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Roberto Peckham

Medellin-based multinational personal-hygiene and paper-products giant Grupo Familia revealed in a March 29 posting to Colombia’s Superfinanciera oversight agency that its full-year 2018 profits dipped 10.98% year-on-year, to COP$205 billion (US$64 million).

Meanwhile, the “Productos Familia” subsidiary likewise saw a 4.27% profit decline, to COP$199 billion (US$62 million), according to the filing.

Grupo Familia earnings before interest, taxes, depreciation and amortization (EBITDA) fell 9.58% year-on-year, to COP$375 billion (US$118 million), while the Productos Familia subsidiary saw EBITDA decline 14.7% year-on-year, to COP$242 billion (US$76 million).

Despite the profit declines, corporate-wide sales rose 3% year-on-year, to COP$2.4 trillion (US$753 million), while foreign sales rose 5.3%, to COP1.1 trillion (US$345 million), according to the filing.

Commenting on the results, Grupo Familia general manager Andres Felipe Gomez Salazar pointed out that much of the Latin America-Caribbean region where Familia mainly operates suffered from economic weakness during 2018, which hurt profits.

In Colombia, economic growth in 2018 rebounded somewhat, with gross domestic product (GDP) up 2.7% year-on-year. The election of moderate conservative Ivan Duque as President helped boost consumer confidence, but the prior government’s hike in value-added tax (“IVA”) to 19% weakened consumer spending.

Elsewhere in Familia’s Latin American markets, Argentina sales were especially hard-hit last year by a 100% currency devaluation, 40% inflation and declining GDP, Gomez noted. Ecuador also saw a slowdown in economic growth, at 1% GDP in 2018 versus 2.4% in 2017, which affected consumer spending on personal products.

Familia’s Puerto Rico market likewise suffered because of the continuing after-effects of a devastating hurricane. But the Dominican Republic market on the other hand enjoyed a 6% year-on-year rise in GDP last year, stimulating personal consumption, he said.

Finally, Peru, Bolivia and Chile all showed positive growth rates in 2018, helping to boost regional demand for Familia’s consumer products.

At year-end 2018, Grupo Familia reported having corporate divisions in eight countries, commercial operations in 13 countries, four regional distribution centers, production plants in eight countries and 4,858 employees.


Colombia’s airline oversight agency Aeronautica Civil de Colombia (ACC) announced April 5 that three airlines – Aeroejectivos de Antioquia SA (AASA), Servicios Aéreos Panamericanos S.A.S (Sarpa) and Servicio Aéreo De Capurganá S.A. (Searca) -- are taking-over the flight routes left by the shut-down Aerolinea de Antioquia (ADA).

According to ACC, AASA will have two weekly flights from Medellin’s downtown Olaya Herrera (EOH) airport to-and-from El Bagre, Acandi and Tolu.

Sarpa will have seven weekly flights to-and-from EOH to Bahía and Quibdó, as well as seven other weekly flights to-and-from EOH to Nuquí, Quibdó and Pereira.

As for Searca, it will offer twice-weekly flights to-and-from EOH and Acandí; three weekly flights to-and-from EOH and El Bagre; seven weekly flights to-and-from EOH and Montelíbano; and two weekly flights to-and-from EOH and Tolú.

The new flight services will “guarantee the connectivity of travelers that move to and from the department of Antioquia that formerly used ADA,” said Aeronautica director Juan Carlos Salazar. “We will continue working to motivate the entry of other operators that facilitate mobility in this region of the country,” Salazar added.

ADA Shutdown

Citing economic problems, Medellin-based short-haul passenger airline Aerolinea de Antioquia (ADA) had announced March 29 that it has ceased all operations from its downtown Olaya Herrera airport base.

The company has operated propeller aircraft from Olaya Herrera for 32 years, serving 11 smaller cities that have relatively short runways.

But “economic realities” including relatively high operating costs, inadequate capital for fleet renovation and competition from relatively lower-cost operators forced the company to shut its doors, according to ADA.

Other airlines offering service at Olaya Herrera include Satena, EasyFly, Searca, Sarpa and AASA.


Medellin-based plastic-container manufacturing specialist Industrias Estra revealed in a March 28 filing with Colombia’s Superfinanciera corporate oversight agency that its full-year 2018 net income rose to COP$1.2 billion (US$379,000), up from COP$1 billion (US$316,000) in 2017.

