Sunday, April 21, 2019

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Roberto Peckham

Colombia’s national infrastructure agency (Agencia Nacional de Infraestructura, ANI) announced February 27 that the existing, congested two-lane highways connecting Rionegro, Llanogrande and Medellin’s Jose Maria Cordova (JMC) international airport will expand to four lanes.

The COP$118 billion (US$38 million) project will tap funds generated by the existing toll booths of the various “Devimed” highways east of Medellin, according to ANI.

“The [highway expansion] works will begin after the delivery of [adjacent] properties by the Civil Aeronautics Authority [Aerocivil], the government of Antioquia and the municipality of Rionegro,” according to ANI.

In total, 12.6 kilometers of existing two-lane highways will expand to four lanes, linking the city of Rionegro to Llanogrande and then onward to the existing roundabout adjacent to JMC airport.

The rapidly growing “oriente” region east of Medellin is about to experience even more traffic congestion when the “Tunel de Oriente” tunnel linking Medellin to JMC airport opens as expected in May or June 2019.

“The next step for the start of the work will be the delivery of the [adjacent] properties by the government of Antioquia and the Aerocivil for the construction of the 6.4-kilometer stretch between Llanogrande and the roundabout to the airport, while the municipality of Rionegro must deliver [properties adjacent to] the corresponding 6.2 kilometers between Rionegro and Llanogrande,” according to ANI.

The “Devimed” highways east of Medellin include the four-lane, divided highway between Acevedo (north Medellin, near Bello) and Santuario -- all part of the existing Medellin-Bogota highway.

Other “Devimed” toll-supported highways east of Medellin include the existing two-lane roads connecting El Retiro, La Ceja, La Union, Carmen de Viboral, Marinilla and Santuario.

Medellin-based cement, electric power and airport/highway concessionaire Grupo Argos announced February 23 that its full-year 2018 net income jumped 32% year-on-year, to COP$1.2 trillion (US$386 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) hit a record COP$4 trillion (US$1.28 billion), while EBITDA margin came-in at 28%, according to the company.

In its Argos cement/concrete division, “the opportunities of the Colombian capital market were exploited and the [public stock-buying] participation was increased to 58% in ordinary shares,” according to the company.

As for its Celsia electric-power division, “the issuance of shares by Celsia was subscribed for an amount of COP$780 billion [US$251 million],” while in the Odinsa airport/highways concession business, “the process of delisting of Odinsa was completed,” as Grupo Argos now holds 99.84% of all shares.

“These [2018] results place us in a privileged position and with optimism to continue promoting the development of infrastructure in our country, a fundamental pillar of competitiveness and progress for Colombia,” added Grupo Argos president Jorge Mario Velásquez.

At year-end 2018, Grupo Argos assets rose to COP$49 trillion (US$15.7 billion), the company added.

As for fourth quarter (4Q) results, Grupo Argos saw net income soar 248% year-on-year, to COP$330 billion (US$106 million), while 4Q 2018 EBITDA rose 14% year-on-year, according to the company.

During 2018, the Odinsa division boasted that the “Pacifico 2” fourth-generation (4G) highway construction project in Antioquia reached 59% completion, or eight percentage points ahead of schedule.

In the Celsia power division, Argos invested COP$618 billion (US$199 million) mainly in renewable, non-conventional energies.

At Cementos Argos, a novel efficiency scheme boosted that division’s net profit to COP$179 billion (US$57 million), while its holdings in the “Pactica” real-estate development partnership closed 2018 with property transactions of nearly COP$140 billion (US$45 million), “an unprecedented figure for this business group,” according to Argos.

Medellin-based multinational processed-foods giant Nutresa announced February 22 that its full-year 2018 net income rose 20% year-on-year, to COP$508 billion (US$163 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) climbed 7% year-on-year, hitting COP$1.1 trillion (US$354 million), while sales rose 3.7% and EBITDA margin came-in at 12.5%, according to the company.

Sales in Colombia grew 4.4% year-on-year, to COP$5.7 trillion (US$1.8 billion), according to Nutresa. International sales meanwhile rose 2.3%, to US$1.1 billion.

Costs of operations fell 42% year-on-year thanks to lower financing costs, lower debt levels and lower interest, according to the company.

Grupo Nutresa – founded in 1920 – now boasts of having some 45,600 employees in eight business units, including processed meats, baked goods, chocolates, pastas, coffees, ice creams and packaged foods.

