Saturday, November 17, 2018

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Organizers of the biannual Feria Internacional del Sector Electrico (FISE) electric-power industry conference in Medellin announced December 1 that this year’s edition generated US$230 million in new business deals, of which US$214 million involved 50 international buyers and US$10.9 million from 80 national buyers.

FISE’s organizers include the Chamber of Commerce of Medellin for Antioquia (CCM), the “Cluster Energia Sostenible” (the 867-member power-industry group of metro Medellin), the Medellin municipal government, and Medellin-based electric-power research group CIDET (Centro de Investigación y Desarrollo del Sector Eléctrico).

Organizers combined this year’s version of FISE with two concurrent conferences – the International Center for Hydropower (ICH), and the fifth congress of the Latin American energy integration group (Comisión de Integración Energética Regional, CIER).

Medellin is at the center of Colombia’s top international electric-power conferences as it hosts the nation’s biggest multinational power producers, transmitters, distributors and engineering giants, including EPM, Isa, Isagen, XM and HMV Ingenieros. What's more, city-owned multinational power giant EPM by itself provides 25% of the annual revenues for Medellin, as Mayor Federico Gutierrez pointed-out in a press conference here.

In addition, once the 2.4-gigawatt “Hidroituango” hydropower plant (owned by EPM and the Antioquia departmental government) is in full production by 2021, Antioquia alone will produce more than 50% of all Colombia’s electric power, as sustainable-energy-cluster director Jaime Arenas Plata explained to Medellin Herald.

Following start-up, Hidroituango would generate roughly COP$6 trillion (US$2 billion) in annual revenue, Mayor Gutierrez added.

The three industry conferences – held concurrently at Medellin’s Plaza Mayor conference center – together attracted an estimated 15,000 delegates, plus 158 technical sessions (which attracted 3,300 delegates), taking 20,000 square meters of show-floor space (the entire Plaza Mayor capacity), and brought 310 exhibitors from 20 countries – including 208 from Colombia, 15 from Mexico, 13 from the USA, 12 from China, 12 from Brazil, 10 from Argentina, six from Norway, five from Germany, four from Spain and two each from Ecuador, the Czech Republic and Turkey.

Exhibitors and technical talks rose sharply, while the international business-deal estimate for 2017 was nearly double that of 2015 -- the product of 700 arranged negotiations involving buyers from 16 nations, as ProColombia regional director Santiago Viera Ochoa explained in a closing press conference.

‘Smart City’ Highlights EVs, Power Networking

This year’s version of FISE featured a first-ever “Smart City Experience” section including demonstrations of electric cars, motorcycles and bikes, organized by FISE and Medellin’s Universidad Pontificia Bolivariana (UPB) university.

The “Smart City” also included demonstrations of computer-controlled street-lighting systems, advanced sensors and automated controls for energy-efficient homes and offices, a mock-up of Medellin-based national power-grid operator and power-trading center XM, plus technical presentations on Medellin’s expanding electric vehicle (EV) fleet and recharge network.

While Medellin hopes to expand its electric vehicle (EV) fleet, the city today has less-than 200 total EVs, with public EV-recharge-capacity for only 5,000 more -- compared to the city’s 700,000 gasoline-powered motorcycles and 650,000 gasoline or diesel-powered cars, trucks and buses, Mayor Gutierrez pointed out in his press conference prior to the launch of the "Smart CIty" exhibit.

However, EPM distributed-power technical expert Jorge Mario Ramirez explained in a presentation here that EPM is working with taxi fleets on a plan to bring 1,500 EV taxis to Medellin over the next three years, to complement the existing electric-powered Metro rail, “Metrocable” aerial trams, the “Tranvia” electric road trams and the eventual conversion of today’s natural-gas-powered “Metroplus” bus-rapid-transit (BRT) buses to all-electric power.

Broader adoption of EV’s in Medellin would help slash the city’s air pollution – 80% of which is caused by a huge fleet of diesel and gasoline cars, trucks, buses and motorcycles (many of them obsolete), as Mayor Gutierrez pointed-out.

