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Written by July 31 2018 0

Medellin-based textile giant Fabricato on July 31 posted a COP$7.4 billion (US$2.6 million) net loss for second quarter (2Q) 2018, down from a COP$16 billion (US$5.5 million) net profit in 2Q 2017.

Earnings before interest, taxes, depreciation and amortization (EBITDA) came-in at COP$2.8 billion (US$970,000) in 2Q 2018, an improvement over the COP$1.6 billion (US$554,000) EBITDA in 2Q 2017.

So far this year, first half (1H) net loss stands at COP$19 billion (US$6.6 million), an improvement over the net loss of COP$25 billion (US$8.6 million) in 1H 2017, according to the company.

“Despite the expectation generated by the [Colombia] presidential elections [won by pro-business, moderate conservative Ivan Duque, rather than socialist-populist Gustavo Petro] and the great interest that the [World Cup] soccer world arouses -- both events that took place in this [2Q 2018] period -- we saw the same recovery trend of the economy already perceived in the first quarter of the year,” according to Fabricato.

“Inflation remained under control and the price of oil remained above the budgeted target, two good elements that allow us to suppose that the trend of recovery in economic activity will continue,” according to the company.

However, “the point of alert in this second quarter was the deviation between the exchange rate of Colombia with the exchange rates of Argentina [Argentine peso down 35% against Colombia peso] and Brazil [Brazilian reais down 17% against Colombia peso], countries with which the free trade agreement entered into force in January of this year.

“The proximity of these countries with Colombia, associated with the devaluation of their currencies, makes the commercial effects immediate, making us [suffer] the increase of Brazilian products both in Colombia and in Ecuador and Peru, main destinations of our exports.

“In addition to the macroeconomic factors, in the textile sector there are positive effects of the measures against unfair competition adopted by the government at the end of last year, that is, the intensification of programs to combat smuggling, the decree with import price thresholds and especially the anti-dumping measure against China denim fabrics.”

However, “we still had many [cost penalties] due to the transfer of the [Riotex affiliate] plant from Rionegro to Bello, with the inevitable difficulties and cost overruns that this represents.

“EBITDA in the [latest] quarter was 3.2% on sales versus 1.8% in the same quarter of the previous year, despite the fact that sales in value were practically the same, a sign that operating efficiencies are beginning to be reflected in the results.

In addition, thanks to Fabricato’s move to meet U.S. environmental and social responsibility standards, “by complying with the standards, values and products required, Fabricato today is a licensed and recognized company in this segment,” the company added.

“Regarding the Colombian domestic market, we perceive a higher level of activity in the [clothing] trade and a lower level of activity in the industry, which can be explained both by the increase in the imports of manufactured clothing and by the excessive stock of imported fabrics in the last year.”

Meanwhile, as for Fabricato’s investments in commercial real-estate businesses, “the start of construction of the [Bello, Antioquia] shopping center is scheduled for September this year. For the defined business model, from the start of construction Fabricato will receive 49% of the revenue that corresponds to future cash flows and the remaining 51% with participation in the areas of the center that will be leased.

“With this income from leases, Fabricato will cover in the future a high percentage of the cash flow needs demanded by our pension liabilities. The approximate value for this year of the shopping center is approximately COP$6 billion [US$2 million].

“For the ‘Ciudad Fabricato’ [real-estate] project, the company has an estimated value of revenues of COP$162 billion [US$56 million] up to the year 2025, being that part of these resources must be received in the first four years of the project.”

As for its Ibagué real-estate project, “Triada S.A.S. continues to advance with the definition of the project and processing the proper permits for the launch of the development, which is scheduled for October of this year. The estimated value of revenues for this project for Fabricato is COP$25 billion [US$8.6 million] over a period of eight years, after the start of construction.”

As for the re-purposing of its former Riotex industrial park in Rionegro, “at the end of June, 45% of the available area is already leased. The objective is that by the end of this year the occupation is 100% or close to this,” according to Fabricato.

“In the case of full occupancy, we estimate that for leases and services, the industrial park should generate annual revenues between COP$5.5 billion [US$1.9 million] and COP$6 billion [US$2 million],” according to the company.

