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Written by November 11 2017 0

Medellin-based multinational cement and concrete manufacturer Cementos Argos reported November 10 that its third quarter (3Q) 2017 net income fell 42% year-on-year, to US$22 million, down from US$38 million in 3Q 2016.

However, operating income grew 3.9% year-on-year, to COP$2.19 trillion (US$728 million), according to the company.

Cement deliveries also grew 16.7% year-on-year, to 4.2 million tonnes, but concrete deliveries fell 6.1% year-on-year, to 2.7 million cubic meters.

Earnings before interest, taxes, depreciation and amortization (EBITDA) excluding non-recurring expenses rose 7.5%, to COP$428 billion (US$142 million), according to the company.

In its U.S. operations, cement deliveries rose 49.4% year-on-year, thanks largely to its recently acquired plant in Martinsburg, West Virginia. Gross income in its U.S. operations rose 14.9%, to US$404 million, while adjusted EBITDA soared 50% year-on-year, to US$73.5 million, according to the company.

Growing construction of U.S. homes, along with US$38 billion worth of infrastructure projects in Maryland, Virginia and Florida, plus the future impact of US$50 billion approved by the U.S. Congress for reconstruction of hurricane-hit areas in Florida and Texas, will help boost future income, according to the company.

In Colombia, cement deliveries rose 1.6% year-on-year, but concrete deliveries fell 8.3%. Gross income fell to COP$565 billion (US$188 million) and adjusted EBITDA declined to COP$113 billion (US$37 million), according to Argos. The declines came mainly due to falling prices for cement in Colombia, according to Argos.

Cement deliveries in Colombia for infrastructure projects reflect “steady growth” as Argos is involved in 70% of the “fourth generation” (4G) domestic highway projects, according to the company.

As for operations in Central America and the Caribbean región, cement deliveries rose 5.9% year-on-year, while concrete deliveries rose 1.7%, despite hurricanes that blasted Puerto Rico, Saint Martin, Saint Thomas and Dominica. Gross income for the Caribbean region hit US$145 million while adjusted EBITDA came-in at US$44 million.

Housing and infrastructure projects in Honduras and new building projects around the Canal Zone in Panama are expected to boost future income, the company added.

Written by November 08 2017 0

Three Colombian industrial producers of Hass avocados – all based in the Medellin metro area -- this month celebrated the first-ever exports of their products to the U.S. market.

The companies – Cartama, Hasspacol and Westsole – are working with California-based Mission Produce to introduce Colombian Hass avocados to the U.S. market, following first-ever import approvals from the U.S. government last month (see: "Top Antioquia Producers Hail U.S. Decision Enabling Avocado Exports," Medellin Herald, August 16, 2017). 

Colombia’s Ministry of Agriculture and the Instituto Colombiano Agropecuario (ICA) worked with avocado producers to achieve crucial U.S. Department of Agriculture Animal and Plant Health Inspection Service (APHIS) safety certification for the products.

ICA “has been instrumental in developing the phytosanitary requirements for export to the U.S.,” said Cartama CEO Ricardo Uribe. “We worked closely with Emilio Arevalo, the technical director at ICA, and with APHIS, in assuring that the strict requirements of the export protocol were met and that all future farms adhere to this protocol,” Uribe added.

The first Colombian Hass avocados reaching the market were grown by Hasspacol and packed at Cartama’s packing facility in Pereira, according to Mission Produce.

Written by November 07 2017 0

Having now won crucial Colombian government licenses for cultivation and production of medical marijuana products with “unlimited” percentages of tetrahydrocannabinol (THC) and cannabidiol (CBD), Toronto-based PharmaCielo now aims to launch production and commercial marketing in 2018.

In a November 7 interview with Medellin Herald, Federico Cock-Correa, the Medellin-based CEO of PharmaCielo Colombia Holdings, told us that the company now faces only one remaining regulatory hurdle: a production “quota” that he expects would be approved soon by Colombia’s Justice Ministry.

The Ministry must issue such quotas following limits mandated by the United Nations International Narcotics Control Board (INCB) -- or, as known in Spanish, the Junta Internacional de Fiscalización de Estupefacientes (JIFE).

INCB works with national governments “to ensure that adequate supplies of drugs are available for medical and scientific uses and that the diversion of drugs from licit sources to illicit channels does not occur,” according to the agency.

INCB also “administers a system of estimates for narcotic drugs and a voluntary assessment system for psychotropic substances and monitors licit activities involving drugs through a statistical returns system, with a view to assisting governments in achieving a balance between supply and demand,” the agency adds.

According to Cock-Correa, following issuance of the “quota,” Colombia would be the first target market for PharmaCielo’s pioneering medical-marijuana products.

Potential distribution chains could involve feedstock sales to third-party pharmaceutical producers as well as direct sales through retail pharmacies and supermarkets.

But the company is also targeting international markets including Australia, Brazil, Canada, Germany, Italy, Mexico, Peru and South Africa -- along with more than a score of other countries that are moving to legalize medical marijuana, he explained.

While some U.S. states have enacted marijuana legalization measures, the U.S. as a whole has yet to adopt a single, uniform regulatory-permission scheme. As a result, PharmaCielo might have to wait a few more years for future U.S. regulatory evolutions that would enable broad market penetration there, Cock-Correa explained to us.

