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Written by November 16 2017 0

Medellin-based insurance and pension-fund giant Grupo Sura announced November 15 that its third quarter (3Q) 2017 net income fell 11.6% year-on-year, to COP$460 billion (US$152 million).

For the January-through-September nine months 2017, net income fell 26.6% year-on-year, to COP$1 trillion (US$331 million).

The decline came “mainly due to a negative impact of the [Colombian peso/U.S. dollar] exchange rate as well as non-recurring provisions recorded during the first half of the year,” according to Sura.

“Were we not to take into account the aforementioned effects, the parent´s net income would have dropped by just 0.3% based on the levels of operating performance obtained by its subsidiaries and the amount of revenues obtained from associates via the equity method.

“Nevertheless, our subsidiaries continue to secure significant levels of growth thereby reinforcing their competitive standing in all those countries in the region where we are present while maintaining positive levels of operating performance in the core lines of business,” according to the company.

The Suramericana insurance division saw earnings before taxes rise 3.5% year-on-year “thanks to a good level of performance from its regional operations as well as higher contributions from all those businesses acquired from RSA, which are now offsetting the increase in interest expense and amortizations incurred with this acquisition” according to Sura.

However, Suramericana’s net income fell 9.4% year-on-year, to COP$393 billion (US$130 million), “mainly due to higher income tax,” according to the company.

At the end of 3Q 2017, Grupo SURA’s consolidated financial liabilities rose 5% year-on-year, to COP$10.2 trillion (US$3.3 billion), including a US$191 billion bond placement in February 2017 as well as a separate US$350 million issue of international bonds (for Sura AM division) in April 2017, “for the purpose of replacing its liabilities and improving their maturity structure,” according to Sura.

The corporate segment, as recorded in Grupo Sura´s consolidated income, includes Grupo Sura, Suramericana and Sura AM. “This segment includes the amortizations relating to the acquisition of the former ING operations, which in no way affect cash,” according to the company.

However, this consolidated statement “does not include the amortizations carried out with regard to the acquisition of the former RSA companies, since these are directly posted in the non-life segment. The main changes to this segment for this past quarter consist mainly of the effect of the exchange rate on the dollar-denominated debt carried as well as the derivatives held by Grupo Sura and SuraA AM to hedge said debt,” according to the company.

Insurance premiums for 3Q 2017 rose by 8.8% “thanks to the level of performance secured by the different segments throughout the region, with life insurance accounting for more than half of this increase,” according to Sura.

“Likewise, the auto [insurance] solution continues with its good dynamics in the region, driven by the signature in September of a new agreement with UBER in Mexico,” the company added.

Completes Mexico Internal Swap Deal

Also on November 15, Sura announced that the Suramericana insurance division completed the buyout of the Mexican life-insurance portfolio formerly belonging to Sura Asset Management.

“Suramericana, with 73 years of experience in the insurance industry, shall be extending its portfolio to cover the aforementioned insurance interests held in Mexico,” according to the company.

Written by November 16 2017 0

Medellin-based multinational supermarket giant Grupo Exito reported November 14 that its net loss for third quarter (3Q) 2017 came in at COP$31 billion (US$10 million), a big improvement over the 3Q 2016 net loss of COP$100 billion (US$33 million).

Net revenues grew 8.5% year-on-year, to COP$13.9 trillion (US$4.6 billion), while gross profit improved 5.3%, to COP$3.1 trillion (US$1 billion).

Recurring earnings before interest, taxes, depreciation and amortization (EBITDA) rose 5.5% year-on-year, to COP$670 billion (US$222 million), according to the company.

For first the nine months of 2017, net income rose to COP$30 billion (US$9.9 million), up sharply from a net loss of COP$148 billion (US$49 million) for the first nine months of 2016, the company reported.

The company’s expansion beyond Colombia into Brazil, Uruguay and Argentina is paying-off, with system-wide synergies now expected to deliver more than US$50 million in savings, according to Exito.

“The results in third-quarter 2017 keep us confident about the strategy followed on each of the countries in where the company operates,” said Exito CEO Carlos Mario Giraldo.

“In Brazil, we highlight the positive figures and growth of the food business through ‘Assaí,’ ‘Extra’ and ‘Pão de Açúcar’ [store brands].

“In Colombia, the expansion of ‘Surtimayorista,’ the innovation with ‘Carulla Fresh Market’ and the cost-cutting strategies will create differentiation in the long-run.

“In Uruguay, the convenience format with ‘Devoto Express’ continues as a strong contributor to results, and in Argentina, we see evidence of economic recovery and a real estate business that continues to contribute to the results,” Giraldo added.

The Latin America integration strategy includes “18 initiatives across the four countries, mainly related to the launch of a renewed loyalty program in Brazil, the exchange of best practices between Colombia and Brazil in supply chain to reduce shrinkage in perishables, and other synergies derived from the ongoing integration process between countries,” according to Exito.

“The gradual decrease of interest rates in Colombia and Brazil may lower financial expenses and trigger consumption levels,” while Exito also expects a “mid-term economic recovery in Colombia, Brazil and Argentina.”

