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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.


Colombia’s national statistics agency (Departamento Administrativo Nacional de Estadistica, DANE) announced May 15 that first quarter (1Q) gross domestic product (“PIB” in Spanish initials) grew by 2.2%, a big improvement over the 1.7% PIB growth in 1Q 2017.

The finance/insurance sector topped every other sector at 6.1% PIB growth, followed by 5.9% growth in public administration/defense; 5.6% growth in professional, technical and scientific activities; entertainment/recreation at 4%; wholesale/retail commerce at 3.9%; communications/information sector at 3.1%; and real-estate activity at 2.9% (see chart, above).

Explaining the decline in the construction sector, the sharpest drop was in residential/nonresidential building (down 9.2%), followed by an 8.2% drop in civil engineering and a 6.4% drop in highway/railroad construction, according to DANE.

The dip in the mining sector was blamed mainly on a 17.5% drop in metals mining. However, the oil-and-gas sector saw a slight (0.8%) increase in 1Q 2018 PIB.

The decline in industrial manufacturing was blamed mainly on a 4.6% drop in textile manufacturing and a 4.2% drop in finished metals production.

Over-all, Colombia’s economic output had a value of COP$210 trillion (US$73 billion) in 1Q 2018, up from COP$207.8 trillion (US$72 billion) in 1Q 2017 (as measured in constant 2015 Colombian pesos), according to DANE.


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.


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.


Medellin-based international electric-power transmitter and highway concessionaire ISA announced May 9 that its first quarter (1Q) 2018 net income rose 24% year-on-year, to COP$297 billion (US$103 million).

Gross revenues climbed 3.6% year-on-year, to COP$1.6 trillion (US$558 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 12% year-on-year, to COP$1.06 trillion (US$351 million).

The profit improvements are mainly due to the entry-into-operation of power-transmission projects in Colombia, Perú and Chile, tax refunds in Colombia and Brazil, additional revenues from recently boosted stakes in the TAESA and IENNE power-transmission affiliates in Brazil, and corporate cost reductions, according to ISA.

Profit margins corporate-wide rose to 18.2%, versus 15.2% in 1Q 2017.

Investments by ISA and its affiliates for full-year 2018 would total COP$3.79 trillion (US$1.3 billion), mainly in power transmission (87.8%), followed by highway concessions ((7.4%) and telecom (3.2%), according to the company.

“In the first half of this year we continue on the path of growth with profitability,” added ISA president Bernardo Vargas Gibsone.

“Among the most important events of the [first] quarter was the awarding of a [power transmission] connection for the modernization project of the Talara refinery to our ‘Transmantaro’ subsdiary in Peru -- a project that will generate annual revenues of US$3.5 million,” he said.

“In Chile, the Ministry of Public Works awarded a concession contract for the execution, repair, conservation and exploitation of the ‘Rutas del Loa’ concession road project, which will increase our operation of roads in Chile to 1,018 kilometers, which consolidates us as the main operator of interurban highways in that country.

“And finally, a few days ago, we announced the first issuance of ‘green’ bonds in the capital market made by [subsidiary] group company, ISA CTEEP, which is also the first company in the energy sector to use this financing instrument in Brazil,” Vargas Gibsone added.


Medellin-based construction giant Conconcreto reported May 9 that its first quarter (1Q) 2018 consolidated net income dropped 86% year-on-year, to COP$2 billion (US$698,000).

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) also dropped by 36% year-on-year, to COP$33 billion (US$11.5 million).

Colombia’s relatively weak economic growth, recent volatility in the exchange rate between the U.S. dollar and the Colombian peso, plus uncertainty over the possible impacts of this year’s upcoming national elections have penalized the construction and housing sectors, according to Conconcreto.

Consolidated gross income also dipped 18% year-on-year thanks to completion of infrastructure projects last year and lack of enough new projects to generate offsetting income, the company added.

Meanwhile, the company expects the Antioquia government to deliver a feasibility report this month to Colombia’s Treasury Ministry regarding the proposed COP$911 billion (US$318 million), 13.8-kilometers-long, “Doble Calzada Oriente” (DCO) divided highway project just east of Medellin.

That project -- in which Conconcreto would take a 60% financing stake -- has already won route approvals from the local Cornare environmental agency, according to the company. The new route would connect the existing Las Palmas highway near the Sancho Paisa roundabout -- as well as the nearby El Escobero highway in Envigado -- to and through the El Tablazo municipality, finally terminating near the San Vicente de Paul Hospital alongside the Jose Maria Cordoba (Rionegro) international airport highway.

Another proposed project – the Darien International Port in Antioquia – awaits finalization of negotiations with potential Port clients. That ocean-freight port project earlier won backing from Brazil-based private equity fund Patria, in partnership with U.S.-based private equity fund Blackstone.