Sales were flat year-on-year, at COP$68.9 billion (US$22 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) dipped to COP$4.1 billion (US$1.3 million), down from COP$5.1 billion (US$1.6 million) in 2017.

Sales and profits generally followed macroeconomic trends in Colombia during 2018, according to Estra. First-half 2018 sales were depressed by uncertainty over national elections, but consumer and industrial confidence rebounded when moderate-conservative Ivan Duque won the presidency over socialist-populist rival Gustavo Petro.

As a result, Estra’s second-half 2018 sales rose to COP$36.3 billion (US$11.5 million), up from $34.8 billion (US$11 million) in the comparable second-half of 2017.

Export sales were a bright spot for Estra, up 17% year-on-year, “thanks to the opening of new markets” including restoration of free-market policies in neighboring Ecuador -- following the 2017 election of market-friendly President Lenin Moreno, who replaced vitriolic socialist-populist former President Rafael Correa.

In the Colombian domestic consumer-products market, Estra’s 2018 unit sales were flat year-on-year through its proprietary retail outlets, although average sales ticket grew. While 2018 industrial sales dipped 9% year-on-year, second-half 2018 industrial sales improved over the first half, the company added.


Toronto-based Gran Colombia Gold (GCC) on March 27 posted a US$3.4 million net loss for full-year 2018, down from a US$36.8 million profit in 2017.

“The net loss in 2018 includes US$28.4 million of losses on financial instruments, primarily triggered by the extinguishment of the 2020 and 2024 debentures in the second quarter, and a US$7.6 million charge for the costs associated with the offering completed in the second quarter of 2018,” according to GCC.

Net profits in 2017 included a reversal of a US$45.3 million impairment of its principal asset: the Segovia gold-mining operations in Antioquia.

For fourth quarter (4Q) 2018, adjusted net income rose to US$14.3 million, up from US$9.1 million in 4Q 2017. The year-on-year improvement “reflected the favorable impact on income tax expense in the fourth quarter of 2018 arising from the Colombian tax reform measures announced in December 2018 that will see a further reduction in future income tax rates,” according to GCC.

Commenting on the results, GCC executive chairman Serafino Iacono noted that “2018 was a watershed year “ with gold production surpassing 200,000 ounces for the first time, up 25% from 2017, as our high-grade Segovia operations delivered another solid year with [gold yield per ton of rock mined] at over 17 grams per ton.”

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 36% year-on-year, “surpassing the $100 million mark for the first time, being a key catalyst in the 58% increase in our operating cash flow to almost $80 million and a 72% increase in our free cash flow to $44 million,” according to Iacono.

“Our debt refinancing earlier in 2018 did exactly what we hoped for, lifting the dilution overhang off of our stock -- and we strengthened our balance sheet, increasing our cash and cash-equivalents to $35.6 million, while reducing our debt by 37%, to $88.3 million by the end of 2018,” he added.

Full-year 2018 revenues jumped 25% year-on-year, to US$268.5 million, “largely driven by the production growth and a modest improvement in realized gold prices to an average of $1,239 per ounce in 2018,” according to GCC.

“In 2019, revenue will benefit from lower charges in our new refining contract that the company entered into in January 2019 with an international refinery, saving as much as $20 per ounce sold. The company will also be paid faster under the new refining contract, a benefit to operating cash flow.”

Meanwhile, GCC expects its Segovia operations will produce between 186,000 to 199,000 ounces of gold this year, while corporate-wide gold production should be in a range of 210,000 to 225,000 ounces, according to the company.

Continental Gold Results

As for Continental, this Toronto-based miner posted a US$31.6 million loss for 2018, more than the US$7.8 million loss in 2017. The company’s main asset is its in-development Buritica, Antioquia, gold mine, due for production start-up in 2020.

The bigger net loss in 2018 versus 2017 was the result of "increasing construction activities in each of the comparative years, net of financing proceeds received from the credit facility in 2018 and 2017; the issuance of shares in 2017 and 2016; and the transfer of collateral deposits to restricted cash in 2018," according to Continental.

Exploration expenses hit US$2.5 million in 2018 versus US$300,000 in 2017, mainly because of "initiation of exploration activities at the Berlin [Antioquia], Dojura [Choco] and southern Colombia [mining] projects in late 2017," according to Continental.



