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Companies 177

Written by November 07 2018 0

Medellin-based electric-power giant Celsia announced November 6 that its third quarter (3Q) 2018 net profit dropped 31% year-on-year, to COP$64 billion (US$20 million).

However, nine-months 2018 net profits so far have risen 35% year-on-year, to COP$243 billion (US$77 million), according to Celsia.

Consolidated revenues for 3Q 2018 rose 8.5% year-on-year, to COP$852 billion (US$271 million), with Colombian revenues rising 18%, to COP$698 billion (US$222 million).

Earnings before interest, taxes, depreciation and amortization fell 12% year-on-year in 3Q 2018, to COP$259 billion (US$82 million), but nine-months 2018 consolidated EBITDA rose 0.5%, to COP$818 billion (US$260 million).

“In Colombia, accumulated energy demand during the [latest] quarter rose 4% with respect to the same period of 2017. The regulated market demand grew at a rate of 3% and the increase exceeded 6% in the unregulated market,” according to Celsia.

While Colombian average energy prices fell 4% year-on-year in 3Q 2018, the average marginal cost of energy in Panama was US$73 per MW-hour, 98% higher than in 3Q 2017, according to Celsia.

Commenting on the results, Celsia president Ricardo Sierra emphasized that the company “has a great emphasis on the development of renewable energies . . . The wind and solar projects that we have will lead us to add, over the next five years, 560-megawatts [MW] of renewable power in addition to the current 77-MW,” he said.

Four of the wind-power generation projects are in the Guajira region (northern Colombia), totaling 330-MW. These power projects already won environmental licenses and grid-connection approvals, according to Celsia.

In solar projects, Celsia Central America acquired in Panama its first photovoltaic plant, incorporating 33,000 solar panels, with a net capacity of 9.9-MW and a transmission line of 2.8 kilometers, according to the company.

“In Colombia, the Celsia Solar Bolívar photovoltaic farm is about to enter into operation. Located in Santa Rosa de Lima in Bolívar, Colombia, with a capacity of 8.06-MW and an estimated generation of 15,542-MW-hours per year, it will deliver the equivalent of the energy consumed by 7,400 households,” according to Celsia.

Written by November 04 2018 0

Medellin-based textile giant Fabricato on November 2 posted a third quarter (3Q) net loss of COP$9 billion (US$2.8 million), an improvement over the COP$19 billion (US$5.9 million) net loss in 3Q 2017.

Earnings before interest, taxes, depreciation and amortization (EBITDA) also improved year-on-year, with a positive COP$909 million (US$285,000) in 3Q 2018 versus a COP$6 billion (US$1.9 million) net EBITDA loss in 3Q 2017.

Sales also rose 13.6% year-on-year, to COP$96 billion (US$30 million), from COP$84.9 billion (US$26.6 million) in 3Q 2017.

As for nine-months (January through September) 2018 results, Fabricato’s net loss rose to COP$28 billion (US$8.8 million) versus a net loss of COP$13 billion (US$4 million) in nine-months 2017. However, EBITDA improved to a positive COP$5.6 billion (US$1.7 million) versus a negative COP$1.5 billion (US$471 million) in nine-months 2017.

Commenting on the latest results, Fabricato pointed out that “the third quarter of 2018 continued presenting the trend of moderate recovery of the [Colombian] economy, perceived since the beginning of this year.

“Some indicators such as controlled inflation, the low basic interest rate and the price of oil above US$80 per barrel allow us to believe that this scenario will remain positive, which generates a favorable environment for the country's economic activity.

“In relation to the textile sector, a resumption of the natural business cycle is perceived, that is, an increase in sales was noted in the third quarter of this year, a sign that the garment industry is preparing for a higher volume of sales for the end of the year.

“The retail sale of garments, accumulated to September 2018, indicated an estimated growth of 5% [year-on-year], which should reflect a resumption of the garment production sector and consequently of the textile sector.

“However, what’s important to note in this case is the increase in the imports of garments made for the large retail chains, which will surely reduce the transfer of the positive impact of their sales to the Colombian productive sector.

“When the new [Colombian national] government took office [this year], hopes were renewed regarding the fight against smuggling and informality, the main problems of the textile and clothing sector in Colombia.

“Some campaign promises, such as the reduction of VAT [value-added tax] for the textile sector, may face political resistance and face difficulties in its processing. However, measures such as the review of import tariffs and thresholds for imports are expected in the short term, as well as anti-dumping measures, which would be the beginning for the restoration of an environment of legal competition in Colombia and the consequent reactivation of this sector so important for the generation of jobs.”

As for the future, “we remain convinced that all of Fabricato’s efforts should be aimed at generating value for our clients, either because of the excellence in the product offer, or because of the speed of response, which is increasingly relevant in the purchase decision, with adequate prices.”

As for Fabricato’s real-estate business ventures, the company reported that its “Ciudad Fabricato” project continues to generate more revenues, while the former “Riotex” factory in Rionegro has achieved 55% leasing of available space to commercial third parties.

“In the case of full occupation [of the former Riotex factory], the leases of the industrial park should generate annual revenues between COP$5.5 billion [US$1.7 million] and COP$6 billion [US$1.9 million]. To this value should be added what will be received for the services available to the tenants, such as water and steam,” Fabricato added.

Written by November 01 2018 0

Medellin-based multinational power and utilities giant EPM announced October 31 that its nine-months 2018 net profits rose 12% year-on-year, to COP$1.7 trillion (US$528 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) also rose 12%, to COP$3.9 trillion (US$1.2 billion).