To help jump-start this transition, EPM employees have been running experimental trials of EVs since 2012. But the company only launched promotion of an incipient public-recharge network last month.

Meanwhile, Colombia’s national government recently extended the 0% tariff on imported EVs for the next three years (for a maximum 3,000 vehicles) -- and the value-added tax (IVA) was cut to 5%, from 19% for most other goods in Colombia. IVA on EVs could be cut to zero if a bill pending in the Colombian Senate eventually passes.

EV’s also enjoy an exemption from Medellin's “pico-y-placa” control system that bans cars with certain license-plate numbers from operating on certain days.

Another law passed earlier this year slashes the cost of installing an EV recharge station by 80%. Typical residential recharge installations are estimated at COP$1 million (US$330) to COP$2 million (US$660), depending upon complexity and distance between the garage and customer’s meter, Ramirez estimated.

Still, the cost of EV batteries needs to fall even more in order to attract more car buyers, as Mayor Gutierrez and numerous other experts pointed-out at FISE here. Once new EV cars have an initial cost that’s similar to a comparable gasoline-powered car, then EV sales are likely to skyrocket beyond the 1.1 million EVs sold world-wide so-far this year.

While some car buyers might worry about traveling distance between recharges, most new EVs today have a traveling autonomy (between recharges) of around 200 to 250 kilometers – far more than needed by typical daily commuters, Ramirez added.


A new study (see: https://idc.compite.com.co/) by the national private-sector competitiveness council (Consejo Privado de Competitividad, CPC) and Universidad del Rosario shows that Antioquia continues to rank near the top in competitiveness among all of Colombia's 32 departments (states).

The departmental competitiveness index (Indice Departamental de Competitividad, IDC) -- now in its fifth edition -- shows that Antioquia ranks second only to Bogota in over-all competitiveness, with Santander third, Caldas fourth, Risaralda fifth, Valle del Cauca sixth, Cundinamarca seventh, Atlantico eighth, Boyaca ninth and Bolivar in 10th place.

Antioquia’s population of 6.6 million represents 13.9% of gross national product (PIB in Spanish intials), equivalent to COP$119.9 trillion (US$40 billion), while per-capita PIB is COP$18.3 million (US$6,135) and output per worker is COP$40 million (US$13,410), the study shows.

Besides coming-in second over-all in the national competitiveness ranking, Antioquia came-in third on institutional quality, fourth in infrastructure, second in market size, third in health-care, third in efficiency, third in higher education, second in market efficiency, second in innovation/sophistication and second in empresarial dynamism, the study shows.

However, Antioquia came-in at a relatively poor 18th in basic (primary and secondary) public schooling – down sharply from the 2013 survey -- and only 19th in environmental sustainability, also down from 2013, the study shows.

The study analyzed 94 variables, grouped into three main categories: basic conditions, efficiency and innovation/sophistication. 

Among the variables analyzed, Antioquia came in at 15th place in unemployment rate (9.62%), second in terms of worker contributions to health and pension funds (at 46.7%), second in terms of secondary-school English proficiency (34.12%), 18th in percent of total area in protected parks (10.7%), eighth in terms of total area covered by forests (34.6%), and sixth in per-capita financial investment in basic public education.

Antioquia came in at 15th place in terms of freight costs (transfers from cities to ocean ports), at US$68.84 per tonne of freight. Antioquia’s decades-long backlog and delays in building divided highways through its mountainous terrain explain the relatively poor freight-cost competitiveness, compared to cities nearer the Atlantic and Pacific ports.

Notably, despite claims by certain politicians, Antioquia is among the best departments in all Colombia in terms of long-term contract electricity costs (mainly for industry), at COP$290 per kiloWatt-hour, the study shows.

In the report, Jaime Echeverri, vice-president of planning and development for the Medellin Chamber of Commerce for Antioquia, pointed to greater economic diversification and greater focus on value-added production in Antioquia over the past 10 years.

This diversification "has been supported by the cluster strategy, in which public-private cooperation and the commitment of companies have been important assets,” according to Echeverri.

“This strategy prioritized six clusters: electric power; business tourism, fairs and conventions; building; medicine and odontology services; technology, information and communications; and textile clothing, design and fashion.