The company also operates 46 production plants in 14 countries; its various products are sold in 81 countries across five continents.

Medellin-based multinational banking giant Bancolombia reported February 21 that its full-year 2018 net income rose 2% year-on-year, to COP$2.66 trillion (US$851 million).

Fourth-quarter (4Q) 2018 net income jumped 84% versus third quarter (3Q) 2018, hitting COP$1 trillion (US$320 million), according to Bancolombia, Colombia’s biggest bank.

Gross loans in 4Q 2018 grew 8.3% when compared to 4Q 2017 and by 5.5% during the quarter.

“The quarterly growth shows a positive trend in credit demand in Colombia,” according to the company. Colombian peso-denominated loans in 4Q 2018 grew 6.5% when compared to 4Q 2017.

Net interest income was COP$2.82 trillion (US$903 million) for 4Q 2018, up 6.1% year-on-year. “This positive performance is mainly explained by the growth in the loan book,” according to the company.

Loan provision charges for the latest quarter were COP$987 billion (US$316 million) and the coverage ratio for 90-day past due loans was 180%, according to Bancolombia.

Provision charges in 4Q 2018 increased 6.1% year-on-year but decreased by 2.1% compared to 3Q 2018. New past-due loans totaled COP$4 billion (US$1.3 million) in the latest quarter.

Net fees were COP$735 billion (US$235 million) and increased by 7.1% in 4Q 2018 versus 4Q 2017. “This growth was mainly driven by an increase in fees related to credit and debit cards, trust services and bancassurance,” according to Bancolombia.

At year-end 2018, Bancolombia’s assets totaled COP$220 trillion (US$70 billion), up 6.5% compared to 3Q 2018 and up 7.9% compared to 4Q 2017. “The increase in total assets during the quarter is largely explained by the growth in the loan book,” according to the company.

During the latest quarter, the Colombia peso (COP) depreciated 9.3% versus the U.S. dollar and the COP fell 8.9% versus the U.S. dollar for all of 2018, Bancolombia noted.

At year-end, 2018, Bancolombia’s operations in Banco Agricola in El Salvador, Banistmo in Panama and BAM in Guatemala represented 26% of total gross loans.

Bancolombia describes itself as s “full service financial conglomerate incorporated in Colombia that offers a wide range of banking products and services to a diversified individual and corporate customer base of more than 13 million customers.”

Besides its Colombia perations, the company also owns El Salvador’s financial conglomerate Banagricola S.A., plus off-shore and local (Banistmo S.A.) banking subsidiaries in Panama, Guatemala, Cayman and Puerto Rico.

Medellin-based electric power producer Celsia announced February 19 that its full-year 2018 net income rose 39.7% year-on-year, to COP$350.7 billion (US$112.6 million), from COP$251 billion (US$80 million) in 2017.

Fourth-quarter (4Q) 2018 net income also rose year-on-year, hitting COP$108 billion (US$34.7 million), up from COP$71 billion (US$22.8 million) in 4Q 2017.

Gross revenues likewise rose 10.7% year-on-year, hitting COP$3.4 trillion (US$1.1 billion) for 2018, versus COP$3.1 trillion (US$995 million) in 2017. Colombia accounted for 81% of revenues, while its Central America power sales accounted for the remaining 19%.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 1% year-on-year, according to Celsia, a subsidiary of Medellin-based Grupo Argos.

Celsia mainly credited income growth to consolidation of its EPSA (Empresa de Energia del Pacifico S.A.) power subsidiary; start-up of the Celsia Solar Bolívar photovoltaic plant; and the completion of its “Plan5Caribe” power projects in Cartagena and Valledupar.

“The strategy of optimizing our capital structure decreased interest rates, which allowed for a reduction in financial expense,” according to Celsia.

“Net debt at the end of the year amounted to COP$3.06 trillion [US$982 million] with a net-debt-to-EBITDA indicator of 2.7 times, below the 3.2 times [ratio] registered in 2017,” according to the company.

Income tax also fell 22.5% year-on-year thanks to favorable tax-law credits and deductions, the company added.

Consolidated investments rose 20% year-on-year, hitting COP$618 billion (US$198 million), COP$592 billion of which was in Colombia.

“Through EPSA, Celsia structured an issuance of ‘green bonds’ worth COP$420 billion [US$135 million] for the development of unconventional renewable energy projects,” with COP$140 billion [US$45 million] bonds already having been sold.

