Thursday, February 20, 2020

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Roberto Peckham

Uber-Colombia announced February 20 that it’s relaunching computerized application-based alternative taxi services, which had been terminated February 1 because the Colombian government ruled that Uber had failed to comply with all legal requirements for such services.

According to the announcement (in Spanish, see: https://www.uber.com/es-SV/blog/uber-se-reinventa-por-colombia/) the newly revised service, “which is temporary, allows [customers] to reach [their] destination by renting a car with a driver. How? By accepting a contract through our application on each occasion and each product, with one additional click.

“In addition, you can customize the conditions of your experience with the [vehicle operator], such as deciding the route you want to follow or the music you want to listen to.

“We want to build an inclusive, flexible, friendly and accessible community for all ... It is our commitment to Colombia. #UberSeReinventaPorColombiaUber reinvents itself to operate again in Colombia and is already providing services.

“Starting at 8 a.m. today February 20, Uber restarted its operation in Colombia . . . We will also offer various services that include traditional and new media such as taxis, so that everyone has the opportunity to take advantage of technology to provide a better service.

“The new platform will offer five services to Colombians: By hours [PorHoras], which will allow people to rent a vehicle with a driver and pay for the time they use it; ‘UberYa,’ with which people can rent a vehicle with driver to move around the city in an agile and reliable way.

“Another of the services will be ‘Economy,’ by which you can rent vehicles with a driver that will include vehicles with not-so-recent models, which can be accessed at a lower price, and will not be available in all cities of Colombia.

“’Comfort’ will be the premium alternative with which you can rent more modern vehicles with driver; ‘Uber XL’ will be aimed at large groups and advise dividing the rental price among all to save,” according to the company.


Medellin-based multinational retail grocery and dry-goods marketer Grupo Exito announced February 19 that its full-year 2019 net profits came-in at COP$57.6 billion (US$16.9 million), down sharply from the COP$253 billion (US74$ million) in 2018 when the company still included Brazil operations (since sold).

“The result was impacted by variations in the tax [regimes], the contribution of international operations and performance of the units registered as discontinued,” according to Exito.

While profits (as measured in total pesos) dipped, operating income rose 6.3% year-on-year, to COP$15.3 trillion (US$4.5 billion) in 2019, versus COP$14.8 trillion (US$4.3 billion) in 2018, with electronic commerce, large-format sales and home-delivery sales representing 75% of the sales growth.

Recurring earnings before interest, taxes, depreciation and amortization (EBITDA) rose slightly year-on-year, at COP$1.28 trillion (US$376 million).

Colombia sales were the best in three years, up 4.8% year-on-year, according to the company, to COP$11.75 trillion (US3.4$ billion), according to the company.

“The results of Colombia are due to the cost-effective implementation of innovative value formats (Exito Wow, Carulla Freshmarket and Surtimayorista) and the execution of the omnichannel strategy (electronic commerce and domiciles),” according to Exito.

“E-commerce sales channels grew 37% in 2019 and represent 4.5% of sales in Colombia, compared to 3.4% in 2018,” the company added.

“The positive results of the Grupo Éxito operation in Colombia show the assertiveness in the development of strategies leveraged in innovation and transformation:

“1. Expansion of value formats: Éxito Wow closed 2019 with nine stores under this format, growing 13.4% of its sales and representing 17.5% of the total sales of the Éxito brand.

“2. Carulla FreshMarket, the concept of the group's premium brand that offers customers multiple experiences, fresh, healthy products and superior service, ended 2019 with 13 points of sale in the country, which grew sales by 12. 7% compared to the previous year and represented 17% of Carulla's total sales.

“3. Carulla SmartMarket, the smart commerce laboratory that opened its doors last December, offers its customers new experiences that reduce their shopping time, also integrating the concept of Carulla FreshMarket and important sustainability initiatives such as plastic use reduction. This proposal had an investment of COP$4 billion (US$1.17 million) and has about 20 technological formats.

“4. Surtimayorista, the format designed for professional customers and final consumers, completed 30 stores and consolidated in the central area of he country. Sales of the cash and carry format brand grew 17.8% in 2019 compared to the previous year.

“The e-commerce platforms exito.com and carulla.com had more than 86 million visits, 40.4% more than in 2018. Orders for these channels achieved 441,000 shipments in 2019.

“The ‘market place’ (virtual platform at the service of other companies) increased its sales by 29.4% in 2019 compared to the previous year.

“The ‘last- mile’ [home delivery] service had double-digit growth in the number of shipments in the year, and digital catalogs of 42%. For its part, the ‘Click & Collect’ service (purchase and pick up) increased the number of its orders by 25%,” the company added.


Medellin-based multinational electric power giant EPM announced February 19 that its board of directors gave formal approval for the company to bid on the “CaribeMar” power company in Bolívar, Cesar, Córdoba and Sucre departments in Colombia.

