Thursday, August 18, 2022

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Roberto Peckham

Medellin-based electric power producer Celsia (a division of Grupo Argos) announced August 5 that its second quarter (2Q) 2022 net income fell to COP$152 billion (US$35 million), a 23% decline from the COP$198 billion (US$51 million) net in 2Q 2021.

Consolidated 2Q 2022 revenues hit COP$1.21 trillion (US$279 million), with 89% of that coming from Colombia operations (COP$1.08 trillion/US$249 million). The other 11% came from Central America operations (COP$132 billion/US$30 million), according to the company.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) reached COP$458 billion (US$105 million) in 2Q 2022, of which Colombia accounted for COP$397 billion (US$91 million). Celsia credited the positive results to higher total power sales along with recent upgrades to power distribution networks.

EBITDA margin in the latest quarter came-in at 37.9%.

Meanwhile, for the first half (1H) of 2022, consolidated net profit so-far totals COP$318 billion (US$73 million), while net 1H 2022 investments totaled COP$827 billion (US$190 million), mainly in “expansion and technological updating of networks, as well as the growth of solar-power farms,” according to the company.

Celsia added that it closed the latest quarter with a consolidated debt of COP$5.13 trillion (US$1.18 billion) and a leverage ratio of 3.04-times debt to-EBITDA.


Medellin-based textile/clothing trade group Inexmoda announced July 29 that the annual Colombiamoda/Colombiatex trade show here attracted an all-time-record of nearly 50,000 attendees, while latest statistics show that Colombian clothing sales are up 9% so far in first half (1H) 2022 versus 1H 2021.

Among those attending the annual show here were some 25,000 admirers at fashion catwalks, as well as 11,300 buyers from 47 nations mingling with 476 exhibitors at the trade show.

What’s more, another 18,500 people attended the annual “wisdom and trends forum” presentations at “Knowledge Pavilion” events.

“Tourist spending for this 33rd edition of Colombiamoda+Colombiatex 2022 is higher than that seen in past editions, due to the record attendance at the event and which, in addition, meant a hotel occupancy of 91.7%,” the trade group noted.

“Colombiamoda+Colombiatex 2022 showed that it is an opportune moment to boost the fashion system and boost the economic growth that the industry has experienced this year,” added Inexmoda President Carlos Eduardo Botero.

Exhibitors showed-off the latest trends in footwear and leather goods, jeanswear, formal casual, beachwear, intimate wear, children’s wear, textiles and supplies, with participants including those from Uruguay, Mexico, United States, Portugal, along with key textile/clothing producers from the Colombian departments of Antioquia, Cundinamarca, Santander, Norte de Santander and Valle del Cauca.

Through 1H 2022, Colombian clothing sales to date have hit COP$14 trillion (US$3.28 billion), while 1H 2022 Colombian exports of textiles and clothing so far have jumped 26% year-on-year, to US$439 million, according to Inexmoda.

For all 12 months of 2022, Inexmoda now expects spending on clothing here to top COP$29.6 trillion (US$6.9 billion), up 6.8% year-on-year, while Colombia textile/clothing exports are likely to rise 15% year-on-year, to US$931 million.


Medellin-based multinational gold miner Mineros SA on August 3 reported a 10% year-over-year hike in net income for second quarter (2Q) 2022.

Revenue likewise rose 7% year-on-year, to US$137 million, while adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 12%, to US$46.7 million.

Gold production also rose by 10% year-on-year, to 74,062 ounces, according to the company.

“Along with increased production, the company has seen reductions in both the all-in sustaining-cost per ounce of gold sold and the cash-cost per ounce of gold sold, compared to the same period in 2021,” added Andrés Restrepo, Mineros CEO.

Net debt-to-adjusted-EBIDTA ratio fell 57%, to 0.11-times, “following repayment of project acquisition loans,” according to the company.

During the latest quarter, Colombia’s environmental licensing authority (ANLA) approved Mineros’ application for its Nechí alluvial property, “sufficient to support planned operations for a four-year period,” according to the company.

Meanwhile, Mineros also received environmental-management and health-and-safety-management certifications for its Hemco mining operations in Nicaragua.

At its Gualcamayo mining property in Argentina, Mineros is undertaking more drilling “to upgrade mineral resources, provide material for metallurgical test work, resource expansion and evaluation of the remaining gold in the heap leach pads,” the company added.

 


Medellin-based multinational electric-power transmission, highways concessionaire and telecom provider ISA announced August 1 that its second quarter (2Q) 2022 net income rose 14.4% year-on-year, to COP$670 billion (US$155.7 million).

Operating income rose 10% year-on-year, to COP$1.9 trillion (US$441.7 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) likewise rose 10%, to COP$2.2 trillion (US$511 million).

