Medellin westward toward Santa Fe de Antioquia; and the construction of 46 bridges.

Once completed, Mar 1 (and the connecting “Mar 2” project) will enable Medellin freight shippers and Colombian coffee exporters to tap a much quicker route to Atlantic ports in the Urabá region of Antioquia.

Today, vehicle transport from Medellín to Necoclí on the Atlantic ocean takes eight hours. But once Mar 1 and Mar 2 are complete, then transport time will be cut to four hours, according to Colombia’s Agencia Nacional de Infraestructura (ANI).

Construction companies in the Mar 1 project include Austria-based Strabag and its Swiss-based subsididary Strabag AG Switzerland (with 37.5% share); Sacyr (Sacyr Concessions Colombia and Sacyr Concesiones S.L.) with 37.5%, and Colombia-based Concay, S.A. with 25%.

Pacifico 1-2-3 Projects

On a related front, ANI president Louis Kleyn announced earlier this month that the 293-kilometers-long Pacifico 1-2-3 highways linking Medellin to the Pacific port of Buenaventura continue to make progress -- although completion on “Pacifico 1” between Medellin and Bolombolo isn’t likely until around 2023.

Currently, freight trucks face a grueling, 15-hours-journey to-and-from Medellin to Buenaventura. But the new Pacifico highways would cut that to 10 hours, according to ANI.

Linking Medellin to the Pacific region on modern, four-lane highways -- including many new tunnels and bridges -- will generate “more international trade from the green mountains that connect southwest Antioquia and the coffee region,” according to ANI.

“The progress in the construction of this great corridor is the result of rigorous and disciplined management in social, environmental, property and contract areas, [along with] confidence generated by banks and investors, both domestic and foreign,” according to the agency.

“To date, Pacífico 1 -- the corridor connecting Bolombolo with La Primavera [the southern Medelliin suburb of Caldas] has an execution of 15%, while Pacífico 2 (connecting Bolombolo to La Pintada) has achieved 64% execution, and Pacífico 3 (La Pintada to La Virginia in Risaralda) has advanced by 54%. These three projects total 119 fronts of active works,” according to ANI.


Medellin-based multinational gold mining giant Mineros SA announced March 13 that its full-year 2018 net income rose 33% year-on-year to COP$156 billion (US$50 million), from COP$117 billion (US$37 million) in 2017.

Gross revenues and gold prices also rose a bit more than 1% year-on-year. But earnings before interest, taxes, depreciation and amortization (EBITDA) dipped 8.7%, to COP$260 billion (US$83 million), while EBITDA margin declined 9.7%, to 32.4%, according to the company.

The mainly alluvial-based gold mining operations in Colombia produced 97,921 ounces of gold-equivalent in 2018, down from 103,370 ounces in 2017, according to the company. On the other hand, Nicaragua gold production rose from 104,681 ounces in 2017 to 109,305 ounces in 2018.

As for fourth quarter (4Q) 2018, net income nearly tripled year-on-year, to COP$97 billion (US$31 million), thanks to a 15% hike in output, a favorable COP/U.S. dollar exchange rate and a 1.3% hike in world gold prices.

On a related front, the US$30 million acquisition of the Gualcamayo gold mining operation in Argentina last December netted Mineros an additional 2,791 ounces of gold in 2018, on top of its Nicaragua and Colombia production, the company added.

As for the 2019 outlook, Mineros projects that corporate-wide production should be in the range of 280,000 to 300,000 ounces of gold-equivalent. The company warned that it foresees “high volatility” in world gold prices, but nevertheless sees an “upward tendency.”

USAID, Mineros Continue Boosting Social Projects

On another front, the U.S. Agency for International Development (USAID), the Colombian national government and Mineros this month will launch yet another project aiming to help poorer rural families in El Bagre, Nechi and Zaragoza (all in Antioquia) through a new “Women of Gold” (Mujeres de Oro) program.

According to USAID, the “Mujeres de Oro” program will help rural women with projects that boost their economic, social, political and cultural well-being.

Mineros has a long history of sponsoring numerous projects that benefit poorer rural families in its areas of operations (see Medellin Herald 09/21/2016, “USAID Projects Boost Ecological Mining, Honey Incomes for Antioquia Families”).

In addition, Mineros years ago banned the use of toxic mercury -- in sharp contrast to reckless, criminal and informal gold-mining operators.