Medellin-based multinational electric power giant EPM reported March 26 that its full-year 2018 net profits rose 4% year-on-year, to COP$2.4 trillion (US$758 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 8% year-on-year, to COP$5.1 trillion (US$1.6 billion), while revenues rose 9%, to COP$16.3 trillion (US$5.1 billion).

The company highlighted the entry-into-service of the gigantic "Aguas Claras" sewage-treatment plant in suburban Bello last year, dramatically reducing contamination of Rio Medellin. The company also boosted clean drinking-water supplies to many more customers in its Colombian markets.

“Thanks to the good results of last year, during 2019 the municipality of Medellín will be able to fund social investment programs worth COP$1.3 trillion,” added EPM, which is 100% owned by Medellin.

“In a difficult year due to the [diversion-tunnel collapse] at the Hidroituango hydroelectric project, the EPM Group nevertheless achieved positive financial results in 2018,” according to the company.

“On the path towards [utilities services] universalization, the EPM Group reached 2018 coverage in energy services and water supply in excess of 96%” in its Colombia service areas, said EPM president Jorge Londoño de la Cuesta.

“In wastewater treatment, we reached 93.3% and, in Medellin, in solid waste we achieved 99.21%, while in [natural] gas we [serviced] 84.63% in the region,” he added.

“In addition, our business group undertook directly and in conjunction with other actors in the country a series of environmental actions that enabled protection of 21,282 hectares of forests in 2018, for an accumulated 57,321 hectares in the period 2016-2018.”

Total assets rose 11% year-on-year, to COP$52.5 trillion (US$16.6 billion), while debt rose 15%, to COP$30.5 trillion (US$9.6 billion), because of “disbursement of credits to finance the general investment plan and the Hidroituango hydroelectric project,” according to the company.


Colombia’s Ministry of Commerce, Industry and Tourism announced March 18 that full-year 2018 foreign direct investment (FDI) in Colombia jumped 20.8% year-on-year, with nearly 20% of that in sectors other-than-petroleum or hydrocarbons.

According to the Minister José Manuel Restrepo Abondan, “a scheme of attractive sectoral tax incentives, strategic priority for internationalization programs, incentives to attract investments in megaprojects, re-established free trade zones and meetings abroad with potential investors interested in Colombia are some of our initiatives to achieve US$11.5 billion FDI in non-mining, nonenergy sectors by2022.”

Citing latest Bank of the Republic statistics, the Ministry noted that FDI in Colombia rose to US$1.44 billion in the first two months of 2019, up from US$1.19 billion in the first two months of 2018. FDI in non-energy sectors has risen 4.6% so far this year, compared to the same period in 2018.

FDI in Medellin

Meanwhile, according to a separate March 20 report from Medellin’s investment promotion agency (Agencia de Cooperacion e Inversion de Medellin y el Area Metropolitana, ACI), local FDI has totaled US$836.6 million from 2016 to 2018, mainly coming from Canada, China, Denmark, El Salvador, Spain, the United States, France, Guatemala, Mexico and Switzerland.

“The interest that the Antioquia capital arouses in the world -- due to its social and urban transformation and constant innovation -- has been the gateway for entrepreneurs and investors to establish themselves in the territory and thus contribute to local development,” according to ACI.

FDI and reinvestment by such companies in metro Medellin is mainly in infrastructure and real estate, manufacturing, high-tech industries, aerospace and life sciences, according to FDI.

“From 2016 to date we have organized 23 ‘Why Medellin?’ events in Argentina, Australia, Brazil, Chile, Spain, the United States, Mexico, New Zealand, Peru, Turkey, Uruguay and Venezuela,” according to ACI.

For full-year 2018, FDI in Medellin topped US$253 million, of which “76% correspond to new investments of national and foreign companies and 24% to organizations that strengthened their confidence in the city by materializing reinvestments,” according to ACI.

The largest number FDI projects in Medellin last year came from the United States with 18% of total investments, followed by France, Spain, Japan, Canada and Argentina. 

Also during 2018, nine ‘Why Medellín?’ events organized by ACI in Peru, Chile, the United States, Mexico and Argentina generated 268 new contacts with companies that see Medellín as a “good opportunity for their expansion plans,” according to ACI.


Colombia’s Vice President Marta Lucia Ramirez announced March 20 that the “Mar 1” highway project linking Medellin westward to Santa Fe de Antioquia -- and eventually to new Atlantic ports -- just won a COP$2.23 trillion (US$754 million) financial close organized by the “Financiera de Desarrollo Nacional” (FDN) financing agency.