“The cluster model has focused on generating environmental conditions that favor competitiveness and productivity, around aspects such as innovation, science and technology, education, institutionality, human resources, as well as strengthening of the business base for taking advantage of business opportunities in high-potential segments.

“In a recent context, and with emphasis on the subregions of the department, the model of productive chains is being developed, in which business initiatives around coffee, cocoa and dairy products have been prioritized, and progress is being made in citrus and rubber, among others.

“In terms of diversification of the export basket, and of export destination countries, the region now has the ‘Grupo Antioquia Exporta Más’ [Antioquia Exports More] initiative, which integrates the entities related to the internationalization of companies -- and this is supported by the Ministry of Commerce, Industry and Tourism.

“This initiative seeks to integrate efforts and resources, and generate synergies in face of the challenges faced by the export base of the region, by advancing in an orderly manner on different fronts: country cost, market opening and expansion, design and development of products and services , business strengthening, human talent, financing, promotion of export culture and development of strategic capabilities,” Echeverri concluded.


For more than 150 years, Antioquia has been Colombia’s biggest gold producer -- and in-development projects are likely to keep it that way.

However, the 320 delegates to the second annual Colombia Gold Symposium (CGS) here in Medellin November 14-15 also heard warnings on real and potential threats to growth -- with environmental issues potentially surpassing the historic problems of violence in gold-mining areas.

The most highly-publicized current battle in Colombia against proposed gold mining isn’t in Antioquia, but rather in neighboring Santander, where the citizens of Bucaramanga (population 522,000) are trying to intervene in Minesa’s proposed US$1 billion “Soto Norte” project near the village of California, northeast of Bucaramanga. Water pollution is the claimed issue.

Minesa CEO Darren Bowden pointed out at CGS here that the Soto Norte project is among the top-five biggest gold-mining development projects in the world -- estimated to produce some 10 million ounces over the expected 25-year-life of the mine.

This project won’t employ toxic mercury nor cyanide, as all final processing will be offshore, not in Colombia, he said. This stands in contrast to the illegal mining in the area, to which Minesa will put a stop by converting illegal miners to work – cleanly, safely and properly -- in the proposed legal-mining operation.

“We guarantee that Soto Norte project will not affect the water that supplies Soto Norte and Bucaramanga,” Bowden said – flatly contradicting claims and legal challenges being raised by a local “green” non-governmental organization (NGO) and the mayor of Bucaramanga.

While the Soto Norte project currently is outside the “paramo” highlands where all mining in Colombia is now banned, a recent Supreme Court decision would have government regulators redraw the “paramo” limits, possibly tripping-up the project.

Meanwhile, in Antioquia, global mining giant AngloGold Ashanti is trying to develop a gold-mining project near Jerico, Antioquia. But “changing social and political scenarios” have clouded the forecast outlook for development, as noted in a presentation here by AngloGold geology manager Pablo Noriega.

On the positive side, Medellin-based Mineros SA has a long-established reputation for socially and environmentally responsible mining (see: "Mineros SA Boosting Environmental, Social Projects," Medellin Herald, March 21, 2016), while Canada-based multinationals including Continental Gold and Red Eagle Mining are likewise emerging to share this positive limelight, earning high praise from local communities in Antioquia as well as from national and local government officials.

Meanwhile, Antioquia Gold president Gonzalo de Losada said here that his company’s in-development project at Cisneros, Antioquia, won’t employ cyanide -- and will be environmentally and socially responsible.

Similarly, Silvana Habib, the current president of Colombia’s national mining agency (Agencia Nacional de Mineria, ANM), touted here the emergence of many more socially and environmentally responsible mining projects -- as well as more-effective government control over criminal and irresponsible artisanal mining.

Properly titled, permitted, designed and executed mining projects are expected to triple legal gold production in Colombia over the next few years -- combined with “formalization” programs to convert artisanal miners to responsible miners, Habib told the CGS forum here.

What’s more, Colombia will have completely banned the use of mercury in gold processing in 2018 – a step already taken well in advance of 2018 by legal miners such as Mineros SA.