What’s more, Mineros routinely restores any lands disturbed by its mining through various reforestation and wildlife conservation projects – unlike the criminal mining groups tied to guerrillas and “paramilitary” organizations that devastate tropical forests and wreck riverside habitats (see Medellin Herald 03/21/2017, “Mineros SA Boosting Environmental, Social Projects”).


Medellin-based multinational banking giant Bancolombia announced March 12 that it’s now offering companies the opportunity to rent all-electric, zero-emissions delivery trucks in Colombia’s major cities – at the same annual cost as conventional trucks.

The goal is to put into circulation 1,000 electric trucks over the next three years, replacing diesel- and gasoline-powered trucks that today are causing much of the air pollution in Medellin, Bogota and other major cities, according to Bancolombia’s “Renting Colombia” subsidiary.

Major companies in Colombia including Nutresa, Bimbo, Bavaria, Colombina and Éxito are already testing these electric trucks, in an alliance with Medellin-based electric vehicle marketer Auteco, according to Bancolombia.

The scheme enables both smaller and larger companies to rent rather than buy the trucks, at a cost of operation “equal to that of [trucks] with traditional gasoline or diesel combustion, so in this way overcoming the [initial purchase price] limitation” of electric trucks, according to Bancolombia.

Besides eliminating toxic particulate matter (PM), nitrogen oxides (NOx) and carbon monoxide (CO) emissions, the electric trucks also slash net carbon dioxide (CO2) emissions -- since most of Colombia’s electric power comes from zero-emissions hydroelectric plants.

“Launching the first [nationwide] fleet of electric trucks in Colombia responds to our commitment to do business well and sustainable,” explained Bancolombia president Juan Carlos Mora.

The vehicles being offered are local delivery trucks rated between three-to-10 tons. These are the type of trucks that are the most numerous in Colombia’s biggest cities.

Diesel-powered delivery trucks are so numerous in big cities that they cause 50% more total pollution than dump trucks, 400% more than buses and 500% more than cars, according to Bancolombia.

Hence eliminating such high-polluting vehicles would help cities including Medellin and Bogota to slash pollution that today has forced city officials to enact severe “pico y placa” driving restrictions on vehicles (alternating-day bans tied to license-plate numbers), Bancolombia noted.

Switching just 1,000 delivery trucks to zero-emission electric power would slash CO2 emissions by 24,800 tons over three years, equivalent to the CO2-removal work of 1.5 million trees, the company noted.

What's more, the latest-generation electric trucks employ new technologies that deliver 40% more power than a conventional diesel- or gasolina-powered truck, according to Auteco.

While an electric truck will consume an annual average of 11,300 kiloWatt-hours of electricity at a total cost of COP$5 million (US$1,590), an equivalent diesel truck would consume 1,200 gallons of diesel fuel and 10 gallons of lube oils, costing a total of COP$12 million (US$3,815) annually, or more than twice as much as the electric truck, Bancolombia noted.

 


Medellin and its neighboring suburbs expanded “pico y placa” driving restrictions on all conventional combustion-engine cars, trucks, buses and motorcycles to nine hours daily for the week of March 2-9, because of worsening air pollution.

The only personal transport vehicles exempted from such driving restrictions are electric cars, along with Medellin’s “Metro” electrified railcar system, the expanding “Metrocable” electric-powered aerial tram system, an incipient electric-powered roadway tram system, the upcoming expansion of pure-electric “Metroplus” electric buses this year, and free zero-emissions bicycles at Metro rail stations.

What’s more, Medellin debuted its first all-electric taxicab on March 3 -- right on the heels of the debut of the “Line M” Villa Hermosa-Buenos Aires aerial tram system on February 28.

“Line M,” serving 350,000 people in northeastern districts, is the fifth aerial-tram system now operating in Medellin, with a sixth coming in a few more months.

All these moves are further signs of the upcoming conversion to zero-emissions transport modes for Medellin -- and likely for many other global cities facing similar air-pollution problems.

On the taxi front, the “Tax Belén” cab company debuted its first BYD all-electric cab this month – exempt from “pico y placa” driving restrictions.

Medellin hopes to see as many as 1,500 electric taxis over the next few years. But the relatively high cost of electric-car acquisition today -- compared to cheaper, conventional gasoline-powered taxis -- is the key sticking point (see Medellin Herald 09/27/2018).