On a related front, Vice President Ramirez simultaneously announced that the long-awaited “Puerto Antioquia” ocean freight port near Turbo, Antioquia, just won a 30-year concession.

That US$300 million port project will include construction of new piers and docking facilities for up to-five ocean ships simultaneously; a four-lane divided highway linking the dock area to terminal facilities; and onward highway linkages to the new “Mar 1” and Mar 2” highways that should be completed over the next six years -- hence bringing Medellin much closer to relatively lower-cost global freight transport.

The new port will handle containerized cargo as well as highway vehicles, grains, plantains and bananas, according to project developer PIO Sas, in association with global shipping and port-operator Naviera Francesa CMA CGM S.A., plus major regional banana growers.

Civil works on the project will be undertaken by France-based Eiffage Infraestructuras de Francia along wth Colombia-based Termotecnica Coindustrial.

As for the “Mar 1” financial partners, these include Blackrock; the Interamerican Development Bank (IBD) and IBD Invest; CAF; ICO; the German Development Bank (KFW); Sumitomo Mitsui Banking; and France-based Société Générale, according to FDN.

Mar 1 includes rehabilitation and operation of existing highway between Santa Fe de Antioquia and Peñalisa (71 kilometers); construction and operation of a second lane between Medellín and Santa Fe de Antioquia (43 kilometers); the construction and operation of a 4.6-kilometers-long, parallel tunnel (adjacent to the existing Tunnel de Occidente) linking Medellin westward toward Santa Fe de Antioquia; and the construction of 46 bridges.

Once completed, Mar 1 (and the connecting “Mar 2” project) will enable Medellin freight shippers and Colombian coffee exporters to tap a much quicker route to Atlantic ports in the Urabá region of Antioquia.

Today, vehicle transport from Medellín to Necoclí on the Atlantic ocean takes eight hours. But once Mar 1 and Mar 2 are complete, then transport time will be cut to four hours, according to Colombia’s Agencia Nacional de Infraestructura (ANI).

Construction companies in the Mar 1 project include Austria-based Strabag and its Swiss-based subsididary Strabag AG Switzerland (with 37.5% share); Sacyr (Sacyr Concessions Colombia and Sacyr Concesiones S.L.) with 37.5%, and Colombia-based Concay, S.A. with 25%.

Pacifico 1-2-3 Projects

On a related front, ANI president Louis Kleyn announced earlier this month that the 293-kilometers-long Pacifico 1-2-3 highways linking Medellin to the Pacific port of Buenaventura continue to make progress -- although completion on “Pacifico 1” between Medellin and Bolombolo isn’t likely until around 2023.

Currently, freight trucks face a grueling, 15-hours-journey to-and-from Medellin to Buenaventura. But the new Pacifico highways would cut that to 10 hours, according to ANI.

Linking Medellin to the Pacific region on modern, four-lane highways -- including many new tunnels and bridges -- will generate “more international trade from the green mountains that connect southwest Antioquia and the coffee region,” according to ANI.

“The progress in the construction of this great corridor is the result of rigorous and disciplined management in social, environmental, property and contract areas, [along with] confidence generated by banks and investors, both domestic and foreign,” according to the agency.

“To date, Pacífico 1 -- the corridor connecting Bolombolo with La Primavera [the southern Medelliin suburb of Caldas] has an execution of 15%, while Pacífico 2 (connecting Bolombolo to La Pintada) has achieved 64% execution, and Pacífico 3 (La Pintada to La Virginia in Risaralda) has advanced by 54%. These three projects total 119 fronts of active works,” according to ANI.


Medellin-based multinational gold mining giant Mineros SA announced March 13 that its full-year 2018 net income rose 33% year-on-year to COP$156 billion (US$50 million), from COP$117 billion (US$37 million) in 2017.

Gross revenues and gold prices also rose a bit more than 1% year-on-year. But earnings before interest, taxes, depreciation and amortization (EBITDA) dipped 8.7%, to COP$260 billion (US$83 million), while EBITDA margin declined 9.7%, to 32.4%, according to the company.

The mainly alluvial-based gold mining operations in Colombia produced 97,921 ounces of gold-equivalent in 2018, down from 103,370 ounces in 2017, according to the company. On the other hand, Nicaragua gold production rose from 104,681 ounces in 2017 to 109,305 ounces in 2018.

