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Written by February 27 2018 0

Medellin-based multinational cement, power and highway/airport-concession giant Grupo Argos announced this month that its full-year 2017 net income rose 29% year-on-year, to COP$453 billion (US$158 million).

Argos also reported earnings before interest, taxes, depreciation and amortization (EBITDA) rose 7% year-on-year, to COP$630 billion (US$220 million), with EBITDA margin hitting 53%.

Consolidated EBITDA results hit COP$3.9 trillion (US$1.36 billion), the highest in the history of the company. This was the result of “good moment of the concessions and energy businesses and the moderate recovery tendency of the cement sector in Colombia,” according to the company.

Year-end 2017 assets rose 6.3% year-on-year, to COP$47.6 trillion (US$16.6 billion), with liabilities totaling COP$23 trillion (US$8 billion) and equity at COP$24 trillion (US$8.4 billion).

While debt grew 9% year-on-year, “given the substantial improvement of EBITDA, we highlight that the adjusted net debt/EBITDA indicator stands at 2.3x, being one of the lowest leverage levels in the history of this group,” according to Argos.

“This indicator, added to the 4.7x operating cash flow/interest, shows the high flexibility that Grupo Argos has in order to continue with the growth strategy. At the cash flow level, it closed the year surpassing COP$300 billion [US$105 million],” according to the company.

Corporate revenues rose 7% year-on-year, to COP$1.2 trillion (US$419 million). “This variation is mainly explained by the divestiture of [ocean port operator] Compas, which generated COP$403 billion [US$141 million] in revenues,” according to Argos.

“In addition, revenues from the real estate business increased by COP$53 billion [US$18.5 million] to COP$260 billion [US$91 million], due to the contribution of Pactia and adjustments in the fair value of investment properties,” the company added.

As for the Cementos Argos division, adjusted EBITDA excluding non-recurring items came in at COP$375 billion (US$131 million) with a 17.8% margin. However, Cementos Argos posted a full-year net loss of COP$80 billion (US$28 million) mainly due to “effects of the [deferred] tax reform in the USA” along with lower sales volumes in Colombia, the company added.

Cementos Argos produces and markets cement and ready-mix concrete in 15 countries including the USA, Colombia, and the Caribbean & Central America (CCA) region. Total annual capacity is estimated at 24 million tons of cement and 18 million cubic meters of concrete.

Despite the 2017 financial setbacks in the USA, Argos foresees a “positive outlook in the United States after the fiscal reform, which is expected to generate positive effects in the country’s economy, the industry and in Argos operations.”

Meanwhile, the Celsia electric-power division – operating in Colombia, Panama and Costa Rica – now boasts 2.4 gigawatts of generation capacity through 28 hydroelectric, thermal, photovoltaic and wind-power plants, generating around 6,317 gigawatt-hours (GWh) per year, according to Argos.

During 4Q 2017, Celsia’s consolidated power generation was 1,769 GWh, “up 12% compared to the same quarter last year and up 23% compared with Q3 2017. Out of the consolidated generation, 77% came from hydroelectric generation, 20% from thermal power plants, 3% from the wind farm in Costa Rica, and 0.20% (4 GWh) from the new solar farm in Yumbo,” according to Argos.

However, Celsia’s full-year 2017 electric power generation dipped 11% year-on-year, to 6,317 GWh, the company added.

Celsia’s consolidated revenue for 4Q 2017 rose 4% year-on-year, to COP$824 billion (US$288 million) , while full-year 2017 revenue fell 18% year-on-year, to COP$3 trillion (US$1.05 billion), “in line with our expectations given the lower generation volume of the thermal power plants and the spot price decrease, influenced in 2016 by the El Niño phenomenon,” the company added.

Celsia’s 4Q 2017 EBITDA rose 21% year-on-year, to COP$309 billion (US$108 million), as “good performance in Central America together with a more efficient operation in Colombia allowed the power generation facilities to make a significant contribution to the results, which added to the stability of the distribution and retail sales business,” according to Argos.

Celsia’s full-year 2017 net earnings rose 47% year-on-year, to COP$251 billion (US$88 million) while net profit attributable to controlling shareholders more than tripled, to COP$149 billion (US$52 million), the company added.

