Friday, April 16, 2021

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Roberto Peckham

Phoenix, Arizona-based Intertec International announced March 10 that it’s expanding operations in Medellin and Bogota, seeking 100 bilingual information technology (IT) professionals for its Colombia operations over the next nine months.

According to a joint announcement from Intertec and Agencia de Cooperacion e Inversion de Medellin y el Area Metropolitana (ACI, Medellin’s investment-promotion agency), Colombia now becomes the second base of operations in Latin America, following Costa Rica.

“Colombia is strategic due to the quality of the talent, the availability of services and a location that gives us proximity to the United States and to our clients,” said Kent Feuerhelm, executive vice president of Intertec International.

The company is seeking “bilingual professionals in the areas of software development and engineering, quality assurance, software testing, automation, IT infrastructure, project management and operations support personnel,” according to the announcement.

Besides new operations underway in Medellín and Bogotá, Intertec also aims to hire IT pros in Cali and Barranquilla, according to the company.

“Intertec has 20 years of operations, providing custom software and IT services to industries such as electronics, aerospace, education, manufacturing, retail, healthcare, high-tech distribution, direct sales, finance, hospitality and others,” according to the company.

Both ACI and the national investment agency ProColombia aided the decision to locate here, according to those agencies.


Medellin-based multinational gold mining giant Mineros SA announced March 8 that its full-year 2020 profits fell 42% year-on-year, to US$37.5 million, but fourth quarter (4Q) 2020 rose 54% year-on-year, to US$13 million.

Full-year 2020 earnings before interest, taxes, depreciation and amortization (EBITDA) dipped 32%, to US$128 million, while gross revenues fell 16%, to US$411 million.

“During the fourth quarter of 2020, the price of gold had a stable behavior with a slight increase of 0.7%, with an average price for the quarter of US$1,876 per ounce,” according to Mineros.

Corporate-wide 4Q 2020 gold production fell 19% year-on-year, to 64,908 ounces of gold, of which Colombia accounted for 17,561 ounces, Nicaragua 26,660 ounces and Argentina 20,687 ounces.

The 4Q production decline resulted from “a drop in production from Nicaragua due to hurricanes 'Iota' and 'Eta' and by lower production in Argentina, explained by the natural ending of a deposit of the open pit mine,” according to Mineros.

Cash cost of production rose 14% while all-in sustaining costs (AISC) rose 24%, “mainly explained by the lower production, by the purchases of artisanal material in Nicaragua given the high price of gold and by investments in maintenance that had been delayed because of the [Covid-19] pandemic,” according to the company.

However, the average selling price of gold in 4Q 2020 rose 28% year-on-year, boosting total revenues despite the production decline.

At the end of 4Q 2020, net debt -- total debt less cash and equivalents — fell 82% year-on-year, to US$11 million. “This decrease is mainly due to the increase in cash and cash equivalents totaling more than US$57 million, along with a US$13 million decrease in debt,” according to the company.

In Colombia, 4Q 2020 production fell 14% year-on-year, to 18,000 ounces, “explained by a lower average grade, by the sale of Operadora Minera [underground mining] and by delays in some environmental permits during the quarter, given the difficulty of coordinating visits with the authorities due to Covid,” according to the company.

Future Plans

Mineros now foresees 2021 production in the range of 257,000 to 282,000 ounces of gold.

Its 2021 plans also include exploration programs aiming to increase the life of the Gualcamayo mine in Argentina, as well as “completion of internal technical studies for the Porvenir and Luna Roja mines in Nicaragua, the DCP mine in Argentina and the La Pepa mine in Chile,” according to the company.

Mineros also aims to “develop new alluvial mining methods in Colombia, to increase annual production and diversify operations. We are currently at the final stages of an internal project that uses suction dredges to reach new areas. Also, we have been working on a formalization model, bringing third parties that operate within our mining titles, in areas that our dredges cannot access,” the company added.


Medellin-based multinational power transmission, highways concessions and telecom services provider ISA announced March 3 that its full-year 2020 net income rose 46.7%, to COP$646 billion (US$175 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 38%, to COP$1.9 trillion (US$516 million), while operating revenues rose 23%, to COP$2.16 trillion (US$587 million), according to the company.

While ISA has operated highway concessions in Chile and Peru for years, during 2020 ISA made its first entry into the road concessions business in Colombia, via the acquisition of Concesión Costera Cartagena Barranquilla.