Meanwhile, the national government and Colombia’s Supreme Court have been enabling local municipalities and territories to ensure greater citizen participation in permitting -- prior to start-up of legal mining projects.

This emerging trend has in some cases has stopped major gold-mining projects -- such as AngloGold Ashanti’s proposed “Colosa” open-pit gold-mining project in Tolima, and Gran Colombia Gold’s Marmato project -- much to the consternation of Asociacion Colombiana de Mineria (ACM), the biggest national mining trade association.

In a presentation here, ACM executive president Santiago Angel revealed that 27 Antioquian municipalities now have an interest in banning mining, including Andes, Amaga, Amalfi, Betania, Caicedo, Cañasgordas, Caramanta, Ciudad Bolivar, Concordia, Fredonia, Hispania, Jardin, Jerico, La Pintada, Montebello, Necocli, Pueblorrico, Santa Barbara, Salgar, Urrao, Uramita, Tamesis, Tarso, Titiribi, Valparaiso, Venecia and Yondo.

More often than not, it’s the fear of water pollution that raises the hackles of local citizens and various “green” NGOs opposed to new mining projects, as CGS attendees heard here.

In a presentation here, risk-management consultant Don Clarke of Birsa International pointed out that people in many areas of Colombia aren’t familiar with environmentally and socially responsible mining.

“Green” NGOs “use emotional tactics, but [mining companies] use logic to respond,” which often isn’t effective, he added. “You need to get better on identifying the [local] issues and improving your speech,” he said.

Responsible Mining Abounds - Internationally

In a technical presentation here, mining hydrogeochemical consultant Patrick Williamson of Colorado-based Intera Geoscience and Engineering pointed out that environmentally responsible mining projects have been successfully undertaken around the world -- with the Golden Cross, New Zealand open-pit and underground silver/gold mine an especially outstanding example (see before-and-after photos, above).

That mine produced some 584,000 ounces of gold and 1.6 million ounces of silver from 5 million tons of ore between 1991 and 1998, according to Williamson.

“The [end-of-mining] closure components included a tailings storage pond, waste rock dump, pit, underground workings and cyanide processing plant,” Williamson explained in follow-up notes provided to Medellin Herald.

“Challenges during closure included net acid-generating waste rock and reactive walls in the pit; management of cyanide solutions from the tailings storage facility during consolidation; a very wet climate (almost three meters of precipitation annually); and the location of the site at the headwaters of the Waitekauri River,” he continued.

“One factor leading to the success of the Golden Cross closure was the participation of a broad stakeholders group, including local politicians, regulators, environmental groups, technical reviewers, local residents and the Iwi band of the Maori people.

“Local communities, government, NGOs, shareholders, institutional investors and financial institutions -- combined with stricter regulatory standards and international criteria -- have challenged mining companies to operate to higher and more effective water management standards,” he added.

In a post-conference interview, Williamson told Medellin Herald that recent mine projects in Utah and Arizona, for example, typically reach closure successfully – in stark contrast to the pollution emanating from mines in centuries past, where many miners were ignorant of pollution problems.

In South America, another outstanding example of a successfully operated-and-closed mine is the “Kori Kollo” gold mine in the altiplano region near Oruro, Bolivia, he said.

However, similar success stories about large-scale Colombian gold mines operated from start-to-finish unfortunately haven’t yet happened yet, as Colombia “is getting such a late start” compared to large-scale gold mining in Mexico or Peru, he added.

“Colombia might jump into large-scale [gold] mining without the experience of opening or closing mines,” he told us. “This requires good science.”

While responsible miners might avoid cyanide or mercury pollution, acidic and metal leaching into water supplies would represent the other major threats -- if best-practices aren't followed, he cautioned.

Fortunately, modern miners now can tap high-quality, best-practices guides such as the Global Acid Rock Drainage (GARD) guide endorsed by the industry-supported International Network for Acid Prevention (INAP), or the Mine Environment Neutral Drainage (MEND) program in Canada, he explained.