Written by February 27 2018 0

Medellin-based multinational insurance and asset-management giant Grupo Sura announced February 27 that its full-year 2017 net profits fell 13% year-on-year – to COP$1.45 trillion (US$493 million) -- mainly because of changes in the exchange rate between the U.S. dollar and the Colombian peso (COP).

Excluding currency impacts and non-recurring items, net profit would have risen 7.7% year-on-year, according to the company. Consolidated revenues grew 12% year-on-year, to COP$20.5 trillion (US$6.9 billion), the company added.

Revenue growth is explained by “good dynamics of the subsidiaries Suramericana and Sura Asset Management, in a challenging environment,” according to Sura.

The year 2017 was “marked by lower economic activity in Latin America. This did not stop the growth of all businesses, which accentuated their efforts in efficiency, profitability and consolidation of their operations in insurance, pensions, savings and investment, among other financial services,” according to the company.

The Suramericana insurance group saw revenues jump 20.9% year-on-year, to US$ 4.8 billion, while Sura Asset Management operating income rose 12%, to US$808 million, according to the company.

“On the other hand, the consolidated expenses of Grupo Sura amounted to 14.5% (US$6.3 billion), after incorporating for a full year the integration of the operations acquired into RSA to Suramericana, as well as higher interest expenses on debt and amortizations. associated with that transaction,” according to Sura.

“However, the efficiency indicators improved in the two subsidiaries: operating expenses in Sura Asset Management increased by 6.5%, almost half of the revenues, while in Suramericana they did so at an annual rate of 20.4%, also lower than the variation of total income.

“In this context, the consolidated net profit reached COP$1.45 trillion (US$493 million), a reduction of 13% in relation to 2016, particularly affected by the foreign exchange impact (COP$173.88 billion), the aforementioned interest expenses and other non-recurring expenses. Without these aspects, the net profit of Grupo Sura would have an annual growth of 7.7%, supported by the operating results of the subsidiaries.”

"After a decade of international expansion, financial strengthening and diversification of the origin of our revenues, 2017 was a year to consolidate inorganic growth, emphasize the strategic management of the portfolio to optimize it and obtain greater profitability, as well as enhance the Group’s business in Latin America,” added David Bojanini, president of Grupo Sura.

As for fourth quarter (4Q) results, consolidated revenues totaled COP$5.3 trillion (US$1.799 billion), up 1.3% year-on-year, while 4Q 2017e consolidated net income was COP$357 billion (US$121 million), “with a remarkable growth of 102.5%, driven by a triple effect: lower constitution of reserves in the insurance business, higher yields of the investment portfolios of the subsidiaries and a decrease of 0.9% in the total expenses,” according to the company.

Sura Asset Management saw 2017 operating profit grow 16.9%, recorded in local currencies, and net profit was COP$615 billion (US$208.5 million), similar to 2016 results. The asset management division saw fee income rise 26% in the “voluntary savings” unit and 39% in assets under management.

As for the Suramericana insurance and risk-management division, this unit posted a net profit of COP$506 billion (US$172 million), up 26.1% year-on-year. Written premiums grew 23%, to COP$12 trillion (US$4 billion), while consolidated reserves reached COP$15.26 trillion (US$ 5.11 billion).

For all of 2017, Grupo Sura assets grew 2.8% year-on-year, to COP$69.4 trillion (US$23 billion), while equity attributable to shareholders reached COP$23.8 trillion (US$7.98 billion), up 5.2%, according to the company.

 

Written by February 27 2018 0

Medellin-based multinational electric power transmission giant ISA announced February 26 that full-year 2017 net profits rose 44.5% year-on-year, to COP$1.1 trillion (US$386 million), largely thanks to improved financial results in its Brazilian electric-power operations.

Earnings before interest, taxes, depreciation and amortization (EBITDA) hit COP$4.4 trillion (US$1.5 billion) for full-year 2017, while gross revenues rose to COP$6.9 trillion (US$2.4 billion), according to the company.

In Colombia, operating revenues dipped by 0.9% year-on-year, to US$570 million, while Brazil operating revenues jumped 75.6% year-on-year, to US$753 million.

Revenues in Peru fell 26% year-on-year, to US$473 million, while revenues in Chile slipped 6.9%, to US$399 million.

ISA not only builds and operates power transmission lines in Colombia, but also has highway concessions, telecom lines and network management systems in neighboring countries.