Written by July 30 2018 0

Medellin-based international packaged foods giant Grupo Nutresa announced July 27 that its second-quarter (2Q) 2018 profits rose 27% year-on-year, to COP$124 billion (US$43 million), while sales rose 5%, to COP$2.2 trillion (US$765 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose a modest 1.6%, to COP$267 billion (US$93 million), while EBITDA margin hit 12.5% during the first half (1H) of 2018, according to the company.

While Colombia currently represents 64% of its total global sales, Central America now accounts for another 9.3%; Chile 8.6%; the USA 7.5%; Mexico 2.6%; Peru and the Caribbean each 1.8%; and Ecuador 1.4%, according to Nutresa.

During 1H 2018, sales in Colombia rose 4.4% year-on-year, to COP$2.8 trillion (US$974 million), due to a 3.8% hike in product volumes “accompanied by a prudent pricing strategy and a decisive investment in brands in the different channels served,” according to Nutresa.

Also during first-half 2018, international sales grew 5.9% (as measured in U.S. dollars), hitting US$547.3 million, according to Nutresa.

Gross profit for 1H 2018 grew 5.6% year-on-year, to COP$1.9 trillion (US$661 million), reflecting “the increase in sales, efforts in productivity and the constant search for greater efficiencies in purchasing strategies and coverage of our raw materials,” according to Nutresa.

In Colombia, the company boasts of a 71% market share in sales of processed meats (Zenu and Pietran brands); a 54% share in crackers/cookies (Noel, Tosh, Dux); a 69% share in packaged chocolates (Corona, Jet, ChocoListo); a 50% share in coffees (Colcafe, Sello Rojo, La Bastilla, Matiz); a 52% share in pastas (Doria); and significant market shares in fast-food restaurants (El Corral, Leños y Carbon, Helados Bon, Krispy Kreme, Taco Bell, Starbucks, Papa John’s and Beer Station).

The company also boasts of robust sales of Italian processed-food specialties through its Tresmontes Lucchetti division in several countries.

Written by July 27 2018 0

Cemex Latam Holdings -- a division of Mexico-based cement giant Cemex -- announced July 26 that second-quarter (2Q) 2018 operating earnings before interest, taxes, depreciation and amortization (EBITDA) for its Colombia operations dipped 4% year-on-year, to US$21.6 million.

Sales in 2Q 2018 in Colombia also dipped 5% year-on-year, to US$129 million, while operating cash flow dipped to US$22 million, from US$23 million in 2Q 2017, according to the company.

Colombian sales volumes of cement, concrete and aggregates all fell between 9% to 13% year-on-year, mainly because of weakness in Colombia’s construction sector, according to the company.

However, year-on-year deliveries of cement for highways and infrastructure sectors were actually improving during the latest quarter, the company added. Meanwhile, prices for gray cement in Colombia during 2Q 2018 rose 8% year-on-year (measured in Colombian pesos).

As for the current situation facing Cemex Colombia’s in-limbo cement plant at Maceo, Antioquia (see: "Cemex Colombia Loses Appeal on Price-Fixing; Former Execs Charged in Maceo Plant Scandal," Medellin Herald, June 22, 2018), Cemex revealed that it’s now trying to work-out a new lease-extension deal with Colombia’s Sociedad de Activos Especiales (SAE) for lands around the Maceo plant.

SAE supplanted the now-liquidated Direccion Nacional de Estupefacientes (DNE) agency, which originally had moved to seize lands around the plant because of alleged tax fraud by the former owner of the properties.

Since then, Cemex Colombia had enjoyed a temporary “lease contract” with DNE to continue construction and an eventual planned-but-not-yet-executed start-up for the plant. But that contract expired July 15, 2018.

“Despite the expiration of the validity of the lease agreement, Cemex Colombia estimates that the lease agreement has the benefit of a renewal prerogative that operates in accordance with the terms and conditions of the lease agreement and by the Ministry of Justice, and that we also have the right to continue using Maceo’s assets in accordance with the terms [of the original lease] until the end of the domain termination process,” according to Cemex Colombia.