Best-practices guides have been developed by leading experts in major mining nations including Australia, Sweden, Canada and elsewhere, while “the Chileans have a really good one in Spanish,” he added.

“If you don’t do best practices, then you run the risk of leaching acid water and metals,” Williamson cautioned.

Modern miners must employ such best-practices in order to obtain regulatory permits and achieve a “social license” to mine from neighboring communities, he added.

Unfortunately, “a lot of people think modern mining is no different from [reckless] Colorado mining of more than 100 years ago,” he said. “There are so many misplaced concerns -- and some NGOs are just trying to scare people,” he added.

On a related front, the UK-based CDP Global organization has published a series of recent surveys that rank major mining companies by their actions to protect water quality.

“Of the mining and materials companies that reported to the CDP Global water report 2014, 64% found exposure to water risk in their operations,” Williamson noted.

In the latest 2016 CDP water report, AngloGold Ashanti got a fairly good “B” rating, while Anglo American Platinum (South Africa), Harmony Gold Mining Co Ltd (South Africa) and Royal Bafokeng Platinum Ltd (South Africa) all got the highest “A” ratings.

“Almost all (92%) responding companies [in materials/mining] have fully integrated water into their business strategies, the highest of any sector, and 77% of companies have board-level oversight of a water policy, strategy or plan,” according to the CDP 2016 report.

CDP’s clean-water industrial survey “acts on behalf of 643 institutional investors, representing US$67 trillion in assets. These investors use CDP water data to engage with portfolio companies, inform investment decisions and catalyze change,” according to CDP.

While most of the companies involved in new gold-mining exploration and development projects in Colombia are relatively small (“junior” grade) -- and hence aren’t included in the CDP survey -- “juniors can learn from the majors and adopt best-practices,” Williamson told Medellin Herald.

“The metrics [of responsible mining] can be applied to any company,” he concluded.


Medellin Mayor Federico Gutiérrez announced November 20 that the city’s enormously popular “Metro” public-transport network will add yet another zero-emissions aerial-tram “Metrocable” system -- helping to stem air pollution mainly caused by obsolete diesel and gasoline vehicles.

The 2.8-kilometers-long, COP$298 billion (US$99 million) “El Picacho” aerial tram is due to start construction in 2018 and then start-up in late 2019 or 2020. France-based Poma -- which has built Medellin's other aerial tram systems -- won the competitive bidding for the project.

While most of the residents that must abandon nearly 400 homes to make way for construction of the new "Picacho" route have agreed to move, the city still hasn’t gotten 100% approvals, which could delay completion.

The “Picacho” line would serve about 160,000 people living in the working-class Northwest neighborhoods of Castilla and Doce de Octubre.

That line will join Metro’s existing electric-powered Metro rail system, an expanding electric-powered “Tranvia” road-tram network, the “Encicla” zero-emissions bicycle system, and the low-emissions, natural-gas-fueled “Metroplus” bus rapid transit (BRT) systems. The “Metroplus” BRT system also could be converted to zero-emissions electric power over the coming decade following initial tests underway on Metro’s first electric-powered bus.

Medellin gets virtually all its electric power from zero-emissions hydroelectric dams, with Medellin-based power utility EPM expanding capacity with the 2.4-gigawatt “Hidroituango” hydropower plant partially starting-up in late 2018.

Exito, EPM Expand EV Recharging

Meanwhile, Medellin-based multinational supermarket giant Exito announced November 21 that it’s opening the first two of a series of public electric vehicle (EV) recharging stations in Medellin – initially at the Éxito Poblado supermarket and at the “Viva” mall in the Laureles neighborhood.

While only a handful of EVs exist in Medellin to-date, local car manufacturer Renault (and its joint-venture partner Nissan) is one of the world’s leading makers of mass-market EVs -- mainly in Europe, so far. However, Renault has been boosting promotional sales of its “Twizy” mini-EV here in Medellin and could expand to more EV models in future.

“In the next few months, we will add two more [EV] charging stations at Éxito Envigado and Viva Palmas” in metro Medellin, added Claudia Echavarría Uribe, corporate affairs director at Grupo Éxito.