As for fourth quarter (4Q) 2018, net income nearly tripled year-on-year, to COP$97 billion (US$31 million), thanks to a 15% hike in output, a favorable COP/U.S. dollar exchange rate and a 1.3% hike in world gold prices.

On a related front, the US$30 million acquisition of the Gualcamayo gold mining operation in Argentina last December netted Mineros an additional 2,791 ounces of gold in 2018, on top of its Nicaragua and Colombia production, the company added.

As for the 2019 outlook, Mineros projects that corporate-wide production should be in the range of 280,000 to 300,000 ounces of gold-equivalent. The company warned that it foresees “high volatility” in world gold prices, but nevertheless sees an “upward tendency.”

USAID, Mineros Continue Boosting Social Projects

On another front, the U.S. Agency for International Development (USAID), the Colombian national government and Mineros this month will launch yet another project aiming to help poorer rural families in El Bagre, Nechi and Zaragoza (all in Antioquia) through a new “Women of Gold” (Mujeres de Oro) program.

According to USAID, the “Mujeres de Oro” program will help rural women with projects that boost their economic, social, political and cultural well-being.

Mineros has a long history of sponsoring numerous projects that benefit poorer rural families in its areas of operations (see Medellin Herald 09/21/2016, “USAID Projects Boost Ecological Mining, Honey Incomes for Antioquia Families”).

In addition, Mineros years ago banned the use of toxic mercury -- in sharp contrast to reckless, criminal and informal gold-mining operators.

What’s more, Mineros routinely restores any lands disturbed by its mining through various reforestation and wildlife conservation projects – unlike the criminal mining groups tied to guerrillas and “paramilitary” organizations that devastate tropical forests and wreck riverside habitats (see Medellin Herald 03/21/2017, “Mineros SA Boosting Environmental, Social Projects”).


Medellin-based multinational banking giant Bancolombia announced March 12 that it’s now offering companies the opportunity to rent all-electric, zero-emissions delivery trucks in Colombia’s major cities – at the same annual cost as conventional trucks.

The goal is to put into circulation 1,000 electric trucks over the next three years, replacing diesel- and gasoline-powered trucks that today are causing much of the air pollution in Medellin, Bogota and other major cities, according to Bancolombia’s “Renting Colombia” subsidiary.

Major companies in Colombia including Nutresa, Bimbo, Bavaria, Colombina and Éxito are already testing these electric trucks, in an alliance with Medellin-based electric vehicle marketer Auteco, according to Bancolombia.

The scheme enables both smaller and larger companies to rent rather than buy the trucks, at a cost of operation “equal to that of [trucks] with traditional gasoline or diesel combustion, so in this way overcoming the [initial purchase price] limitation” of electric trucks, according to Bancolombia.

Besides eliminating toxic particulate matter (PM), nitrogen oxides (NOx) and carbon monoxide (CO) emissions, the electric trucks also slash net carbon dioxide (CO2) emissions -- since most of Colombia’s electric power comes from zero-emissions hydroelectric plants.

“Launching the first [nationwide] fleet of electric trucks in Colombia responds to our commitment to do business well and sustainable,” explained Bancolombia president Juan Carlos Mora.

The vehicles being offered are local delivery trucks rated between three-to-10 tons. These are the type of trucks that are the most numerous in Colombia’s biggest cities.

Diesel-powered delivery trucks are so numerous in big cities that they cause 50% more total pollution than dump trucks, 400% more than buses and 500% more than cars, according to Bancolombia.

Hence eliminating such high-polluting vehicles would help cities including Medellin and Bogota to slash pollution that today has forced city officials to enact severe “pico y placa” driving restrictions on vehicles (alternating-day bans tied to license-plate numbers), Bancolombia noted.

Switching just 1,000 delivery trucks to zero-emission electric power would slash CO2 emissions by 24,800 tons over three years, equivalent to the CO2-removal work of 1.5 million trees, the company noted.

What's more, the latest-generation electric trucks employ new technologies that deliver 40% more power than a conventional diesel- or gasolina-powered truck, according to Auteco.

While an electric truck will consume an annual average of 11,300 kiloWatt-hours of electricity at a total cost of COP$5 million (US$1,590), an equivalent diesel truck would consume 1,200 gallons of diesel fuel and 10 gallons of lube oils, costing a total of COP$12 million (US$3,815) annually, or more than twice as much as the electric truck, Bancolombia noted.

 


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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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