ISA also bought a 65% stake in a new “Interconexiones” alliance with Medellin-based highway construction giant Construcciones El Cóndor, which enables further participation in public tenders and private infrastructure projects in Colombia and Peru, according to the company.

As for its electric-power transmission business unit, “five energy transmission projects entered into operation in Brazil, Chile, Colombia, and Peru, expanding our infrastructure to 47.358 kilometers and 95,720 millivolt-amps (MVA),” according to the company.

“ISA also was awarded eight energy transmission projects in Colombia, Peru, and Brazil, and we acquired 100% of the shares of Orazul Energy Group, which will cover 746 kilometers of circuit.

“Furthermore, through ISA CTEEP, our affiliate, we entered into an agreement in Brazil to acquire 100% of the shares of Piratininga-Bandeirantes Transmissora de Energia (PBTE).

“In terms of the decarbonization of the Colombian energy sector, ISA was the first company in the power sector to issue green bonds in the stock exchange market.

“ISA also inaugurated a solar plant at its headquarters in Medellín, Colombia, that supplies part of the energy required in our headquarters but is also used to conduct research on distributed energy resources in a company-academia-government alliance to develop an integral proposal that will transform the Colombian energy sector.

“Finally, in for the Telecommunications business unit, through Internexa, we strengthened the services that support our customers' digital transformation processes. Additionally, we gained access to two additional Internet Exchange Points,” the company added.


Argentina-based electronic-commerce giant Mercado Libre announced March 3 that it’s opening a new information technology (IT) center in Medellin -- and expects to hire 500 technical professionals here.

The new center is the company’s second in Colombia, having opened its first IT center in Bogota in 2020.

As a result of the Medellin expansion, “Colombia joins Argentina, Brazil, Chile, Uruguay and Mexico in the list of countries that have two centers of this type for the entire Mercado Libre operation,” according to a joint press release from Mercado Libre, Medellin’s Agencia de Cooperacion e Inversion de Medellin y el Area Metropolitana (ACI, the investment promotion agency) and Ruta N, Medellin’s local high-tech landing site and incubator.

“For the start-up of the new IT Center, job openings will be filled by local experts and talents in skills such as back-end and front-end software, mobile development, IT security, business intelligence, machine learning, data science, application infrastructure [and] user experience, among others,” according to the company.

“After a 2020 of exceptional growth, we decided to redouble this effort in Antioquia,” said Mercado Libre Andean Region Director Jaime Ramírez.

“We are sure that the ecosystem of digital entrepreneurship and the innovative approach that positions Medellín as the city of the fourth industrial revolution is the right place for this second center,” he added.

Founded in 1999, Mercado Libre offers on-line platforms for individuals and companies to buy, sell, advertise and pay for goods and services online.

The “MercadoLibre.com” web site “is among the 50 most-visited sites in the world in terms of page views and is the mass consumption platform with the highest number of unique visitors in the most important countries where it operates, according to metrics provided by ComScore Networks,” the company added.


Medellin-based construction giant Conconcreto on March 1 reported a 64% year-on-year drop in 2020 net income, to COP$23.5 billion (US$6.5 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) declined 40%, to COP$102 billion (US$28 million), while revenues likewise declined by 39%, to COP$574 billion (US$158 million).

Despite the decline in profits, 2020 nevertheless “represents a positive year-end compared to that reported in third quarter 2020, and even more so considering that it reflects the negative impact that the Covid-19 emergency had on the company’s business plan and its investments,” according to Conconcreto.

Meanwhile, Conconcreto’s relatively solid cash position at year-end 2020 enables it to “comply with the financial indicators required to tender standard bidding projects and other [opportunities],” according to the company.

Among those is the recently awarded “Doble Calzada Oriente-DCO” public-private association highway project connecting Medellin eastward to Rionegro and portions of Envigado and El Retiro. For the DCO project, Conconcreto holds a 60% stake.

The DCO project, estimated at COP$926 billion (US$255 million), boosts Conconcreto’s construction backlog by approximately COP$300 billion (US$82.6 million), according to the company.

U.S. ‘Strategic Alliance’ Developments

Meanwhile in the U.S. market, Conconcreto’s “strategic alliance” with U.S.-based Century Asset Management has resulted in development of some 35,000 houses worth about US$6.5 billion., according to the company

The “strategic alliance” is now becoming an “asset manager” that will “manage the resources of its investors through investment funds for the development of rental housing projects,” according to Conconcreto.