Medellin-based multinational concrete/cement giant Cementos Argos reported February 18 that its full-year 2018 net income rocketed by 271% year-on-year, to COP$291 billion (US$93 million), from COP$78 billion (US$25 million) in 2017.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) rose 8% year-on-year, to COP$1.54 trillion (US$494 million), while EBITDA margin hit 18.3%.

“This result is supported by geographic diversification, the increase in financial flexibility as a relevant factor for the successful long-term execution of the customer-focused strategy, and the efforts of the entire organization to advance efficiency and competitiveness, among which the 6% decrease in administration and sales expenses stands out,” according to Cementos Argos.

The company ended 2018 with a net debt-to-EBITDA index (plus dividends) of 3.7 times, a big improvement over the debt-to-EBITDA index of 4.6 at year-end 2017, “as a result of capex optimization, the release effort of working capital and a successful execution of disinvestments of non-operational and non-strategic assets,” according to Cementos Argos.

A bond issue totaling COP$500 billion (US$160 million) with an average life of 9.5 years, plus a new syndicated loan totaling US$600 million “significantly improved the debt profile,” according to the company.

“In the middle of a highly challenging business context, the company shipped 16 million tons of cement, with a variation of -1%, and 10.3 million cubic meters of concrete, with a variation of -3%, which delivered consolidated revenues of COP$8.4 trillion [US$2.69 billion], 1.4% less than in 2017,” according to the company.

In its USA operations, “public spending on infrastructure continued to show very good dynamics, while the housing market slowed down as a result of the rise in interest rates,” according to Argos.

“Shipments [in the USA market] reached 5.7 million tons of cement, with a variation of -2%, and 7 million cubic meters of concrete, 2.5% less than in 2017, generating revenues of US$1.49 billion, with a variation of -3.4%, and an EBITDA of US$239 million, very similar to the previous year,” according to the company.

“In 2019, Argos expects growth in volumes, both for public construction, which represents 40% of total USA consumption, and for the commercial segment in the midst of a healthy work environment, the positive trend in consumer confidence, the highest household income available after the tax reform and the expectation of a more moderate increase in interest rates,” according to the company.

“In Colombia, the construction sector began to show signs of recovery from the second semester, with volume growth both in cement, and in particular due to greater demand in the mass consumption segment, a better macro environment and an increase in civil works, particularly of 4G [fourth-generation highway] projects, where Argos is a leader and provides about 70% of the functional [construction projects] that have been awarded.

“In Colombia, an EBITDA of COP$433.9 billion [US$142 million] stands out, with a variation of 16.7% with respect to the previous year. On the other hand, cement dispatches were 5 million tons, with a variation of -1.8%, and dispatches of concrete totaled 2.9 million cubic meters, with a variation of -3.6%; which resulted in COP$2.3 trillion [US$738 million] in revenues, 0.4% less than in 2017.

“Several indicators generate optimism in relation to the recovery [in Colombia] that is beginning to be evident in the industry, especially the growth of concrete dispatches for civil works and better dynamics in the construction of non-[subsidized] housing expected from the second semester of 2019.”

As for operations in its Caribbean and Central America markets, “shipments reached 5.1 million tons of cement, with a growth of 1%, and 412 million cubic meters of concrete, with a variation of -6.9%; which represented revenues of US$593 million, 2.2% more than in 2017, and an EBITDA of US$178 million, 3.4% higher than the previous year,” according to Argos.

“Puerto Rico -- driven by the reconstruction works after the impacts of hurricanes Irma and María -- presented a significant increase of close to 40% in cement dispatches,” the company added.

Medellin-based textile, fibers and filaments manufacturing specialist Enka de Colombia revealed in a February 7 filing with Colombia’s Superfinanciera corporate-oversight agency that its full-year 2018 profits more-than doubled year-on-year, to COP$4.3 billion (US$1.37 million).

Operating earnings rose 15% year-on-year, to COP$411 billion (US$131 million), thanks to higher prices in international markets and a 3% hike in sales volumes, according to the company.

Especially notable was the 122% jump in sales to North America, along with an 8% rise in sales to Brazil and a 21% hike in sales to the local Colombian market, according to Enka.

Earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 38% year-on-year, to COP$31.8 billion (US$10 million), according to the company.

The positive earnings enabled Enka to invest nearly COP$17 billion (US$5.4 million) mainly in projects to expand and modernize its novel recycling operations that convert waste plastics into specialty fibers and textiles, according to the company.