Meanwhile, the company will focus upon "cost and expense control activities” and maintain an “expansion focus on high-return formats such as cash-and-carry in Brazil and Colombia.”

Exito also foresees a “high potential from store conversions and renovations of premium stores,” according to the company.

In Colombia, Exito forecasts that its capex spending this year will hit about COP$300 billion (US$99 million). Strategic priorities in Colombia include “focusing on cost and expense control activities and in profitable expansion to maintain profitability” as well as “strengthening the differentiation of textiles, the ‘fresh’ model from' Super Inter,' and private-label penetration to defend the company’s market positioning and to improve sales volumes in the country.”

A recently announced “Puntos Colombia” loyalty program “may improve the company’s strength for traffic monetization in the near future,” the company added.

In Colombia, Exito this year plans to open “25 to 30 stores in profitable formats, mainly in mid-sized cities to avoid cannibalization, including eight cash-and-carry stores, for a sales expansion of nearly 35,000 square meters,” according to the company.

As for real estate projects, “expansion of Viva Malls will represent an additional 120,000 square meters of [retail leased space] in 2018,” according to the company.

In Brazil, strategic priorities this year include opening five new “Assaí” stores and converting 15 other stores to this format.

Another 40 Brazil stores will continue to adapt the “Colombian textile business model,” while recurring EBITDA margin will rise to about 5.5% in the food segment, “derived from higher profitability in ‘Assaí’ and stability in ‘Multivarejo,’” according to Exito.

In Uruguay, Exito plans to add another 10 to 15 “Devoto Express” stores this year, while in Argentina, strategic priorities include adding another 35.000 square meters of leased retail space over the next two-to-three years, according to the company.

Written by November 16 2017 0

Medellin-based construction giant Construcciones El Condor reported November 14 that its third quarter (3Q) 2017 net income nearly doubled year-on-year, to COP$15 billion (US$4.9 million), from COP$8 billion (US$2.6 million) in 3Q 2016.

Operating income also jumped in the latest quarter, to COP$262 billion (US$87 million), from COP$163 billion (US$54 million) in 3Q 2016. The company credited gains from the sale of its interest in the Opain airport concessionaire to Grupo Argos for part of the improved results.

Conconcreto Results Dip

Meanwhile, Medellin-based highway construction specialist Conconcreto reported November 15 that its 3Q 2017 net income fell 46.6% year-on-year, to COP$33 billion (US$10.9 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) fell 18.9%, to COP$127 billion (US$42 million).

The downturn for Conconcreto reflected slower growth in the Colombian economy this year, resulting in construction slowdowns, according to the company.

Meanwhile, Conconcreto reported a construction order backlog with a total value of COP$2.59 trillion (US$859 million), equivalent to 2.4-years of work.

Written by November 16 2017 0

Medellin-based construction, electric power and cement giant Grupo Argos announced November 14 that its third quarter (3Q) 2017 consolidated net profit grew 38% year-on-year, to COP$452 billion (US$150 million).

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for 3Q 2017 rose 28% year-on-year, to COP$1.2 trillion (US$398 million).

Revenues soared by 253% “thanks to the sale of the Compas [ocean ports] shares, to the lots appraisal in the real estate business and to the positive results of all businesses,” according to the company.

“Grupo Argos now has a solid cash position for the closing of the quarter of COP$267 billion [US$88 million], and a reduction in the leverage indicators of 2.2 times the EBITDA, well below the 3.8 times obtained in the same period last year. Both indicators give flexibility to the holding company to develop its strategy of capital allocation and active management on investments,” according to the company.

Grupo Argos is the multinational parent company of Cementos Argos, Celsia and Odinsa, all based in Medellin.

“The cement business showed a positive growth dynamic especially in the United States, which along with significant advances in operational efficiency in all geographies allowed us to show the best figures of the year, with an adjusted EBITDA of COP$428 billion [US$142 million], equivalent to 19.5%, if non-recurring expenses are excluded,” according to Grupo Argos.

“In the energy business, on October 26 [2017], Celsia announced an issuance of common shares and a public offer of acquisition of up to 14% of the Epsa shares. Both operations [Celsia and Epsa] are supported by Grupo Argos, as they will strengthen the energy business and offer greater transparency to the market regarding the capital structure of the holding.

“In terms of the [highway and airports] concessions business, we are confident with the stock market Odinsa strategy, a Grupo Argos road and airport concession company. As shown by the results, we issued bonds for COP$400 billion [US$132 million], with an oversupply of 2.3 times what was offered, making it the first issuer of the sector which in the last 10 years issued securities in the market with an AA- rating.

“Odinsa also achieved the first disbursement and final closure of its US$250 million loan for the construction of the Pacifico 2 highway, under the fourth generation [4G highway] concessions program,” the company added.

During the latest quarter, Odinsa’s revenues were COP$200 billion (US$66 million), up 9% year-on-year, thanks to “stability in the growth of vehicle and passenger traffic, with increases of 3% compared to the same period of 2016, with 73,000 vehicles per day on road concessions, while consolidated from January to September [Odinsa] registered 27 million passengers at airports.”