Meanwhile, in Conconcreto’s existing housing and infrastructure construction portfolios, current backlog totals COP$2.4 trillion (US$837 million), equivalent to 1.7 years of work, according to the company.

The company also is a major contractor on the US$5 billion “Hidroituango” hydroelectric dam project in Antioquia – now nearing completion of the largest, initial phase.

Conconcreto also is working with the “Pactia” commercial real estate development partnership on the Corferias Hotel (Bogotá), the El Ensueño Shopping Center (Bogotá), the Chamber of Commerce of Medellín building, Blu Logistics, and others, according to the company.


Medellin’s “Metro” public transit agency announced May 4 that it just took delivery on its 80th train -- the last of 22 new trains ordered in 2016 from Spanish manufacturer Constructores y Auxiliares de Ferrocarriles (CAF).

The COP$380 billion (US$135 million) investment in the 22 new trains enables Metro to improve reliability and cut waiting times between train departures and arrivals at stations, according to the agency.

“With this new [railcar] vehicle, Metro completes 80 train units destined to meet the demand of Lines A and B, which together transport nearly 810,000 passengers a day,” according to Metro.

The mainly electric, mostly zero-emissions Metro system now mobilizes about 1.2 million passengers daily including the Metro rail system, the Metrocable aerial tram, the “Tranvía de Ayacucho” electric streetcars and the natural-gas-fueled “Metroplus” bus rapid transit (BRT) lines, the latter of which gradually will convert to pure electric power over the next decade.

While Metro initially ordered 20 new trains, it was able to get two extra trains thanks to a special government exemption on value-added tax for zero-emissions vehicles.

The last of the 22 new trains “will start the reception and testing phase today and it is estimated that in a month or so, they will begin to provide commercial service and join the 66 trains that currently provide service during peak hours,” according to Metro. The rest of the railcar fleet is held in operational reserve or else would be undergoing routine maintenance.

Because of the expanded fleet, Metro has cut the delay between train arrivals to three minutes on “Line A” (down from three minutes and 40 seconds previously) and to three minutes 50 seconds (down from four minutes 45 seconds) on "Line B."

In addition, total railcar capacity has risen to 41,480 passengers per hour, per direction, up from 35,650 passengers per hour, per direction previously, according to the agency.

“The acquisition of the new trains has also made it possible to react effectively to any technical difficulty since there are reserve trains prepared to attend to any contingency,” according to Metro.

“Another advantage of the increase in the fleet is that it will make it easier to advance the repowering of the first generation trains, one of the company's major projects for this year.

“One of the most notorious differences with the first-generation trains is that the second-generation trains enable internal communication between the three cars that make up a unit, facilitating the movement of passengers inside the vehicle.

“In addition, the trains have state-of-the-art technology and an aerodynamic design for lower energy consumption,” Metro added.


Medellin-based textile giant Fabricato announced May 1 that it posted a COP$11.6 billion (US$4.1 million) net loss for first quarter (1Q) 2018, 13% worse than the COP$10 billion (US$3.5 million) net loss in 1Q 2017.

Sales also dipped 13.6% year-on-year, while earnings before interest, taxes, depreciation and amortization (EBITDA) dropped 45% year-on-year, to COP$1.8 billion (US$637,000).

However, the 1Q 2018 business environment improved compared to the immediate prior quarter (4Q 2017) thanks to relatively low inflation, low interest rates, rising oil prices and an improved consumer confidence index, according to the company.

In addition, Colombia’s textile sector “is beginning to see the positive effect of [government] measures taken at the end of last year against illegal competition,” including “intensification in the fight against contraband [clothing imports] and especially the antidumping measure taken against denim imports from China,” according to Fabricato.

In addition, the start-up of the new free-trade agreement between Colombia and the Mercosur nations enables favorable flow of fabrics at zero tariffs between Colombia, Mexico, Peru, Argentina and Brazil, the company noted.

Meanwhile, Fabricato continues to transfer operations from its shuttered “Riotex” factory in Rionegro, Antioquia, to its centralized Bello, Antioquia, production facilities, hence boosting productivity. Completion of this operational transfer is expected by July.

Reviewing 1Q 2018 results, Fabricato highlighted what it termed as a “bad January, but a good February and March, with EBITDA positive, to a level aligned with our budget.”

In addition, “another relevant factor is our new business model, under which the volume of production is aligned with sales expectations for the period, instead of employing the concept of maximum capacity utilization,” according to Fabricato.

“This has reduced product inventory by 25% in [Colombia Peso] terms and 32% in volume terms, year-on-year,” the company added.