Medellin-based multinational paints, chemicals and water-treatment technology manufacturer Grupo Orbis revealed February 14 in a filing with Colomba’s Superfinanciera corporate oversight agency that it posted a COP$3.2 billion (US$1 million) net loss for full-year 2018, compared to a COP$40.7 billion (US$12.9 million) net profit in 2017.

Full-year 2018 sales dipped slightly year-on-year, to COP$1.46 trillion (US$464 million), down 0.9% from COP$1.69 trillion (US$538 million) in 2017, according to the company.

The company includes the giant “Pintuco” paints subsidiary along with chemicals unit Andercol, water-treatment specialist O-Tek and aerosol-spray specialist Mundial.

On another front, Icontec -- the Colombian Institute of Technical Standards and Certification – last month awarded Pintuco a special certification for its recent efforts to slash net global-warming emissions through the “BanCO2 Plus” project, which helps Antioquian farmers replant native trees and conserve local water resources.

“Being ‘carbon-neutral’ is the result of the commitment that our organization has toward reduction and compensation for greenhouse gases (GHG) emissions,” according to Pintuco.

Medellin-based commercial real estate investor Valores Simesa revealed February 14 in a filing with Colombia’s Superfinanciera corporate-oversight agency that its full-year 2018 after-tax profits rose to COP$24 billion (US$7.6 million), up from COP$12 billion (US$3.8 million) in 2017.

Bancolombia’s investment-bank division held 68% of the stock of Valores Simesa, according to the company’s most recent annual report (issued March 2018).

A core holding of the company is Medellin’s giant “Ciudad del Rio” center, which includes shops, restaurants, offices, residential apartments, parking garages and the Modern Art Museum.

Valores Simesa is a spin-off from the former Siderugica iron foundry complex, now occupied by Medellin's Modern Art Museum.

Besides real-estate deals, Valores Simesa also invests in other companies. Part of its income has come from royalties from the Drummond coal mines in Colombia, but this arrangement is due to expire at year-end 2019, according to the company.

China-based electric vehicle (EV) manufacturer BYD on February 7 launched sales of zero-emissions EV cars at its first-ever retail showroom in Medellin – simultaneous with the Mayor’s office announcing new driving restrictions on polluting vehicles with internal combustion engines (ICEs) for the entire Medellin metro area.

BYD’s new dealership on Avenida El Poblado opposite the Premium Plaza mall comes on the heels of winning a contract to supply 64 pure electric buses to Medellin’s “Metro” public transit agency later this year (see Medellin Herald on December 29, 2018). It's a further sign that Medellin aims to slash air pollution by replacing ICE vehicles with EVs of all types, including cars, motorcycles, buses,  taxis, local-delivery vehicles, rail transit, cable-cars and trams.

“Medellín is among the places with the greatest potential in Colombia for the development of mobility with electric vehicles,” said Juan Felipe Velásquez, BYD’s commercial director for Antioquia.

“Both the municipal administration and private companies [including EV sellers Renault, Nissan and Mitsubishi] have made important bets in the development of sustainable mobility . . . The environmental [air-pollution] contingency of the metropolitan area has caused the authorities to focus their efforts on electric vehicle replacement,” he added.

Medellin also aims to expand the fleet of EV taxis, Velasquez said. “This project is very important for us as BYD, so much so that we are structuring two electric-taxi pilot [projects] with different individual public transport administration companies, which will start in a few months,” he said.

Beyond EV cars, buses and taxis, BYD “intends to exploit a high-potential market with last-mile cargo [local delivery] vehicles,” according to the company.

Meanwhile, Medellin and the regional planning agency (Area Metropolitana del Valle de Aburra, AMVA) on February 7 jointly announced greater “pico y placa” restricions on more ICE vehicles over more days -- including six days/week (rather than the current five) and sequentially hitting six of the last nine digits on license plates each day, rather than just the current four of the nine digits.

The existing “pico y placa” vehicle-driving restrictions alternately ban circulation of vehicles -- depending upon the final digits of license plates -- during morning and afternoon rush-hours. However, zero-emissions EVs are exempt from such driving restrictions.

Under the new scheme – debuting February 18 and lasting until at least March 30, the typical "dry" season for air-pollution alerts – older, higher-polluting vehicles will face even greater hours-of-operation restrictions, from 5 am to 8:30 am, and then from 4:30 pm to 9 pm Monday through Saturday, according to AMVA.

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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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