The boost in net income came “mainly due to the positive effect of inflation in Brazil (IPCA) and Colombia (IPP) on operating revenues and a lower tax expense due to the incorporation of Brazilian capital interest in the effective tax rate,” according to ISA.

On the other hand, net income “was partially reduced by higher financial expenses due to the effect of higher inflationary indexes, mainly in Chile and Brazil,” the company added.

Net margin for 2Q 2022 came-in at 20.6%, while return on equity was 11.1%, according to the company.

During the latest quarter, investments totaled COP$846 billion (US$197 million), including 33 energy transmission projects totaling more than 4,900 kilometers of new power lines.

Consolidated financial debt totaled COP$29 trillion (US$6.7 billion), up 3.1% year-on year.

ISA’s debt/EBITDA ratio closed at 4.05-times, “maintaining adequate levels to continue supporting the growth of ISA and its companies and to maintain the current credit rating,” the company added.

Electric-power transmission revenues rose 12% year-on-year, to COP$225 billion (US$52 million), due to entry-into-service of projects in Peru, Brazil, Chile and Colombia.

Among the revenue boosts from power start-ups, highway/telecom expansion projects and price-indexing effects during 2Q 2022:

Colombia: higher power revenues of COP$108 billion (US$25 million).

Brazil: higher revenues of COP$51 billion (US$11.8 million), “mainly due to the positive effect of the inflation adjustment of revenues in ISA CTEEP [power tariffs].”

Peru: higher revenues of COP$41 billion (US$9.5 million), “mainly due to higher revenues in energy transmission contracts” as well as “the favorable effect resulting from the exchange rate in dollars to pesos.”

Chile: higher revenues of COP$16 billion (US$3.7 million), “mainly due to the entry into operation of new projects and the increase in Producer Price Index (IPP) and Consumer Price Index (IPC).”

Road concessions: increase in revenues of 110% “mainly due to higher returns on financial assets and higher revenues from the operation and maintenance of concessions and toll management in Chile, and higher revenues from the Ruta Costera concession.”

Telecommunications: increase in revenues of 7.7% “mainly due to higher sales of connectivity services, sales of internet and ethernet capacities and other telecommunications services in Colombia and Peru, and the growth of the ‘Over the Top Operators’ segment in Colombia,” the company added.


Medellin-based multinational utilities giant EPM announced July 29 that its first half (1H) net income rose 10% year-on-year, to COP$2.1 trillion (US$491 million), versus COP$1.9 trillion (US$483 million) in 1H 2021, even while the net margin actually dipped two percentage points.

Revenues rose 28% year-on-year, to COP$15 trillion (US$3.5 billion), versus COP$11.7 trillion (US$2.97 billion) in 1H 2021.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 34% year-on-year, to COP$4.7 trillion (US$1.09 billion), versus COP$3.5 trillion (US$890 million) in 1H 2021.

Investments in infrastructure projects during 1H 2022 amounted to COP$2 trillion (US$467 million), according to EPM, which is 100% owned by the city of Medellin.

“Of the COP$1.8 trillion [US$420 million] that EPM will transfer to the city of Medellin during 2022, in the first half of this year we have already paid COP$1.2 trillion [US$280 million), up 28% year-on-year,” according to the company.

Of the COP$2 trillion (US$467 million) invested in infrastructure so far this year, COP$887 billion (US$207 million) went for continuing development of the 2.4-gigawatt Hidroituango hydroelectric project in Antioquia, scheduled for initial startup of two generating units in October 2022.

“Thanks to the high volume of rains in Colombia and especially in Antioquia, plus the effect of the ‘La Niña’ weather phenomenon, the aggregate reservoir among EPM’s hydraulic power generation system rose from 90% to 100%,” according to the company.

“With this, the total energy generation of the EPM Group in the first half of the year was 9,578 gigawatt-hours, up 8% compared to the same period of 2021,” the company added.

“EPM’s diversified business portfolio and presence in Mexico, Panama, Guatemala, El Salvador, Colombia and Chile were also fundamental in the results achieved.

“Of the COP$15 trillion [US$3.5 billion] in revenues that we achieved in the Group in the first six months of 2022, the EPM parent company contributed 41%, foreign subsidiaries 28% and national subsidiaries of energy and water 31%.

“Of the total EBITDA of $4.7 trillion (US$1.09 billion), parent company EPM contributed 57%, the national subsidiaries of energy and water 25%, and foreign subsidiaries 18%. The Group's EBITDA margin was 31%, one percentage point higher than the same period last year.”

Electric power local distribution segment contributed 55% of the consolidated revenues, power-generation 29%, power-transmission 4%, natural gas 2%, water supply 7%, and wastewater and solid-waste management 3%, according to the company.

Grupo EPM now has assets totaling COP$69 trillion (US$16.1 billion), up 2%, while liabilities grew 4% year-on-year, to COP$ 40.7 trillion (US$9.5 billion), according to the company.