The International Monetary Fund (IMF) on April 30 announced that it foresees 2.7% growth in Colombia’s gross domestic product (GDP) this year.

In its latest annual “executive board” report (see: http://www.imf.org/en/News/Articles/2018/04/30/pr18154-imf-executive-board-concludes-2018-article-iv-consultation-with-colombia?cid=em-COM-123-36986), IMF found that during the 2017 calendar year, “adequate policy management brought Colombia near completion of its adjustment to large external shocks while further advancing inclusive growth.”

However, “economic growth moderated as private investment and consumption weakened in line with lower national income. Some delays in the infrastructure [development] agenda also contributed to the decline in private investment.”

On the other hand, “fiscal consolidation continued, guided by the fiscal rule and contributed to the narrowing of the current account deficit which was also buttressed by some recovery in oil and non-oil exports,” IMF found.

“Despite the growth moderation, social indicators improved with both poverty and income inequality decreasing in 2017.

“The current-account deficit declined to 3.4% of GDP and continued to be financed by FDI [foreign direct investment] to a large extent. Portfolio inflows moderated somewhat but remained ample with further increases in foreign participation in the local government debt market,” the organization added.

“Colombia’s outlook is favorable as continued efforts to advance the structural reforms will foster economic diversification and productivity growth. Economic growth is expected to rebound strongly in 2018 and further over the medium-term, led by strengthening investment and exports.

“The combined impact of the structural tax reform, a brighter outlook for oil prices and the authorities’ 4G [fourth-generation highway construction] infrastructure agenda will underpin investment while reducing Colombia’s relatively large infrastructure gap.

“Continued efforts to reduce trade barriers and some recovery in global growth will help sustain strong export growth. The implementation of the peace agreement will promote regional development and reduce inequality,” IMF’s report added.

On the other hand, “the economy remains vulnerable to uncertainties from a sudden tightening of global financial conditions and escalation of trade or geopolitical tensions.”

In addition, “placing public debt on a declining path is an appropriate fiscal target which would also leave room to fine-tune the consolidation pace as guided by the fiscal rule.

“IMF directors encouraged [Colombian] authorities to focus on improving tax administration, as associated revenue gains will create space for public investment. They highlighted the need for a comprehensive pension reform to increase coverage and progressivity.

“The current monetary policy stance should be conducive to a recovery in activity and reducing the [discount] rate further in line with inflation expectations could be warranted if the recovery faltered.

“Directors agreed that the flexible exchange rate regime has served Colombia well and should remain the first line of defense against global shocks as well as help accumulate adequate buffers.

“Directors noted that the banking system has been resilient amid the economic slowdown, reflecting partly effective financial supervision and ample capital and liquidity.

“They welcomed recent regulatory measures to homogenize banks’ loan restructuring practices and to bring regulation closer to Basel III standards, including through the implementation of the conglomerates law,” the IMF report concluded.


Medellin-based multinational foods giant Grupo Nutresa announced April 27 that its first quarter (1Q) 2018 net profits fell 13.1% year-on-year, to COP$121 billion (US$43 million).

The profit dip “is mainly explained by not accounting a portion of the dividends from our investment portfolio during the period, COP$26 billion [US$9.3 million], which will be registered during the second quarter of this year. Eliminating this effect, Grupo Nutresa’s net profit [for 1Q 2018] would have grown 5.7%,” according to the company.

Corporate-wide consolidated sales for 1Q 2018 rose 3.1% year-on-year, to COP$2.1 trillion (US$748 million), according to Nutresa.

“Sales in Colombia showed a positive performance -- in alignment with better consumption dynamics -- amounting to COP$1.3 trillion [US$463 million], which represents 64% of Grupo Nutresa’s total sales, a growth of 2.4% when comparted to the corresponding [1Q] in 2017, the company added.

Revenues outside Colombia grew 6.6% year-on-year, to US$265.2 million, accounting for 36% of total sales, according to Nutresa.

Consolidated gross profit rose 5% year-on-year, to COP$935.6 billion (US$333 million), “resulting from a sound commodities sourcing strategy,” according to the company.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 3.3% year-on-year, to COP$273 billion (US$97 million), with EBITDA margin at 13% of sales. “This is the reflection of our efforts in productivity and cost efficiency, along with a continued investment in the market,” according to Nutresa.

Grupo Nutresa boasts of a 59.8% market share in processed foods in Colombia “and one of the most relevant players in the sector in Latin America, with consolidated sales of COP$8.7 trillion [US$3.1 billion] in eight business units: cold cuts, biscuits, chocolates, Tresmontes Lucchetti [Italian specialties], coffee, retail food, ice cream and pasta,” according to the company.


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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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