So far this year, EPM has spent COP$251 billion (US$78 million) in compensation costs to cover problems arising from a diversion-tunnel collapse in the US$5 billion, 2.4-gigawatt Hidroituango hydroelectric project. But this hasn’t stopped EPM from generating profits, general manager Jorge Londoño de la Cuesta said.

“As complicated as it has been for our company to address the contingency in the Hidroituango hydroelectric project, thanks to our EPM people and their commitment to the quality of life of the community and the development of the country, we have achieved growth in the group’s profits,” Londoño added.

The city of Medellín – EPM’s sole shareholder -- has netted COP$806 billion (US$250 million) in profit transfers so far this year, while EPM’s gross revenues rose 10% year-on-year, to COP$12 trillion (US$3.7 billion), the company noted.

EPM’s main holding company contributed 49% to earnings, foreign subsidiaries 33%, national energy subsidiaries 16%, and national water subsidiaries 2%, according to the company.

A hike in Colombian national power sales this year mainly explains the boost in revenues and profits, according to the company.

Meanwhile, EPM so far this year has invested COP$2.3 trillion (US$714 million) in infrastructure, 84% of which has been in Colombia, the company added.

Written by October 30 2018 0

The Medellin City Council early this morning (October 30) voted 16-5 to approve EPM’s sale of an estimated COP$4 billion (US$1.25 billion) worth of non-strategic assets in order to fill a gaping fiscal hole left by problems with its under-construction “Hidroituango” hydroelectric dam here in Antioquia.

The vote followed dozens of public hearings, City Council subcommittee hearings, briefings with local, departmental and national politicians, regulatory agencies, interest groups, debt-funding sources and Wall Street analysts, plus massive public information campaigns.

The deal ultimately overcame objections from some Council members arguing that EPM would be better-off selling its half-interest in the telecom/internet company TigoUne rather than its 10% stake in Colombia power generator ISA.

EPM estimates that it should be able to complete the sales of all these assets by third-quarter 2019. Revenues from the sales will help EPM maintain its annual payments to the city of Medellin, its sole shareholder, as well as maintain its crucial investments in power, water and sewer infrastructures.

The approval also means EPM will sell its stakes in Chilean power and water companies and its small stakes in a handful of Colombian companies including Gas Natural de Oriente, Terpel, BBVA, Acerias Paz del Rio and others.

EPM also plans to slash some COP$1 billion (US$313 million) from operating costs and delay COP$2 billion (US$626 million) in investments in order to recoup an estimated COP$7 billion (US$2.2 billion) in lost electricity sales, repair costs and compensation costs from the three-year-delay in Hidroituango’s start-up.

In a question-and-answer document provided to the City Council and the public, EPM explained the rationale behind its sale decisions.

As to why the company decided against selling its Tigo-Une shares (also called “Une-Millicom”), EPM stated: “The approval of the sale of Une-Millicom would take more time, and the current situation demands greater agility to obtain the necessary resources for the development of the investment plan.”

Asked why it would sell its 10% stake in ISA, “if it is a profitable asset, even above other less strategic investments,” EPM stated: “As it is a non-controlling minority stake of 10.17%, EPM has no interference in the major decisions of ISA. Therefore, this investment does not contribute EBITDA [earnings before interest, taxes, depreciation and amortization] or income and its sale would not affect the covenants of the credit agreements and EPM bonds.

“Additionally, ISA is a highly recognized company in Latin America whose shares are listed on the stock exchange, so its sale has a high probability of execution. Finally, the sale of the shares of ISA would generate a significant amount of resources to EPM, which would be comparatively more favorable than the annual amount of dividends received annually, which on average in the period 2014-2018 represent approximately 3.5% annually on the capital that EPM has invested in ISA.”

Dam Nears Completion, Spillway Starts Operating

On another crucial front, EPM reported that the Cauca River is just about to pass over the engineered spillway at the Hidroituango power project, which will enable closure of the tunnel to the mechanical room -- that room temporarily being used as an emergency diversion tunnel ever since the main diversion tunnel collapsed last April.

Once the mechanical room has been cleared of water, EPM can begin repairs to the project, hopefully leading to start-up of power production no later than 2021.

Written by October 28 2018 0

Medellin-based multinational foods giant Nutresa reported October 26 that its third quarter (3Q) 2018 net profit rose 19% year-on-year, to COP$386 billion (US$121 million).

“This growth is the result of a balanced equation that includes rising sales, efficiency in purchase of basic materials, productivity programs, lower growth in operating expenses and a continuing decline in financing costs,” according to Nutresa.

Consolidated sales of Grupo Nutresa grew by 3.4% year-on-year, hitting COP$6.6 trillion (US$2.07 billion) while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 5.1% year-on-year, to COP$841 billion (US$264 million). EBITDA margin was steady at 12.7%.

Sales in Colombia rose 4.1%, to COP$4.2 trillion (USS$1.3 billion) thanks to a volume hike of 2.3% plus a price hike of 1.5%. Sales abroad also rose 4%, to US$829.8 million.

“Innovation continues to be an important driver of growth for the Group -- and sales resulting from this concept represent 22.1% of the total,” according to Nutresa.

Gross profit rose 5.2% year-on-year, to COP$3.0 trillion (US$943 million), “the result of the increase in sales accompanied by a strategy to improve productivity,” according to the company.

“Operating income amounted to COP$634 billion [US$199 million], equivalent to an operating margin of 9.6%, and representing an improvement of 4.7% compared to the same period of 2017. This result is a consequence of the efficiencies in sales, administration and production during the period.

Net post-operative expenses fell 46% year-on-year, to COP$100.7 billion (US$31.6 million), “mainly explained by the significant reduction in financial expenses, resulting from lower indebtedness, and better interest rates in the main markets where the Group operates,” according to Nutresa.

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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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