“Although the SAE questions the validity of the documents signed by the DNE, the SAE and Cemex Colombia continue to work on a long-term scheme that allows the Maceo plant to be commissioned while the extinction-of-domain process [that is, the economic seizure of property assets due to the tax-fraud allegations] is resolved,” according to the company.

Written by July 19 2018 0

New York-based global high-tech consultancy Accenture on July 18 officially announced the opening of its “Advanced Technology Center” at Medellin’s “Ruta N” landing space, aiming to serve information technology (IT) customers throughout the Americas.

“The center’s professionals will work with clients in a wide range of industries, including finance, telecommunications, consumer goods, natural resources, mining and energy, using the latest technologies available in the market and smart tools to help customers seize opportunities, enter new markets, increase the speed of commercialization and outperform competitors,” according to the company.

The new Advanced Technology Center “includes software developers, consultants, technical specialists, data scientists and experts in artificial intelligence, automation of robotic processes and other innovative technologies,” Accenture added.

“Accenture plans to hire 500 people for the Center and for its other operations in Colombia this year, seeking not only experienced professionals, but also new talent recruited from local universities with which it has close ties.

“The company plans to build local teams with advanced skills in core and new technologies, and with expertise in the most advanced delivery models, such as Agile, continuous integration, DevOps and highly automated processes.”

“There is a great amount of technological talent in Medellin, and we are pleased to offer IT professionals the opportunity to develop their careers at Accenture. Those who join our team will have access to the latest technology and will receive training for personal and professional development opportunities, as well as expand their commercial, industrial, technical and leadership skills,” added  Marco Ribas, president of Accenture in Colombia.

Ruta N director Alejandro Franco added that Accenture already employs some 225 technical workers at Ruta N and that thanks to the new Advanced Technology Center, Accenture aims to generate some 1,000 more jobs here over the next two years.

Written by July 18 2018 0

Tango fanaticism in Medellin is perhaps second only to Buenos Aires -- and only partly because the world’s most famous tango singer Carlos Gardel tragically died in a plane accident here on June 24, 1935.

Since then, numerous tango clubs have sprung-up around Medellin, eventually prompting the city to organize the popular, annual Medellin Tango Festivals each June.

These events and venues draw thousands of national and international spectators and dozens of internationally famous tango stars (see "Medellin’s Annual Tango Festival Shines This Month," Medellin Herald, June 15, 2016, and "Tango in Medellin Continues to Thrive; Salon Malaga, Patio del Tango Local Favorites,” Medellin Herald, August 31, 2016).

This fame continues to grow in unexpected ways, as evidenced by a July 18, 2018 report in Portafolio, one of Colombia’s two major national business newspapers.

That report recounts the founding and growth of Medellin-based shoe-maker D’Raso, which specializes in shoes for tango, flamenco, jazz, salsa and ballet -- for customers in cities as far-flung as Paris, London, Madrid, Rome, New York, Montreal and Melbourne, where the company has specialist sales representatives.

According to the company, its hand-made shoes employ “exclusive designs evolved from quality and functionality,” tailor-made for each dancer.

“In our D’Raso shoes it is essential that all seams are resistant and that all its parts are reinforced, to ensure that the shoes between jumps and movements absorb shock and energy without breaking, of course, without losing the comfort and flexibility that our brand offers," according to the company.

“Our shoes make a difference by being specially designed to dance. Softness, flexibility, comfort and light weight allow you to more easily perform your pivot movements, turns, rotations, insteps, jumps among other movements.”

The family-owned company first ventured into footwear in 1962. But a succeeding generation --- led by current owner Robiro Ocampo (himself a tango dancer) – spotted an international market for specialist dancing shoes.

“The main characteristic of a D'Raso shoe is that it should be comfortable and should be adjusted to the foot as if it were a glove,” according to the company.

“When a shoe is not adjusted to the foot, this forces the dancer to make an extra effort to maintain posture while making turns or fast movements. We know how important it is for you to be comfortable when it comes to dancing, so our team is committed to do our best to meet your expectations, providing a product of excellent quality,” according to the company.

Page 3 of 15

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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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