On the same day, EPM announced that it will have 20 EV recharging stations installed in metro Medellin by end-December 2017. That total includes the two new recharge stations involving Exito as well as a just-opened recharge station at the El Tesoro mall.

Additional EV recharge stations coming over the next month include Santafé mall, Unicentro mall, Los Molinos mall, Florida Parque Comercial, Mayorca mall (Sabaneta), Puerta del Norte (Bello); Viva Envigado, Plaza Mayor, Primer Parque de Laureles, Centro de Negocios Milla de Oro and Mall Río 10, according to EPM.


Colombia’s corporate oversight agency (Superintendencia de Sociedades) announced November 17 that Medellin-based architectural engineering giant Arquitectos e Ingenieros Asociados (AIA) filed for bankruptcy reorganization because of likely delays in paying creditors next year.

According to the Superintendencia, AIA reported revenues of COP$179 billion (US$59.6 million) at year-end 2016 and net income of COP$8.796 billion (US$2.9 million).

“The company requested the reorganization process, invoking the inability to pay imminently,” according to the Superintendencia. “That is, the company’s own projections suggest that it could stop paying its obligations next year.”

Superintendencia director Francisco Reyes Villamizar pointed out that AIA is one of Colombia’s most famous architectural engineers and construction companies, having participated in major infrastructure works such as the Bogota-Villavicencio superhighway and Medellin’s inconic María Luisa Calle cycling stadium, among many other big projects.

“The objective of the reorganization is to preserve the company as a productive unit and a source of employment generation,” Reyes added.

“Among the causes of the business crisis is a lower-than-expected behavior of the [Colombian construction] sector and a lack of working capital,” according to the Superintendencia.

“Upon admission to the insolvency regime, the company must refrain from making patrimony transfers that are not included in the ordinary course of business or making payments or arrangements outside the process,” the agency added.


Grupo Familia 3Q 2017 Profits Dip Year-on-Year

Friday, 17 November 2017 09:52 Written by

Medellin-based multinational personal-hygiene products maker Grupo Familia announced November 15 that its third quarter (3Q) 2017 net profit dipped to COP$44 billion (US$14.6 million), down from CP$51 billion (US$16.9 million) in 3Q 2017.

However, for the first nine months of 2017, Familia’s net profit has more than tripled, to COP$159 billion (US$52.8 million), compared to COP$41 billion (US$13.6 million) in the first nine months of 2016.

Sales in 3Q 2017 rose slightly year-on-year, to COP$579 billion (US$192 million), while taxes also rose in the latest quarter, to COP$24 billion (US$7.9 million), from COP$19.9 billion (US$6.6 million) in 3Q 2016.

Familia – founded in 1958 as a family company – operates in 23 countries in Latin America, with four manufacturing plants in Colombia, one in Ecuador, one in Argentina and one in the Dominican Republic.

Its brand names include “Familia,” “Pequeñin,” “Petys,” “Nosotras,” “Pomys” and “Tena.” Product lines include toilet paper, facial tissues, diapers, feminine hygiene products, creams, shampoos, pet-cleaning products and industrial hygiene products.


Antioquia Governor Luis Perez announced November 15 the signing of a memo of understanding that would clear the way for starting construction in March 2018 of the US$600 million “Puerto Antioquia” ocean-freight port near Turbo.

Signing the memo were the Antioquia departmental government and its Instituto de Desarollo de Antioquia (IDEA) investment agency, France-based CMA Terminals, Colombia port operator/investor Pio SAS, banana export trade association Augura, the Sociedad Puerto Antioquia and the municipality of Turbo, Antioquia.

IDEA and the Antioquia department will put-up 5% of the funds for the project, due for start-up in second-half 2020, according to Governor Perez.

The new port not only would expand capacity for Colombia’s banana and coffee exports, but also will add new capacity for general containerized freight, bulk products and automobiles, at an estimated 6 million tonnes per year initial capacity.