“Tax Belén, one of the largest taxi companies in Medellín with more than 2,300 cabs, will be in charge of operating these public-service cars, while BYD will provide after-sales service and will contribute its experience as one of the world’s leading manufacturers of electric vehicles,” according to BYD.

“Fuel savings compared to other combustion vehicles will be approximately 70% and operating costs will be 50% lower than natural-gas or gasoline taxis,” according to BYD.

BYD claims that range-between-recharge should be around 400 kilometers, while fast-charge stations can recharge the vehicle in 90 minutes.

 


Medellin-based multinational electric power transmission operator and highways concessionaire ISA announced March 7 that its full-year 2018 net income rose 6% year-on-year, to COP$1.5 trillion (US$483 million).

Revenues also rose 4% year-on-year, to COP$7.2 trillion (US$2.3 billion), while earnings before interest, taxes, depreciation and amortization (EBITDA) grew 8.4% year-on-year, to COP$4.8 trillion (US$1.54 billion).

EBITDA margin came-in at a fat 66.5%, or 73% if excluding construction activities during 2018. Return on equity likewise came-in at a favorable 12.8%.

ISA credits the profit gains to “entry into operation of new projects in Peru, Colombia and Chile; the update for inflation of the [power] tariff cycle, the recovery of taxes and [tax deductions from] fiscal losses in Brazil, and lower taxes for the application of the Financing Law in Colombia,” according to the company.

As for fourth quarter (4Q) 2018 profits, ISA netted COP$581 billion (US$187 million), up 116% over 4Q 2017, according to the company.

In ISA’s electric power transportation unit, 4Q 2018 revenues rose 17.8%, to COP$187 billion (US$60 million).

“The variation is explained in Colombia, by the remuneration of the new projects such as the San Antonio Substation (230 kiloVolts) and associated transmission lines; the Ituango-Medellin Substation (Katíos) and the Caribbean Coast reinforcement (500 kiloVots); the Caracolí Substation and associated lines, the charge for connection to the network of the El Bosque transformer project, the extensions of the Nueva Barranquilla substation and the Ternera substation,” according to ISA.

Entry-into-operation of several new transmission lines in Chile along with higher power tariffs in Brazil also boosted revenues, according to the company.

Also in Brasil, ISA’s “Companhia de Transmissão de Energia Elétrica Paulista” (CTEEP) subsidiary completed its first emission of “green bonds,” which will finance “energy infrastructure projects with environmental benefits,” according to ISA

ISA’s highway concessions revenues in Chile dipped slightly in 4Q 2018 because of higher maintenance costs and an adjustment in accounts receivable, according to the company.

During 2018, ISA and its subsidiaries invested a total of COP$2.4 trillion (US$772 million) in power transmission, highway concessions, telecommunications infrastructure and technological developments.

What’s more, for the period 2019 through 2023, the company now projects estimated capex investments of COP$10.575 trillion (US$3.46 billion).

ISA’s corporate-wide net assets totaled COP$44.9 trillion (US$14.4 billion), up 3.6% year-on-year. The increase in assets incorporated “entry into operation of new projects in the electric energy transport business in Colombia, Chile and Peru,” as well as the incorporation of assets, profits and revenues from its “TAESA” and “IENNE” power businesses in Brazil, according to the company.


Medellin-based telecom/internet/cable-TV giant TigoUne announced March 5 that its full-year 2018 earnings before interest, taxes, depreciation and amortization (EBITDA) rose 6% year-on-year, to COP$1.43 trillion (US$460 million), on revenues of COP$5 trillion (US$1.6 billion), described as “similar to 2017” revenues.

However, in a subsequent March 28 filing with Colombia's corporate-oversight agency Superfinanciera, part-owner Une EPM Telecommunications revealed that  full-year 2018 consolidated net loss hit COP$65.7 billion (US$20.6 million), worse than the COP$40 billion (US$12.6 million) net loss in 2017. 

TigoUne's ownership is split 50-50 between Luxembourg-based telecom multinational Millicom and Medellin utility Grupo EPM.

TigoUne also separately revealed that it plans to make a COP$1 trillion (US$322 million) bond offering in the Colombian stock market, but didn’t offer further details.