If EPM were to win the auction, then its national share of the Colombia power market would jump to 35% (19 million customers), up from 23% today.

“After an exhaustive and comprehensive analysis process, the EPM board of directors in its session on Wednesday, February 19 approved that the company present the documentation for its participation in the auction process of the shares of ‘CaribeMar,’ one of the two companies that will arise from the separation of markets of Electricaribe,” according to EPM.

Following the financial collapse of Electricaribe and a subsequent national government takeover, the government decided to split the auction of its assets into two parts: CaribeMar (Bolívar, Cesar, Córdoba and Sucre) and CaribeSol (Atlántico, Magdalena and La Guajira).

“Entering CaribeMar means for EPM a unique growth opportunity to reach the Atlantic coast market and provide its service to 1.5 million customers. CaribeMar represents approximately 12% of the share of the national energy market,” according to EPM

As noted in a separate report last month by Colombian business newspaper Portafolio, the “CaribeMar” portion of the former Electricaribe company includes 65% of the hotel sector of the tourist-popular Caribbean coast as well as many large industrial and commercial customers.

While Electricaribe has historically suffered from widespread theft of electric power through illegal connections, the “CaribeMar” area suffers less than the “CaribeSol” area, according to that report.

Not mentioned in the Portafolio report -- but widely known here in Antioquia and admired by power-experts internationally -- is that EPM pioneered the development of low-cost, pay-as-you-go metering systems that avoid power theft, especially in low-income neighborhoods.

This novel system enables people to buy “power cards” (similar to credit cards) in ubiquitous neighborhood stores. These cards provide a certain number of kilowatt-hours at subsidized power prices. Hence people on limited budgets buy only the power they actually want -- at affordable prices -- rather than stealing power through illegal connections and subsequently wasting “free” power by profligate usage, irrespective of actual need.

Colombia’s Energy Ministry announced last year that following years of debate over how to resolve chronic financial losses and massive power thefts at Electricaribe – with a resulting lack of investment in required infrastructure -- the government decided to assume COP$1.2 trillion (US$353 million) in Electricaribe’s pension liabilities, and then sell-off the assets to other power companies with better track records and greater financial muscle.

Electricaribe divisions will require about COP$8 trillion (US$2.35 billion) in infrastructure investments over the next 10 years, according to the Energy Ministry.

Meanwhile, upper-middle-class and wealthier residential power customers (“estratos 4,5 and 6”) throughout Colombia have been paying a special COP$4 (US$0.001) per-kilowatt surcharge to help Electricaribe limp along until new owners are found, the Energy Ministry noted.


Medellin-based multinational cement/concrete giant Cementos Argos on February 14 announced the debut of a US$78 million “green cement” processing facility at its 2.3 million tonnes/year Rioclaro, Antioquia cement plant.

The new technology cuts carbon dioxide (CO2) emissions by up-to-38% while cutting energy consumption by 30%, according to Argos.

“For the first time in Colombia is this type of cement produced, in which a porrtion of the traditional ‘clinker’ raw material is replaced by thermally activated clays (artificial pozzolana),” according to Argos.

The new facility thermally activates 450,000 tonnes/year of certain clays used in Portland cement production.

“With this project we are leading the industry and sowing the seeds of the Argos of the future, which starts today a new production line in Rioclaro, but which has a gigantic growth potential in all geographies,” added Cementos Argos President Juan Esteban Calle.

The new facility also “allows Argos greater flexibility and positions it as the first cement producer in Colombia to offer its customers a broad portfolio of products,” according to Argos.

“The entry into operation of this new [production] line, added to the modern Cartagena [Colombia] plant and other facilities in the national geography, gives Argos the largest installed capacity in the country for the production of cement and concrete,” the company added.


Colombia-based aviation giant Avianca announced February 13 the launch of its new “Avianca Express” division for new routes including flights from Medellin’s downtown Olaya Herrera airport (EOH).

Absent from EOH for 20 years, “Avianca Express” soon will launch flights utilizing ATR-72 propeller aircraft to and from downtown Medellin -- initially serving Quibdó, Montería and Bucaramanga, starting March 30.

“Given the importance of Medellín as a development hub in the Colombian territory, the Olaya Herrera airport will be one of the most robust foci of operations that Avianca Express will have to connect the regions of the country,” according to the company.

Avianca Express also announced new flights to-and-from Bogota to cities including Corozal, Florencia, Ibagué, Manizales and Villavicencio, according to the company.

Medellin is the only city in Colombia with two airports: Downtown EOH for domestic flights mainly to smaller cities, and Jose Maria Cordova (JMC) international airport in the eastern Medellin suburb of Rionegro.