At the signing ceremony, Colombia’s Transport Minister German Cardona Gutiérrez pointed-out that the national government’s COP$13 trillion (US$4.3 billion) current investment in “fourth generation” (4G) highways including the “Mar 1” and “Mar 2” highways and the “Toyo" tunnel -- linking Medellin to Atlantic ports (including the future Puerto Antioquia) -- are crucial to the economic future of Antioquia.

The deadline for financial close on the project is January 31, 2018, according to the governor.


Medellin-based insurance and pension-fund giant Grupo Sura announced November 15 that its third quarter (3Q) 2017 net income fell 11.6% year-on-year, to COP$460 billion (US$152 million).

For the January-through-September nine months 2017, net income fell 26.6% year-on-year, to COP$1 trillion (US$331 million).

The decline came “mainly due to a negative impact of the [Colombian peso/U.S. dollar] exchange rate as well as non-recurring provisions recorded during the first half of the year,” according to Sura.

“Were we not to take into account the aforementioned effects, the parent´s net income would have dropped by just 0.3% based on the levels of operating performance obtained by its subsidiaries and the amount of revenues obtained from associates via the equity method.

“Nevertheless, our subsidiaries continue to secure significant levels of growth thereby reinforcing their competitive standing in all those countries in the region where we are present while maintaining positive levels of operating performance in the core lines of business,” according to the company.

The Suramericana insurance division saw earnings before taxes rise 3.5% year-on-year “thanks to a good level of performance from its regional operations as well as higher contributions from all those businesses acquired from RSA, which are now offsetting the increase in interest expense and amortizations incurred with this acquisition” according to Sura.

However, Suramericana’s net income fell 9.4% year-on-year, to COP$393 billion (US$130 million), “mainly due to higher income tax,” according to the company.

At the end of 3Q 2017, Grupo SURA’s consolidated financial liabilities rose 5% year-on-year, to COP$10.2 trillion (US$3.3 billion), including a US$191 billion bond placement in February 2017 as well as a separate US$350 million issue of international bonds (for Sura AM division) in April 2017, “for the purpose of replacing its liabilities and improving their maturity structure,” according to Sura.

The corporate segment, as recorded in Grupo Sura´s consolidated income, includes Grupo Sura, Suramericana and Sura AM. “This segment includes the amortizations relating to the acquisition of the former ING operations, which in no way affect cash,” according to the company.

However, this consolidated statement “does not include the amortizations carried out with regard to the acquisition of the former RSA companies, since these are directly posted in the non-life segment. The main changes to this segment for this past quarter consist mainly of the effect of the exchange rate on the dollar-denominated debt carried as well as the derivatives held by Grupo Sura and SuraA AM to hedge said debt,” according to the company.

Insurance premiums for 3Q 2017 rose by 8.8% “thanks to the level of performance secured by the different segments throughout the region, with life insurance accounting for more than half of this increase,” according to Sura.

“Likewise, the auto [insurance] solution continues with its good dynamics in the region, driven by the signature in September of a new agreement with UBER in Mexico,” the company added.

Completes Mexico Internal Swap Deal

Also on November 15, Sura announced that the Suramericana insurance division completed the buyout of the Mexican life-insurance portfolio formerly belonging to Sura Asset Management.

“Suramericana, with 73 years of experience in the insurance industry, shall be extending its portfolio to cover the aforementioned insurance interests held in Mexico,” according to the company.


Exito 3Q 2017 Net Loss Improves Year-on-Year

Thursday, 16 November 2017 12:25 Written by

Medellin-based multinational supermarket giant Grupo Exito reported November 14 that its net loss for third quarter (3Q) 2017 came in at COP$31 billion (US$10 million), a big improvement over the 3Q 2016 net loss of COP$100 billion (US$33 million).

Net revenues grew 8.5% year-on-year, to COP$13.9 trillion (US$4.6 billion), while gross profit improved 5.3%, to COP$3.1 trillion (US$1 billion).

Recurring earnings before interest, taxes, depreciation and amortization (EBITDA) rose 5.5% year-on-year, to COP$670 billion (US$222 million), according to the company.

For first the nine months of 2017, net income rose to COP$30 billion (US$9.9 million), up sharply from a net loss of COP$148 billion (US$49 million) for the first nine months of 2016, the company reported.