In fourth-quarter (4Q) 2017, ISA profits benefitted from the entry into operation of power transmission lines in Peru, the expansion of a substation and connecting power lines in Chile, and upgrades in Brazilian transmission systems.

As for over-all 4Q 2017 results, profits rose 57% year-on-year, to COP$269 billion (US$94 million), mainly because of reduced costs in Colombia, according to the company

However, operating revenues corporate-wide dipped 7.6% year-on-year in 4Q 2017, mainly because of a dip in construction revenues in Peru and Chile.

Brazil accounted for 30.5% of operating revenues in 4Q 2017, followed by Colombia (25.8%), Perú (22%) and Chile (19%), according to the company.

The company’s data-management systems division saw income rise in 2017 in part thanks to new control systems installed for Medellin’s “Metro” public-transit system, ISA added.

As for capital investments in 4Q 2017, ISA invested COP$1 trillion (US$350 million), including COP$799 billion (US$280 million) for Colombian power substations in Ituango and Caracoli, and new transmission lines between Chinú-Montería-Urabá and Cerromatoso-Chinú-Copey, the company said.

Written by February 27 2018 0

Medellin-based multinational foods giant Grupo Nutresa on February 22 reported a 6.2% year-on-year rise in profits for full-year 2017, hitting COP$420 billion (US$147 million).

Consolidated sales rose 2.4% year-on-year, to COP$8.7 trillion (US$3 billion), after excluding sales in economically failing “socialist” Venezuela.

In Colombia, sales rose 2.5% year-on-year, to COP$5.5 trillion (US$1.9 billion), representing 63.2% of Grupo Nutresa’s consolidated revenues.

Sales abroad (excluding Venezuela) rose 5.7% year-on-year, to US$1.1 billion, accounting for 36.8% of Grupo Nutresa’s total sales.

“Furthermore, exports from Colombia presented strong positive dynamics over the year, growing 19.4% in U.S. dollars,” according to the company.

“Gross profit improved by 3.5% in relation to 2016, amounting to COP$3.8 trillion [US$1.3 billion]. This outcome is the result of a strong commodities sourcing and management strategy, the favorable prices of some commodities, and the productivity programs set in motion by the company,” Nutresa added.

As for earnings before interest, taxes, depreciation and amortization (EBITDA), Nutresa realized a modest 1.5% gain year-on-year, to COP$1.04 trillion (US$364 million).

“This result is explained to a large extent by moderate sales in our local market, the execution of various productivity-focused projects, and a sensible pricing strategy focused on protecting volumes,” according to the company.

Meanwhile, Nutresa saw a 4.5% growth in total assets, closing the year at COP$14.3 trillion (US$5 billion). “This increase is largely due to a greater cash generation during the period and the higher valuation of the investments in [Medellin-based multinational companies] Grupo Sura and Grupo Argos,” according to Nutresa.

Written by February 26 2018 0

Medellin-based international banking giant Bancolombia announced February 21 that its fourth quarter (4Q) 2017 net income fell 20.25% year-on-year, to COP$902 billion (US$318 million), from COP$1.13 trillion (US$398 million) in 4Q 2016.

Net loans grew 4.9% in 4Q 2017 versus 4Q 2016 – an indicator of “moderation in credit demand in Colombia,” according to the company.

Meanwhile, investments rose by 25.39% in 4Q 2017 versus 4Q 2016, to COP$16 trillion (US$5.6 billion), according to the company.

For full-year 2017, consolidated net income fell 9% year-on-year, to COP$2.6 trillion (US$916 million). However, compared to 3Q 2017 net income, 4Q 2017 net income rose 100% -- to COP$902 billion (US$318 million), the company noted.

Net interest income in 4Q 2017 grew 7.4% year-on-year, to COP$2.65 trillion (US$934 million), “explained by higher volumes of peso-denominated loans and the year-on-year increase in net interest margin,” according to Bancolombia.

Net fees rose 11.3% year-on-year, to COP$658 billion (US$232 million), “mainly driven by an increase in fees related to credit and debit cards, bancassurance, as well as trust services,” according to the company.

Provision charges for the latest quarter hit COP$930 billion (US$328 million) and the coverage ratio for 90-day past due loans was 164.2%. “These provisions allow us to maintain a solid coverage ratio amid a challenging environment, as new past-due loans totaled COP$622 billion [US$219 million] for the [latest] quarter,” the company added.

