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Written by May 16 2018 0

Medellin-based electric power, cement, construction and highway/airport concessionaire Grupo Argos announced May 15 that its first quarter (1Q) 2018 net profits jumped 53% year-on-year, to COP$210 billion (US$73 million).

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) rose 9% year-on-year, to COP$941 billion (US$328 million), while EBITDA margin hit 28%, 272 basis points higher than in 1Q 2017.

The latest results “include stability of consolidated revenues of COP$3.3 trillion [US$1.1 billion] and growth in all other areas, reaching an operating profit of COP$607 billion [US$211 million], 23% more than in the same period of 2017, the result of the operational efficiencies in all its businesses,” according to Argos.

“Three significant advances are highlighted: First, in the process of deepening our investment in the [highway/airport] concessions business, the Odinsa delisting from the Colombian Stock Exchange was carried out, which will allow the subsidiary to have a more flexible and attractive capital structure. for the global market.

“Secondly, the simplification and strengthening of the capital structure of the energy business was completed, with the issuance of Celsia shares and the sale of the shares in [power producer] Epsa, which leaves an increasingly clear portfolio for the market.

“Finally, Cementos Argos' disinvestment plan continued with two important operations: the sale at the beginning of the year of 13 concrete-block plants in the U.S. [netting Argos US$50 million] and the divestment of three self-generating power plants in Colombia for US$58 million.”

“Our portfolio profitability strategy has given us very good results for our shareholders since, for the third consecutive quarter, all our businesses delivered positive contributions,” added Grupo Argos president Jorge Mario Velásquez.

Revenue and EBITDA gains in the latest quarter “are mainly explained by the sale of the shares of [Colombia power producer] Epsa, which generated a non-recurring income of COP$655 billion [US$228 million]. If we exclude the effects of this operation, revenues show an increase of 10% and a 23% increase in EBITDA,” the company added.

Odinsa Results

During the latest quarter, “an arbitration award in favor of Odinsa stands out -- in the case of the [highway] concession of the Autopistas del Café -- which, in addition to us maintaining the administration [of the concession] until 2027, confirms the good performance of the company. Likewise, the private initiative for the new Cartagena airport was presented, with estimated investments of more than US$600 million,” according to Argos.

As for its Bogota international airport concession, “it is worth noting the increase in passengers at the El Dorado airport, from 7.6 million to 7.9 million, and the stable behavior of daily vehicular traffic of 75,100 vehicles, very similar to the 75,400 recorded in the same period of 2017. These operating results have allowed Odinsa to have revenues of COP$184 billion [US$64 million], 1% more than in the first quarter of last year,” the company added.

Cementos Argos Results

“During the first three months of this year, Cementos Argos announced the use of tires as an alternative fuel source at the Cartagena [cement] plant. The efficiencies achieved by the ‘BEST’ program have allowed to reach an EBITDA of COP$371 billion [US$129 million], 31% more than in the same quarter of the previous year, and the improvement of the EBITDA margin in all the regional areas, to achieve a 19% margin,” according to Argos.

Celsia Results

In the Celsia energy division, “a positive balance included the start of the operation of the Yumbo solar [photovoltaic] farm. With respect to [over-all power plant] results, the company reached an EBITDA of COP$290 billion [US$101 million], 20% more than in the same period of the previous year, and an EBITDA margin of 34%. These results were achieved thanks to the increase in generation by 18%, and by 11% in power sales,” according to Argos.

Real Estate, Pactia Results

During 1Q 2018, the Grupo Argos urban-development division accumulated property deeds totaling 90,000 square meters, and the division realized revenues of COP$10 billion (US$3.5 million) from the sale of lots. “In addition, in the [commercial] real-estate rental business, we highlight the positive results of Pactia which closed the quarter with assets under management of COP$3.4 trillion [US$1.18 billion], and a gross leasable area of 719,000 square meters, growing 40% year-on-year,” according to Argos.

Written by May 16 2018 0

Medellin-based banking giant Bancolombia announced May 15 that its first-quarter (1Q) 2018 net profit dipped 14% year-on-year, to COP$522 billion (US$181.7 million).