Other 2018 operating highlights cited by TigoUne were a total of COP$941 billion (US$303 million) invested in “digital highways that connected more Colombians” as well as investments that “revolutionized the mobile [cell-phone] market in Colombia by being the first operator to have ‘4.5-G’ zones and ‘value proposals’ so that users are always connected.”

“We consolidated [our offering] as the leading telecommunications company in innovation as the first [in Colombia] to perform testing of ‘5G’ networks and having the first ‘4.5G’ zones in the main cities of the country,” boasted TigoUne president Marcelo Cataldo.

The strong revenues “allowed the company to make a debt repayment of COP$183 billion [US$59 million], reducing our obligations and strengthening our financial situation” as well enabling "an ambitious investment plan,” according to TigoUne.

“In the last four years, the company has invested close to COP$4 trillion (US$1.3 billion) to promote the development of the country.

“Investments in the fixed [telecom] network were reflected in the commercial launch in seven cities: Pasto, Tuluá, Tunja, Sogamoso, Funza, Mosquera and Fusagasugá. Likewise, we increased the network coverage in cities where we already have presence,” according to the company.

“In addition, TigoUne obtained [bond rating] certifications from the three most important risk rating agencies. Fitch Ratings confirmed the rating of the telecommunications company UNE EPM Telecomunicaciones S.A. as a stable perspective (AAA) at the local level, the highest rating a company can have.

“In turn, the credit rating agency highlighted the strength of the company and ratified its international rating "BBB" for the third consecutive year.

“For its part, the technical committee of BRC Standard & Poor’s also confirmed the highest local qualification of payment capacity 'AAA' to UNE EPM Telecomunicaciones S.A. and its subsidiary Colombia Móvil S.A. E.S.P., as well as to the three issues of outstanding bonds that it currently has in the market. To complete, in February 2019, the Moody's firm awarded TigoUne the Baa3 international rating,” the company added.


Medellin-based textile giant Coltejer revealed in a March 5 filing with Colombia’s Superfinanciera oversight agency that it suffered a COP$29 billion (US$9.3 million) net loss for full-year 2018, 17% worse than the COP$24.7 billion (US$7.9 million) net loss in 2017.

Sales also dropped 15% year-on-year, to COP$144 billion (US$46 million), compared to COP$169 billion (US$54 million) in 2017.

Operating plus non-operating income combined dipped 17% year-on-year, to COP$176 billion (US$56.7 million), according to the company.

The net loss for 2018 is “basically owed to financing costs and reduced sales,” according to the company.

Meanwhile, fellow Medellin-based textile giant Fabricato revealed March 5 in a separate, one-sentence filing with Superfinanciera that its full-year 2018 net loss hit COP$31.75 billion (US$10.2 million), worse than the COP$6.4 billion (US$2.2 million) net loss in 2017. That filing failed to offer any other details.

Colombia’s textile manufacturers have been suffering severe losses in recent years in part because of massive below-cost contraband textile imports, mainly from Asia.

Textile Contraband ‘Czar’ Arrested

On a related front, Colombia’s Attorney General announced March 5 the arrest of Salim Ricardo Yamhure Daccaret of Imetex Ltda. and his alleged associate René Romero Sánchez on charges of illegal textile imports and money-laundering, totaling at least COP$177 billion (US$57 million) in avoided taxes and duties.

According to the Attorney General, Yamhure Daccaret allegedly evaded taxes and duties on imports of more than 19,000 tons of fabrics from Panama, Hong Kong and China, followed by the fictitious export of 12,000 tons of textiles.

“The raw material entered under the appearance of legality via Colombia by the ports of Cartagena, Barranquilla and Buenaventura,” according to the Attorney General.

“But this material wasn’t processed into products that were reported as exported. On the contrary, it was found that the merchandise remained in the country and, apparently, was sold at very low prices,” according to the Attorney General.

“Imetex Ltda. reported operations generating income totaling US$57 million, supposedly covered with tariff exemptions and [exclusions from] value-added tax. So, it is estimated that the fraudulent scheme generated losses to the state of at least US$57 million,” according to the Attorney General.

“In 2015, Imetex Ltda. was fined for COP$47 billion [US$15 million] for breach of tax commitments. Yamhure Daccaret in an attempt to divert the attention of the authorities, changed the name of the company registered it as Prointexco,” according to the Attorney General.


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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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