Medellin-based Compañia de Empaques -- manufacturer of more than 1,500 types of packaging materials and fibers for industrial, agricultural, construction and infrastructure sectors – on February 10 revealed in a filing with Colombia’s Superfinanciera oversight agency that its full-year 2019 profits hit COP$12.8 billion (US$3.77 million), up from COP$10.6 billion (US$3 million) in 2018.

At its upcoming shareholders meeting March 4 in the Medellin suburb of Itagüí, the company’s board proposes to pay COP$5.9 billion (US$1.7 million) in dividends, with monthly payments of COP$40 (US$0.01) per share between April 2020 and March 2021, according to the filing.

Compañía de Empaques -- which produces more than 30,000 tonnes per year of products and employs a workforce of 1,500 -- boasts of more than 75 years of experience in “transformation of natural fibers and plastic resins into practical [packaging] solutions.”

Products include “sacks and fabrics of synthetic fiber and natural fiber, zunchos [specialty threads and cords], packaging meshes, shade fabrics for the protection of crops, natural and synthetic fiber rope, erosion-control mantles, mesh and plastic protection and enclosure fabrics, printable input solutions for signage, advertising and commerce, and packaging and storage solutions for homes and offices.

“Our corporate social responsibility is focused on promoting the planting and transformation of fique -- a biodegradable and very resistant fiber native to the Andes -- which represents an important source of livelihood for more than 50,000 Colombian families and contributes to the substitution of illegal crops in our country. For this social purpose, we have the support of different national and foreign entities,” the company adds.


Colombia-based cement/concrete producer Cemex LatAm Holdings revealed in a February 12 filing with Colombia’s Superfinanciera oversight agency that its full-year 2019 net profits plummeted to US$4 million, from US$63 million in 2018.

For fourth quarter (4Q) 2019, the company posted a net loss of US$3 million, compared to a 4Q 2018 net profit of US$10 million.

Sales for full-year 2019 likewise declined 11% year-on-year and 9% quarter-on-quarter, according to Cemex LatAm.

Results in Colombia generally improved, compared to company operations elsewhere in Latin America.

“In Colombia, our net sales and operating [cash] flow improved by 7% and 3%, respectively, in terms of local currency throughout the year 2019,” according to Cemex.

Cement prices in Colombia rose by 11% from December 2018 to December 2019 in terms of Colombian pesos, while sales volumes improved by 9% during 2019.

As for the current outlook on expected sales volumes in Colombia, Cemex estimates that 2020 cement volumes will decline by 4% to 6%, but concrete volumes should rise by 3% to 5%.

In the Colombia residential sector, “we estimate that national cement shipments to this sector increased by a low digits during 4Q 2019 and the full year, compared to the same periods last year,” according to Cemex.

“Cement volumes for the self-construction segment [in Colombia] improved during 2019, driven by economic recovery and remittances [of U.S. dollars from Colombians working overseas].

“In [Colombia’s] social housing segment, indicators such as permits, launches and sales improved in double digits during the last six months.”

As for Colombia’s infrastructure sector, “this was the sector with the best performance during 2019, increasing in double digits. We expect the national cement/concrete demand for the fourth generation ['4G' highway construction program] to increase more than 50% in 2020.

“Our [2019] volumes for this sector were supported by 4G projects, as well as projects in Bogotá such as the Salitre water treatment plant and the CETIC Hospital, among other projects throughout the country,” Cemex added.

Commenting on the over-all results, Cemex LatAm general director Jesús González stated that the company is “satisfied with our results in Colombia.”

“However, our consolidated results were affected by the depreciation of the Colombian peso against the U.S. dollar and much weaker markets in Panama, Costa Rica and Nicaragua. To respond to this challenge -- and as part of our ‘stronger Cemex’ plan in 2019 -- we achieved recurring savings of US$20 million and dedicated our free cash flow to reduce financial debt.

“During 2019, our free cash flow improved by 68%, reaching US$93 million and reducing our net debt by US$92 million dollars, or 11%.

"Additionally, during December we refinanced loans with maturity in 2020. Now, our debt maturity profile is more manageable, and we have no significant debt maturities until December 2022."

Beyond Colombia, Cemex LatAm’s corporate-wide 4Q 2019 volumes of gray cement, concrete and aggregates decreased by 3%, 13% and 10%, respectively, compared to 4Q 2018.

In Panama, 4Q 2019 cash flow decrease by 23%, to US$10 million. Net 4Q sales likewise fell 27%, to US$38 million, according to the company.

In Costa Rica, 4Q 2019 cash flow fell 27%, to US$7 million, while net sales fell 20%, to US$22 million.

In the rest of its operating areas (Nicaragua, El Salvador and Guatemala), cash flow fell 25% year-on- year in 4Q 2019, to US$14 million, while 4Q 2019 net sales declined 11% year-on-year, to US$52 million.