Financial indebtedness for both Grupo EPM and the EPM parent company now stand at 41%.

The debt to EBITDA ratio for EPM Group closed at 2.99, compared to 4.03 in 2021, while the debt/EBITDA ratio for the EPM parent company stood at 4.17, down from 5.17 from 1H 2021, according to the company.


Medellin-based multinational foods giant Grupo Nutresa announced July 29 that its second quarter (2Q) 2022 net profit rose 53% year-on-year, to COP$214 billion (US$50 million).

Revenues also rose 36% year-on-year, to COP$4 trillion (US$935 million), according to the company.

So far this year, first-half (1H) net income is up 38%, at COP$515 billion (US$120 million), while 1H earnings before interest, taxes, depreciation and amortization (EBITDA) is up 27%, to COP$950 billion (US$222 million), with a 12.5% EBITDA margin, according to Nutresa.

“All of the geographies where the organization operates report double-digit growth rates,” according to Nutresa.

“Colombian sales amount to COP$4.6 trillion [US$1.07 billion], which represents 61.1% of the total sales, with a 32.5% growth rate.

“International sales totaled COP$3.0 trillion [US$701 million], with a 30.6% growth.

“In the middle of an inflationary and volatile global setting, Grupo Nutresa continues to manage the commodities increase through hedging and an optimal administration of its main raw materials.

“Operating expenses grew 14.4%, entailing efficiencies for the company and growing at a lower rate than sales. Consequently, the operating profit amounted to COP$729 billion [US$170 million], which represents a 34.7% growth compared to the corresponding term in 2021.

Meanwhile, financial expenses rose 47.9% year-on-year, “mainly due to the increase in the interest rates in the territories where Grupo Nutresa operates,” according to the company.


Colombia-based Cemex LatAm announced July 28 that its second-quarter (2Q) 2022 operations produced zero profits, down from a modest US$16,000 net profit in 2Q 2021.

Consolidated net sales rose 11% year-on-year on a comparable basis for the ongoing operations once including foreign exchange fluctuations, according to the company. “Higher cement prices and ready-mix volumes were the main drivers of the improvement,” according to Cemex.

Corporate-wide cost-of-sales as a percentage of net sales increased by 7.8 percentage points (pp), from 60.2% in 2Q 2021 to 68% in 2Q 2022. “The increase was primarily due to higher variable costs, mainly in kiln fuel,” according to Cemex.

Operating expenses as a percentage of net sales declined by 2.7pp during the latest quarter, from 26% in 2Q 2021 to 23.4% in 2Q 2022.

Operating earnings before interest, taxes, depreciation and amortization (EBITDA) during the latest quarter declined by 20% on a comparable basis. “Thee decline was mainly due to higher operating costs, despite higher sales,” according to Cemex.

Operating EBITDA margin during 2Q 2022 decreased by 6.1pp year-on-year. “The positive effect from higher cement prices and ready-mix volumes was offset by higher variable costs and a negative product-mix effect,” according to the company.

“In Colombia, our domestic gray cement volumes declined by 6%, while our ready-mix volumes increased by 33%, during the second quarter on a year-over-year basis,” according to Cemex.

“Our cement and ready-mix prices improved by 8% and 2%, respectively, on a year-over-year basis in local-currency terms. The improvement in cement pricing was driven by our price increases in the distribution segment, implemented in December 2021 and April 2022.

“In the ready-mix business, our volume growth during the quarter was supported by increased market demand in the formal sector, and our recent investments to increase the ready-mix footprint mainly in the metro areas of Bogota and Cali,” the company added.

In Panama, domestic gray cement and ready-mix volumes increased by 6% and 25%, respectively, year-over-year. “Volume growth was driven primarily by increased activity in the infrastructure sector, mainly in the third line of the Metro. Despite the improvement, industry volumes are still below pre pandemic levels,” according to Cemex.

Panama cement prices “during the quarter improved by 1% on a sequential basis, stopping the downward trend observed since 2019. During the quarter, our cement plant exported more than 65,000 tons of cement and clinker to nearby markets with supply shortages.”

In the “Rest of Cemex LatAm” region including Guatemala and Nicaragua, “domestic gray cement and ready-mix volumes declined by 6% and 37%, respectively, year-over-year,” according to the company.

“In Guatemala, our domestic gray cement volumes declined by 12% on a year-over-year basis. Our cement volumes declined mainly due to heavy rains during May and June, as well as to our pricing strategy.

“In Nicaragua, our domestic gray cement volumes remained stable year-over-year. After several quarters of cement volume growth in the infrastructure sector, we observed a slight decline during the latest quarter,” the company added.


Medellin-based multinational supermarket and dry-goods retailer Grupo Exito announced July 27 that its second quarter (2Q) 2022 net income rose 22.7% year-on-year, to COP$62.2 billion (US$14.2 million).