As for cement operations, “the results for Argos confirm the recovery shown as of June of this year. The EBITDA margin of 19% reached in the third quarter is the same achieved during 2016. This has been achieved thanks to a 17% growth in cement volumes compared to the same period last year, the recovery in the Colombia and competitive efficiencies through the ‘Best’ program,” according to Argos.

In energy, “Celsia obtained revenues of COP$785 billion w[US$ million] with an EBITDA of COP$294 billion [US$97.5 million], an increase of 20% compared to the same period of 2016, and reached an EBITDA margin of 37%,” according to Grupo Argos.

“During this period, the entry into operation of the Celsia Solar Yumbo project stands out, which represents the first of the projects announced by the company to develop a portfolio of non-conventional renewable energy generation in excess of 200 megawatts.”

In real estate, Grupo Argos reported the deeding of 19,000 square meters and COP$29 billion (US$9.6 million) of revenue from sales of lots. Accumulated income from January to September for the sale of lots amounted to COP$221 billion. The company’s participation in the “Pactia” real estate fund “has had a growth in the value of the unit with effective annual yields of 7.7%,” the company added.

Written by November 14 2017 0

Medellin-based gold mining giant Mineros SA reported November 14 that its consolidated third quarter (3Q) 2017 operating income rose 14% year-on-year, to COP$589 billion (US$195 million), while net income rose 7.46%, to COP$91 billion (US$30 million).

In its mainly alluvial mining operations in Colombia, Mineros SA’s net income rose a slight 0.7% year-on-year, to COP$93 billion (US$30.8 million), while operating income dipped 0.1%, to COP$290 billion (US$96 million).

Colombian mining operations saw a 0.1% dip in production, combined with a 3.5% decline in the price of gold as measured in Colombian pesos, the company noted.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) rose 9% year-on-year in the latest quarter, to COP$193 billion (US$64 million).

In the “Hemco” division in Nicaragua, net income rose 174% year-on-year, to US$11 million, while operating income rose 38%, to US$101 million.

The Nicaragua division saw production rise 33% year-on-year, but EBITDA margin was better in Colombia, at 47%, versus 23% in Nicaragua.

Gran Colombia Gold Results

Meanwhile, Toronto-based Gran Colombia Gold on November 13 posted a US$1 million net loss for 3Q 2017, down from a net profit of US$8.1 million in 3Q 2016

Commenting on the report, Gran Colombia CEO Lombardo Paredes Arenas pointed out that the 42-days-long miners’ strike in Segovia, Antioquia, cut gold output 5% year-on-year.

Despite the strike, “we demonstrated our resiliency once operations returned to normal in early September, rebounding with two of our best production months this year,” Paredes said.

“We have since signed some new contracts with small mining cooperatives in Segovia and negotiations are continuing with the rest. We now believe our 2017 gold production will total between 165,000 to 170,000 ounces.”

However, year-to-date gold production of 122,122 ounces is up 12% over the first nine months of 2016, he added.

Revenue so-far this year is up 8% year-on-year thanks to higher gold production, worth US$144.4 million. However, output disruption during the strike, combined with a 4% decline in world gold prices, contributed to a 17% year-over-year decline in 3Q 2017 revenue to US$42.7 million.

“With Segovia’s operations back to normal and spot gold prices in October and the first half of November generally above $1,270 per ounce, Gran Colombia is expecting stronger revenue performance in the fourth quarter of 2017,” according to the company.

Gran Colombia’s 3Q 2017 total cash costs averaged US$748 per ounce, while its all-in sustaining costs (AISC) averaged $970 per ounce, “reflecting the adverse impact of the reduced level of production on fixed costs and capital spending on a per-ounce basis,” according to the company.

Red Eagle Results

Meanwhile, Vancouver, Canada-based Red Eagle Mining – developer of gold-mining operations in Antioquia, Colombia -- reported November 15 a US$5 million net loss for third quarter (3Q) 2017, down from a US$568,000 net loss in 3Q 2016.

Net losses so far this year total US$11.9 million, compared to a net loss of US$1.2 million for the first nine months of 2016, according to the company.

“The net loss increased compared to the 2016 period primarily due to increased expenses associated with the ramp-up of the San Ramon gold mine and mill during the 2017 period, which also resulted in the increased values of total assets and shareholders’ equity,” according to the company.

“Underground development at the San Ramon gold mine continues to advance according to plan with 1,756 meters completed in the third quarter, 438 meters in October and 4,493 meters completed year-to-date.

“Stope mining operations resumed in October with 4,373 tonnes at 6.09 grams per tonne gold mined and stockpiled. Prior to the anticipated mill start-up in January 2018, Red Eagle Mining expects to have stockpiled 21,000 tonnes of ore.

"Upon completion, the additional development, infill drilling and back fill system will allow consistent production resulting in an estimated 50,000 ounces of gold produced during 2018,” according to the company.

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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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