Spain-based Air Europa announced February 10 that it’s expanding its Medellin-Madrid-Medellin nonstop service to four times per week (up from three currently) starting in April 2020.

“This new operation, which responds to the good [market-demand] behavior shown by the route since its launch [last June], will mean an average increase of 30.7% in the number of seats,” according to the company.

The Medellin-Madrid-Medellin service attracted 44,000 passengers last year, with plane occupancy rates “close to 90%,” according to the company, a division of the Globalia tourism conglomerate.

The expansion means that Air Europa nonstop service on Boeing 787-8 “Dreamliners” will include Fridays in addition to Tuesdays, Thursdays and Saturdays.

The new-generation, fuel-efficient planes carry 274 passengers in economy class and 22 in business, “generating less [greenhouse gas] emissions than any other aircraft of similar size,” according to Air Europa.

Via its hub operations in Madrid, “Air Europa will consolidate other destinations on its international map with an increase in frequencies and the progressive arrival of the new Boeing 787-9” aircraft, according to the company.

“The Air Europa fleet is one of the most modern on the [European] continent. It consists of more than 50 aircraft whose average age does not exceed four years,” according to the company.

Air Europa is a member of the SkyTeam alliance, formed by 19 airlines that collectively transport more than 630 million passengers annually through 15,400 daily flights to more than 1,000 destinations in more than 170 countries.


A report claiming ties between former President Alvaro Uribe and imprisoned Mexican drug kingpin “El Chapo” Guzman has now prompted even President Uribe’s longest-running, harshest media critic to trash the report as unsubstantiated.

The apparent fake-news report – first broadcast by fired former Colombian Attorney General’s Office investigator and convicted criminal Richard Maok, and subsequently repeated in UK-based newspaper Daily Mail --also prompted President Uribe’s lawyers to issue an unusual February 10 news release contradicting the report.

The biggest surprise, however, came from fierce Uribe critic, former Semana magazine columnist and now Univision editorial director Daniel Coronell, who trashed the apparent fake-news story, pulling it from Univision broadcasts “because I consider that this report hasn’t been verified by independent [rather than the usual anti-Uribe, left-wing-biased] journalists,” Coronell stated.

In addition, President Uribe’s Bogota-based attorneys Jaime Granados and Jaime Lombana issued the following press release (obtained by Medellin Herald) denouncing the Maok report as a fantastical fabrication:

“Responding to new calumnies proffered against President Alvaro Uribe Velez, we state the following:

“Richard Maok is a fugitive from Colombian justice, condemned [by the Colombian Supreme Court] for grave crimes against the administration of national justice.

“Aided by political sectors adverse to President Uribe [including left-wing Senator and former M-19 guerrilla Gustavo Petro], Maok fled to Canada where he enjoys immunity from his crimes.

“Since years ago, this shadowy person has proffered a series of infamies against various public persons including Luis Camilo Osorio, former Attorney General [of Colombia]. These ‘denunciations’ [by Maok], lacking any seriousness, have been debunked.

“Now, [Maok] has chosen President Uribe as victim of his absurd calumnies, trying to link [Uribe] to the Sinaloa cartel. Lamentably, international news media have echoed these fantastical tales, staining the good name of President Uribe.

“President Uribe has been recognized globally and regionally as one of the most important leaders in the struggle against narcotrafficking. Statistics [during Uribe’s two terms as President] are unprecedented: Reduction [of coca plantation areas] from 180,000 hectares during Plan Colombia to 62,000; more than 1,150 [cocaine traffickers] extradited [to the United States]; seizures of cocaine rising from 95 tonnes in 2002 to more than 1,330 tonnes at the end of his term – achievements that were key in the transformation of Colombia and our democracy. Because of that he was awarded the Medal of Freedom, the highest decoration given by the U.S. government to any civilian,” the bulletin from Uribe’s lawyers concludes.


Medellin-based real-estate developer Valores Simesa on February 7 reported an after-tax profit of COP$21.1 billion (US$6.1 million) for full-year 2019 -- and simultaneously revealed in a filing with Colombia’s Superfinanciera agency a proposed COP$20 billion (US$5.8 million) stock buyback.

Simesa is the developer of the giant “Ciudad del Rio” residential, commercial and office-building project on the site of the former Siderurgica Simesa iron/steel mill in Medellin.

According to the company’s most recent annual report, two-thirds of Simesa’s stock is held by the investment banking division of Medellin-based Bancolombia.

Simesa’s board of directors wil put the stock-buyback proposal to a vote at the anual stockholders meeting March 11 in the Medellin Museum of Modern Art (MAMM), located in Ciudad del Rio.


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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.

Medellin Herald welcomes your editorial contributions, comments and story-idea suggestions. Send us a message using the "contact" section.

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