Gross loans in 1Q 2018 grew 4.1% when compared to 1Q 2017 “and decreased by 1.1% during the quarter,” according to Bancolombia.

“This annual growth shows moderation in the credit demand in Colombia, as well as an appreciation of the COP [Colombia peso] against the US dollar by 3.6% during the last twelve months. Peso-denominated loans grew 11.1% when compared to 1Q 2017.”

Net interest income dipped 4.1% year-on-year, to COP$2.51 trillion (US$873.7 million).

“This slowdown in net interest income is explained by the adoption of IFRS 9 [international accounting standards] during 2018, which caused a reduction of COP$102 billion [US$35 million] during the quarter. Also, the appreciation of the COP against the US dollar during the last twelve months impacted the number,” the company added

Net fees rose 8.8% year-on-year, “mainly driven by an increase in fees related to credit and debit cards, bancassurance, payments and collections, as well as trust services,” according to Bancolombia.

Provision charges were COP$875 billion (US$304 million) and the coverage ratio for 90-day past due loans was 173.6%, according to the company.

“Provision charges increased by 13.0% when compared to 1Q 2017 and decreased by 5.9% compared to 4Q 2017,” according to Bancolombia. “These provisions allow us to maintain a solid coverage ratio amid a challenging environment,” the company added.

As of March 31, 2018, Bancolombia’s assets totaled COP$200.9 trillion (US$69.9 billion), up 2.1% year-on-year.

“During the [latest] quarter, the COP appreciated 6.8% versus the US dollar and over the past 12 months, it appreciated 3.6%,” the company noted. “The increase in total assets during the quarter is largely explained by the growth in reverse repurchase agreements and derivative financial instruments.”

Also as of March 31, 2018, Bancolombia operations via Banco Agricola in El Salvador, Banistmo in Panama and BAM in Guatemala, represented 24% of total gross loans.

“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 US dollar-denominated loans in Colombia, accounted for 32% [of total loans] and decreased by 6.9% during 1Q 2018 (when expressed in COP), explained mainly by the reduction of the loan portfolio in dollars in Colombia and the appreciation of the COP against the US dollar during the quarter,” according to the company.

At the end of 1Q 2018, Bancolombia’s liabilities totaled COP$177.7 trillion (US$61.8 billion), “decreasing by 1.0% from the end of 4Q 2017 and increasing by 1.8% compared to 1Q 2017” according to the company,.

“Deposits by customers totaled COP$130 trillion [US$45 billion] or 73.2% of liabilities at the end of 1Q 2018, decreasing by 1.4% during the [latest] quarter and increasing by 4.5% over the last 12 months. The net loans to deposits ratio was 115.0% at the end of 1Q 2018,” 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. The objective is to build and maintain ample liquidity and reduce the sensitivity of the balance sheet to cuts in interest rates,” according to the company.

“In the last months, Bancolombia has generated capital organically due to the appropriation of earnings in March 2018 and to the efficient allocation of capital in different products. The annual increase in the RWA [risk-weighted assets indicator] is mainly explained by the growth in the loan book, as well as the market risk,” the company added.

Written by May 15 2018 0

Medellin-based synthetic textiles specialist Enka Colombia announced May 11 that its first quarter (1Q) 2018 net income fell to COP$1.7 billion (US$591,000), down from COP$4.2 billion (US$1.4 million) in 1Q 2017.

Operating income for 1Q 2019 rose 8.4% year-on-year, to COP$91.9 billion (US$32 million), but earnings before interest, taxes, depreciation and amortization (EBITDA) fell to COP$5 billion (US$1.7 million), down from COP$6.8 billion (US$2.3 million ) in 1Q 2017.

The Colombian domestic market accounted for 54% of 1Q 2018 sales, while Brazil took the number-two spot at 22%; the USA market was a distant third at 5% and Argentina fourth at 4%.

Volume (in tons) of sales dipped 2.5% year-on-year “mainly because of fewer sales of recycled products” as feedstocks.

The rising value of the Colombian peso versus the U.S. dollar during the latest quarter slightly mitigated the decline in EBITDA and net income, as a large portion of corporate sales are indexed to the U.S. dollar, Enka added.