The company’s expansion beyond Colombia into Brazil, Uruguay and Argentina is paying-off, with system-wide synergies now expected to deliver more than US$50 million in savings, according to Exito.

“The results in third-quarter 2017 keep us confident about the strategy followed on each of the countries in where the company operates,” said Exito CEO Carlos Mario Giraldo.

“In Brazil, we highlight the positive figures and growth of the food business through ‘Assaí,’ ‘Extra’ and ‘Pão de Açúcar’ [store brands].

“In Colombia, the expansion of ‘Surtimayorista,’ the innovation with ‘Carulla Fresh Market’ and the cost-cutting strategies will create differentiation in the long-run.

“In Uruguay, the convenience format with ‘Devoto Express’ continues as a strong contributor to results, and in Argentina, we see evidence of economic recovery and a real estate business that continues to contribute to the results,” Giraldo added.

The Latin America integration strategy includes “18 initiatives across the four countries, mainly related to the launch of a renewed loyalty program in Brazil, the exchange of best practices between Colombia and Brazil in supply chain to reduce shrinkage in perishables, and other synergies derived from the ongoing integration process between countries,” according to Exito.

“The gradual decrease of interest rates in Colombia and Brazil may lower financial expenses and trigger consumption levels,” while Exito also expects a “mid-term economic recovery in Colombia, Brazil and Argentina.”

Meanwhile, the company will focus upon "cost and expense control activities” and maintain an “expansion focus on high-return formats such as cash-and-carry in Brazil and Colombia.”

Exito also foresees a “high potential from store conversions and renovations of premium stores,” according to the company.

In Colombia, Exito forecasts that its capex spending this year will hit about COP$300 billion (US$99 million). Strategic priorities in Colombia include “focusing on cost and expense control activities and in profitable expansion to maintain profitability” as well as “strengthening the differentiation of textiles, the ‘fresh’ model from' Super Inter,' and private-label penetration to defend the company’s market positioning and to improve sales volumes in the country.”

A recently announced “Puntos Colombia” loyalty program “may improve the company’s strength for traffic monetization in the near future,” the company added.

In Colombia, Exito this year plans to open “25 to 30 stores in profitable formats, mainly in mid-sized cities to avoid cannibalization, including eight cash-and-carry stores, for a sales expansion of nearly 35,000 square meters,” according to the company.

As for real estate projects, “expansion of Viva Malls will represent an additional 120,000 square meters of [retail leased space] in 2018,” according to the company.

In Brazil, strategic priorities this year include opening five new “Assaí” stores and converting 15 other stores to this format.

Another 40 Brazil stores will continue to adapt the “Colombian textile business model,” while recurring EBITDA margin will rise to about 5.5% in the food segment, “derived from higher profitability in ‘Assaí’ and stability in ‘Multivarejo,’” according to Exito.

In Uruguay, Exito plans to add another 10 to 15 “Devoto Express” stores this year, while in Argentina, strategic priorities include adding another 35.000 square meters of leased retail space over the next two-to-three years, according to the company.


Medellin-based construction giant Construcciones El Condor reported November 14 that its third quarter (3Q) 2017 net income nearly doubled year-on-year, to COP$15 billion (US$4.9 million), from COP$8 billion (US$2.6 million) in 3Q 2016.

Operating income also jumped in the latest quarter, to COP$262 billion (US$87 million), from COP$163 billion (US$54 million) in 3Q 2016. The company credited gains from the sale of its interest in the Opain airport concessionaire to Grupo Argos for part of the improved results.

Conconcreto Results Dip

Meanwhile, Medellin-based highway construction specialist Conconcreto reported November 15 that its 3Q 2017 net income fell 46.6% year-on-year, to COP$33 billion (US$10.9 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) fell 18.9%, to COP$127 billion (US$42 million).

The downturn for Conconcreto reflected slower growth in the Colombian economy this year, resulting in construction slowdowns, according to the company.

Meanwhile, Conconcreto reported a construction order backlog with a total value of COP$2.59 trillion (US$859 million), equivalent to 2.4-years of work.


Page 11 of 37

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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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