Operating income likewise rose 27.6%, to COP$4.7 trillion (US$1.07 billion), while recurring earnings before interest, taxes, depreciation and amortization (EBITDA) rose 21%, to COP$371 billion (US$84.8 million).

Éxito credited “good commercial performance and operational efficiencies in the three countries [Colombia, Argentina and Uruguay] where it has a presence.”

“The strengthening of the omnichannel strategy in Colombia allowed e-commerce channels to grow their sales by 17%, orders by 36.2% (a total of 5.7 million dispatches) and reaching a share of 12.1% over the total sales of the country during the first half of the year.

“Innovative formats continue to be an important lever for differentiation and competitiveness. ‘Success Wow’ represented 30.2% of the brand's total sales and ‘Carulla FreshMarket’ 46.6%,” according to the company.

“The increase in traffic to shopping centers continued to contribute to the result of the real estate business. The occupancy rate of shopping centers reached 93.1% in Colombia and 88% in Argentina in the second quarter.

“The stable internal consumption of Uruguay was reflected in a growth in sales of 7.2% in local currency with an increase in recurring EBITDA of 23.4% measured in COP [Colombia pesos], as a result of greater productivity and strict control of expenses.

“The ‘Disco’ and ‘Devoto’ stores that operate under the ‘fresh market’ model participated with 50.5% of total sales, growing 5.8 percentage points more than the non-reformed stores.

“In Argentina, Grupo Libertad's sales in local currency grew by 78.7%, exceeding high inflation, benefiting from the economic reactivation and the positive performance of the real estate business,” the company added.


Toronto-based GCM Mining (formerly Gran Colombia Gold) – Antioquia’s biggest gold miner -- announced July 25 that it has just completed a 100% all-stock merger deal and as a result will now be renamed Aris Gold, with headquarters moved to Vancouver, British Columbia.

The GCM/Aris combination boasts of combined gold reserves of 3.8 million ounces and a resource base of 18.3 million ounces “measured and indicated” as per conventional mining standards, according to the company.

According to incoming Aris chairman Ian Telfer, “after Aris Gold became operator of the Soto Norte [Santander, Colombia] joint venture, joining forces with GCM became a logical next step.”

Outgoing GCM chairman Serafino Iacono commented that “this transaction further diversifies the company’s portfolio and reaffirms Colombia as an area of focus,” with expanded diversification projects in Guyana and in Canada.

The new CEO of Aris Gold -- Neil Woodyer – added that “we are building a gold mining business with scale, cash flow, a strong financial position with US$397 million of cash and US$260 million of additional committed funding, and a high-quality growth pipeline.”

The company simultaneously announced that former Colombia Minister of Justice and Vice-Minister of Mines and Energy Mónica de Greiff is now joining the Aris board of directors.

The Segovia operations in Antioquia – ongoing for more than 150 years -- produced 206,389 ounces of gold in 2021, the company noted.

Meanwhile, the Marmato mine in Caldas, Colombia, is undergoing a modernization program and is expected to produce some 175,000 ounces of gold per year, according to the company.

Elsewhere, the Toroparu project in Guyana is expected to have an average gold production of 225,000 ounces per year over the projected 24-year mine life, according to the company.

As for the Soto Norte joint-venture project in Colombia, Aris estimates average gold production of 450,000 ounces per year, of which 50% would go to Aris, according to the company.


In contrast to some wildly unsustainable economic schemes proposed by incoming Colombia President Gustavo Petro – like giving dead-end government jobs to 3 million unemployed people -- outgoing President Ivan Duque on July 21 here in Medellin outlined huge potential for sustainable jobs growth and wealth creation in the creative-industries sectors, also known as the “orange economy.”

Thanks to wisely targeted tax incentives, “today Colombia is the epicenter and the most attractive place in Latin America for more investment in the orange economy,” President Duque explained here.

At the “Forum of Art, Culture, Creativity and Technology,” Duque pointed out that companies in the creative-industries sectors here "do not pay income tax during the first five years,” as long as they meet certain targets for investment and jobs creation.

“Last year more than 300,000 companies were created and, according to Confecamaras, 40% of them were associated with the orange economy,” he said.

Colombia’s national trade-school program (SENA) “has more than 400,000 young people who have been trained through these certified programs, and SENA can reach an additional million in complementary programs,” he added.

“Today Colombia allows these enterprises to connect with more markets, with important regulations that allow more exports from Colombia, including creative services, and at a 40% tax discount,” he said.

Thanks to huge growth in the “orange economy,” creative industries here now account for a greater proportion of Gross Domestic Product (GDP) than even Colombia’s traditional coffee and mining industries, he said.

That’s why “we have to ensure that this sector has a continuing voice, stability, training and projection for the future,” he concluded.


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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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