Net debt at the end of 1Q 2018 was a relatively modest 1.9-times EBITDA, although not as good as the 1.6-times index in 1Q 2017, the company added.

Sales in the domestic market rose 5% (in Pesos) while export sales rose 12% year-on-year, led by technical thread exports to the U.S. and Canada, “EKOFibras” recycled fiber sales to Brazil and the development of filament textile sales to Argentina, according to Enka.
As a result, the export markets accounted for 46% of sales, up from 45% in 1Q 2017.

“Green” and recycled “EKOFibras” fiber sales grew 16% year-on-year, accounting for 33% of corporate sales, according to the company. Meanwhile, sales of “EKOPET” recycled textiles are at 100% of production capacity, with the company now focused upon boosting collection of waste-plastic bottle feedstocks.

Textile filament sales rose 12% year-on-year, mainly due to a 28% jump in export sales, while domestic sales were flat. However, a government measure aimed at thwarting contraband textile imports should help improve domestic sales in coming months, the company added.

The year 2018 is starting on a positive note thanks to restrictions on low-quality Chinese recycled product imports, the new Brazil free-trade agreement and a crackdown on contraband clothing, Enka added.

By third-quarter 2018, Enka expects to start-up a new plant that can reprocess waste plastic bottle-tops and labels into fibers. On a parallel front, Enka continues to work toward a second-quarter 2019 start-up of a modernized “EKOFibras” plant, which will boost productivity and quality of fibers produced from waste plastic bottles.

Proposed legislation in the Colombian Congress that would require plastic recycling also could boost prospects for Enka in future years, the company added.

Written by May 14 2018 0

Medellin-based software whiz-kids Jorge Soto and Santiago Villegas just won recognition in the prestigious “Endeavor Entrepreneurs” competition at Endeavor’s 79th “International Selection Panel” (ISP) in Louisville, Kentucky.

Soto, the chief executive officer (CEO) of Medellin accounting software pioneer Alegra, and Villegas, the chief technology officer (CTO) of the company, competed globally against dozens of start-ups to join 13 other companies in the Endeavor winners circle this month.

“’Endeavor Entrepreneurs’ gain access to comprehensive customized services, including introductions to local and international business mentors and volunteers from Fortune 500 consulting firms who will help them address key needs,” according to global startup-promotion organization Endeavor.

“Endeavor Entrepreneurs have had a significant track record of creating hundreds of thousands of jobs, generating billions of dollars in revenues, and building sustainable growth models in their home countries,” the organization added in a May 10 announcement.

Explaining the award announcement, Endeavor cited Alegra’s clever niche: “Small businesses should not have big bookkeeping problems, and yet, 95% of the US$6 billion Latin American micro, small and medium enterprise (MSME) market still manages invoices and administration by hand.

“In 2017, Colombian and Costa Rican governments followed the lead of seven other Latin American governments including Mexico, Brazil, and Peru, by mandating that all businesses, irrespective of industry and size, must issue 100% of their invoices electronically by 2019. In January 2018, Panama followed suit with a pilot program; in April 2018, the Dominican Republic did the same.”

Responding to these challenges, “Alegra is alleviating a major pain point for 25,000 daily active users in nine countries by providing an easy-to-use, cloud-based software for Latin American MSMEs to efficiently manage their businesses under these new regulatory standards,” Endeavor noted.

Alegra History, Expansion Plans

Asked to elaborate on the company’s origins and evolution, Alegra told Medellin Herald that CEO Soto is an administrative-engineering graduate from Medellin’s Escuela de Ingenieria Antioquia (EIA) University, as well as a political science student.

“In his career as an entrepreneur, Soto created five companies -- and in some of these he failed, but he knew how to get up and take advantage of the experience gained. Thus, he discovered the needs of companies and created his sixth venture, Alegra.com, a software in the cloud for small-business administration.

“Soto realized from experience that one problem that small business owners have in common is how to invoice and keep accounts. Thus, he was given the task of finding a solution:

“First he tried Excel, but found that the margins are unbalanced, the invoice numbers are duplicated and in general it becomes chaotic. Then he used a traditional accounting software and found that these are complicated, expensive systems, made for the [professional] accountant and most are more than 20 years old.