Despite U.S. Attorney General Jeff Sessions’ recently expressed hostility toward marijuana legalization, ironically there’s a growing rationale for broader legalization of medical marijuana in the U.S. -- thanks in part to U.S. President Donald Trump recently declaring that the U.S. is in the midst of a horrific opioid-addiction epidemic.

Rationale for legalization: In recent years, several health researchers have published studies concluding that relatively non-addictive medical marijuana could at least partially substitute for highly addictive opioids in pain control -- hence potentially helping to stem opioid abuse.

Other claimed health benefits for medical-marijuana products include stress reduction, sleep inducement, appetite enhancement, nausea reduction (for patients using certain cancer drugs), headache relief and glaucoma relief. However, researchers also have cautioned that medical marijuana can have detrimental effects on attention-span, judgment and balance.

Asked what factors are key to achieving success in the emerging medical-marijuana market, Cock-Correa pointed out to us that scientific research, development and quality control throughout the entire process -- from cultivation to manufacturing of extracts – are critical.

For example: Artisanal and illegal marijuana-extract producers (whose products are found in the Colombian market today) don’t necessarily ensure that an end-product is free of harmful metals, chemicals or other contaminants. Nor can the efficacy of certain illegal products be guaranteed.

But besides ensuring relatively high quality products, legal producers also could benefit from being first-to-market with certain specialties, he added.

High-quality research-and-development, cooperation with quality, licensed producers of marijuana feedstocks, potential deals with third-party pharmaceutical manufacturers, marketing deals with big retail chains, and ability to produce a suite of high-quality products for various niche markets are all factors that could favor legal producers over illegal producers, he added.

Colombia’s more-than 50-years’ experience in ornamental flower production on a massive, industrial scale – plus its relatively favorable climate and competitive costs-of-production-- are additional factors favoring legalized medical-marijuana producers here, he said.

As for potential misuse of medical marijuana for recreational use, Cock-Correa pointed out that this same problem already occurs with alcohol or other products that have both medical and recreational -- and sometimes addictive -- applications.

So, while legalized medical-marijuana producers can do their best to warn against misuse -- and also employ control methods to prevent illegal diversion -- consumer education and government enforcement also must be part of the solution to minimize this problem, he concluded.

Written by November 02 2017 0

Medellin-based electric power transmission giant and multinational infrastructure operator ISA reported November 1 that its third quarter (3Q) 2017 net income rose 30.8% year-on-year, to COP$317 billion (US$103 million).

The improvement mainly came as a result of greater revenues, a decline in finance costs and favorable Brazilian tax-and-compensation provisions for operations there.

Consolidated operating revenues for 3Q 2017 rose to COP$1.9 trillion (US$620 million), while consolidated net income rose to COP$565.8 billion (US$184 million), according to the company.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for the latest quarter hit COP$1.18 trillion (US$385 million) with an EBITDA margin of 64%.

Capital investments during 3Q 2017 totalled COP$643 billion (US$210 million).

In Colombia, ISA invested COP$197 billion (US$64 million) in projects under construction, including the Ituango and Caracolí power substations and the Chinú-Montería-Urabá and Cerromatoso-Chinú-Copey transmission lines.

In Peru, ISA invested COP$154 billion (US$50 million) in various power-distribution construction projects.

In Chile, ISA invested COP$236 billion (US$77 million) in transmission and transformer projects, as well as COP$7.7 billion (US$2.5 million) in security and lighting projects for several of its highway concessions.

Written by November 01 2017 0

Medellin-based multinational utilities giant EPM announced October 31 that it successfully placed a COP$2.3 billion (US$764 million) 10-year bond offering at 8.375% interest.

“This is the third international issue denominated in Colombian pesos,” according to the company. Wall Street bond rater Fitch gave the issue a “BBB+” rating while Moody’s gave it a “Baa2” rating.

“With this issuance, made in order to prepay debt in dollars, the profile of the company’s debt is improved,” according to EPM. The latest placement takes advantage of the “current financial conditions of the international market,” according to the company, whose sole shareholder is the municipality of Medellin.

For the issue, about 60% of the bond buyers were from the United States, Europe, Chile, and Peru, while the remaining 40% were Colombian investors, according to the company.

“Thanks to this issue, we managed to make an important debt-management operation, which will allow us to improve the maturity profile and the average life of the debt,” added EPM general manager Jorge Londoño de la Cuesta.

“In addition, we will increase our debt composition in Colombian pesos, which will allow us to reduce EPM’s exposure to debt denominated in dollars, thereby minimizing the impacts derived from foreign exchange risk,” he said.

Funds from the bond issue will prepay a loan due in 2020, which was signed with seven banks in 2015. In total, 45% of the issue funds are going toward the construction of the US$5.5 billion, 2.4-gigawatt “Ituango” hydroelectric project in Antioquia, with the remaining 55% going to support other investment plans.

Spanish bank BBVA, U.S.-based Bank of America Merrill Lynch, and UK-based HSBC served as placement bankers for the issue.

Page 6 of 14

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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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