At year-end 2017, Bancolombia’s assets totaled COP$204 trillion (US$72 billion), up 3.9% year-on-year but down 0.1% compared to 3Q 2017. “The increase in total assets during the quarter is largely explained by the growth in loans, cash and reverse repurchase agreements,” according to Bancolombia.

The company also noted that during 4Q 2017, the Colombian peso depreciated 1.6% versus the U.S. dollar, while over the past 12 months, the peso appreciated 0.6%.

“As of December 31, 2017, our operations in Banco Agricola in El Salvador, Banistmo in Panama and BAM in Guatemala, represented 25% of total gross loans,” according to Bancolombia.

“Gross loans denominated in currencies other than COP -- originated by our operations in Central America and the offshore operation of Bancolombia Panama as well as the U.S. dollar-denominated loans in Colombia -- accounted for 34% and decreased 2.2% during 4Q 2017 (when expressed in COP), explained mainly by the reduction of the loan portfolio in dollars in Colombia,” according to the company.

“Total reserves (allowances in the balance sheet) for loan losses increased by 5.0% during the quarter and totaled COP$8.223 trillion [US$2.9 billion], equivalent to 5.1% of gross loans at the end of the quarter.

“As of 4Q 2017, Bancolombia’s goodwill and intangibles totaled COP$6.631 trillion [US$2.3 billion], increasing 1.6% compared to 3Q 2017. This variation is explained by the depreciation of the COP against the U.S. dollar during the quarter,” the company added.

At year-end 2017, Bancolombia’s liabilities totaled COP$179 trillion (US$63 billion), falling 0.7% from the end of 3Q 2017 and increasing 3.3% compared to 4Q 2016, according to the company.

Deposits by customers totaled COP$131.96 trillion (US$48 billion) or 73.5% of liabilities at the end of 4Q 2017, increasing 3.2% during the quarter and 5.9% over the last 12 months. The net loans-to-deposits ratio was 115.4% at the end of 4Q 2017, the company added.

“Bancolombia’s funding strategy during the last months has been to reduce the average life of time deposits and promote saving and checking accounts in the consumer segment in order to keep the funding cost at a minimum,” according to the company.

“The objective is to build and maintain ample liquidity and reduce the sensitivity of the balance sheet to cuts in interest rates,” the company added.

“During the quarter, the deterioration of loans increased mainly in the consumer segment as well as some deterioration in SMEs [small and medium enterprises]. Provisions as a percentage of the average gross loans were 2.3% for 4Q 2017 and 2.2% for 2017.

“Bancolombia maintains a strong balance sheet supported by an adequate level of loan loss reserves. Allowances for loan losses totaled COP7.46 trillion [US$2.6 billion], or 4.8% of total loans at the end of 4Q 2017, increasing as compared to 3Q 2017,” the company added.

“Income tax expense was COP$346 billion [US$122 million] for 4Q 2017, increasing 40.9% when compared to the income tax registered in 3Q 2017. Income tax expense for 2017 was COP$1.239 trillion [US$436 million] with and effective tax rate of 31.0%,” the company explained.

“The variation in the income tax between 4Q 2017 and 4Q 2016 was due to the fact that during 4Q 2016, there was a tax reversion in the provision of the income tax after the income statement was finalized, meaning there was certainty about the payable taxes based on the income generated during the fiscal period.

“Usually, this adjustment occurs at the end of each year. Additionally, there was a reversion for the compensation of fiscal credits and the tax reform approved in December 2016, had an impact on deferred taxes because statutory tax rates were lower than those previously estimated,” the company added.

Meanwhile, Bancolombia noted that on December 12, 2017, Standard & Poor’s Global Ratings downgraded the ratings of Bancolombia and its subsidiaries from BBB- to BB+, “in line with a downgrade in the rating of the Republic of Colombia.”

In a subsequent conference call with investment analysts, Bancolombia chief economist Juan Pablo Espinosa added that the bank expects Colombia’s GDP to grow by 2.5% this year -- up from 1.8% last year and just 1.6% in 4Q 2017 -- the result of “poor performance” in manufacturing, agriculture and retail sectors.

Meanwhile, Colombia is likely to see 3.4% inflation this year, down from earlier forecasts, Espinosa added. As for monetary policy, the Colombian central bank potentially could cut another 0.25% from its current rate levels, he predicted.

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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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