“The third option was to use foreign software, but since it was not adapted to the legislation and requirements of the local [Colombia] tax authority, this generated inconveniences and more work. These options did not solve the needs of administration of the micro and small companies.

“With this idea, the team of Alegra got together to start working on the project, and after a year of development they went on the market in January 2013. The reception was very good from the first month -- and since then they have not stopped growing.

“After one year of the launch in Colombia -- and already with a number of important users who had validated the product -- they thought of scaling up to other countries. So, in 2014, they released versions for Panama, Mexico and the Dominican Republic, where they found very similar situations, and where Alegra solved the same problems.

“Today, five years after going on the market, Alegra has 120,000 registered companies on its platform, a presence in 16 countries, and a team that makes the platform and service better every day.

“Unlike other startup ventures, Alegra has not been part of any incubator or accompaniment process, which has enabled them to grow autonomously without having to resort to funds or venture capital to leverage growth.

“The next objectives of the company are to launch versions for the countries that are missing from the Latin American region, such as Argentina, then continue with countries in Africa and Southeast Asia, as Alegra seeks to be the first and best option for small businesses in developing countries,” according to the company.

Written by May 12 2018 0

Canada-based Gran Colombia Gold reported May 10 that profits from its first quarter (1Q) 2018 gold mining operations here in Antioquia rose to US$5.4 million, up from an $800,000 net loss in 1Q 2017.

The company credited “higher gold sales volumes, realized gold prices and lower total cash costs per ounce” for the year-on-year profit boost.

On the other hand, Medellin-based gold mining giant Mineros SA announced May 11 that its 1Q 2018 net profits dipped 17.9% year-on-year, to COP$19.8 billion (US$6.9 million), down from COP$24 billion (US$8.4 million) in 1Q 2017.

Mineros cited a 6.1% drop in gold-equivalent production corporate-wide, including a 13.9% decline in Colombia. That was partially offset by a 1.8% production boost in Nicaragua.

Cash cost of operations also rose in Colombia, to US$764/ounce, compared to US$596/ounce in 1Q 2017.

For the remainder of 2018, Mineros forsees continuing volatility in world gold prices, while its gold production is likely to come-in at between 195,000 to 215,000 ounces this year.

Gran Colombia Balance Sheet Improves

Commenting on its 1Q 2018 results, Gran Colombia executive co-chairman Serafino Iacono noted: “We have reached another milestone with the successful completion of our debt refinancing, which will shortly conclude with the full repayment of the principal amount of our 2020 debentures and 2024 debentures.

“We are also pleased with the continued improvement in the operating and financial results we are reporting today. With the enhanced liquidity made possible by the debt refinancing, we have a stronger balance sheet that, together with our internally generated cash flow, will allow us to forge ahead with the execution of our strategy to create value by exploring, developing and modernizing our mining operations.”

Gran Colombia added that 1Q 2018 total gold production hit 52,672 ounces with a further 16,119 ounces produced in April 2018.

“Fueled by continued growth in the company’s high-grade Segovia [Antioquia] operations, the company’s trailing 12-months’ total gold production increased to 187,485 ounces as of March 2018, up 8% over the total for 2017 of 173,821 ounces and within the company’s guidance range for 2018 of between 182,000 and 193,000 ounces,” according to Gran Colombia.

“Revenue increased 42% in the first quarter of 2018 over the first quarter last year to US$64.8 million, positively impacted this year by the increased level of gold production as described above and 10% better realized gold prices in the first quarter of 2018 as spot gold prices rose 9% compared with the first quarter last year.

“Total cash costs and all-in sustaining costs (AISC) averaged $670 per ounce and $896 per ounce, respectively, for the first quarter of 2018, down from $748 per ounce and $941 per ounce, respectively, in the first quarter last year.

“Adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] doubled in the first quarter of 2018 to $27.4 million, compared with $13.6 million in the first quarter of 2017, bringing the trailing 12-months total adjusted EBITDA at the end of March 2018 to $89.3 million, up 18% compared with 2017,” the company added.

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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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