“’Century Real Estate Fund I’ is the first fund of this alliance. It is currently in the capital raising stage and seeks to capitalize on the opportunity to invest in an environment of low interest rates, high demand for housing in Miami-Dade County and scarcity of land with permits in strategic locations, developing the Midtown Doral Multifamily project,” according to the company.

“The first project is two towers with a total of 326 apartments, located in the city of Doral, in Miami-Dade County. The first fund will be US$150 million in which Constructora Conconcreto will carry out the designs and execute the construction.”

Backlogs Growing

Aside from the new DCO project in Antioquia, the company’s backlog at year-end 2020 stood at COP$2.21 trillion (US$609 million), while the DCO and other new projects announced so far in 2021 bring the total backlog to COP$2.59 trillion (US$713.6 million), according to the company.

In total, 86.4% of the backlog corresponds to infrastructure projects, while the remaining 13.6% corresponds to buildings, including housing projects.

Infrastructure backlog values are mainly concentrated in the “Ruta 40” highway project, the “Transmilenio” mass-transit rail project in Bogota, the DCO project and the Hidroituango hydroelectric project in Antioquia.

As for building construction backlogs, these are mainly concentrated in the “Contree” and “Las Vegas de Comfandi” housing projects, along with the Century Homestead projects in the U.S., according to the company.

Hidroituango Lawsuit

In a PWC accountant’s note to the official 2020 earnings report, PWC cites the pending COP$10.5 trillion (US$2.9 billion) lawsuit brought by Medellin-based power giant EPM against the builders and designers of the US$5 billion “Hidroituango” hydroelectric project.

That lawsuit claims that Hidroituango’s builders and designers are to blame for a diversion-tunnel collapse in 2018 that resulted in hundreds of millions of dollars in physical damages and billions of dollars in lost power sales because of resulting delays of entry-into-service for the hydroelectric project.

Conconcreto has a 35% share of the “CCC Ituango” consortium in the Hidroituango project, PWC noted.

“Based on the analyses undertaken by the consortium, Conconcreto and its legal team consider that no solid arguments exist that would put blame on the consortium and its members for the [losses caused by the tunnel collapse] and therefore they don’t consider it probable that the consortium or its members would be found guilty. As a result, to date the company has not made any [special financial-loss accounting] provision,” according to PWC.

Meanwhile, the CCC Ituango consortium has filed for arbitration to settle the claims -- to be overseen by the Medellin Chamber of Commerce, PWC noted.


Medellin-based multinational foods giant Grupo Nutresa reported February 26 that its full-year 2020 net income rose 14.3% year-on-year, to COP$575 billion (US$158 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 7.2%, to COP$1.44 trillion (US$395 million), while revenue rose 11.7%, to COP$11.1 trillion (US$3.04 billion).

Sales in Colombia grew 7.9%, to COP$6.7 trillion (US$1.8 billion). International sales increased 18.1%, hitting COP$4.4 trillion (US$1.2 billion).

Gross profit totaled COP$4.7 trillion (US$1.29 billion), up 6.1%. The gross profit increase was lower than the growth in revenues “mainly due to higher commodities prices in some countries of our strategic region,” according to Nutresa.

Operating profit reached COP$1 trillion (US$274 million), up 6.6%. “This is the result of consistent work focused on administrative, sales and production expense efficiency and productivity during a period that demanded additional efforts to protecting the people and guaranteeing the continuity of the operation,” according to the company.

“Net post-operative expenses amounted to COP$204 billion [US$56 million] 9.0% lower than last year. This is explained by a 7.8% increase in financial revenue as a result of Grupo Nutresa’s good cash position over the year and a 6.4% reduction in the financial expenses from lower financing rates,” the company added.

Grupo Nutresa has food production and distribution operations in Colombia, Chile, Costa Rica, Guatemala, México, Panamá, the U.S, Venezuela, Ecuador, El Salvador, Nicaragua, Perú, Dominican Republic and Malaysia.

Its main product-and-service lines (some of them franchised) including coffees, chocolates, ice creams, pastas, biscuits/crackers, meats and fast-food restaurants. Major brands include Noel, Starbucks, Papa John’s, El Corral, Zenu, Chocolates Corona, Jet, MontBlanc, Sello Rojo, Colcafe, Matiz, Lucchetti, Crem Helado, Doria and Monticello.


Medellin-based highway construction giant Construcciones El Condor revealed February 25 that its full-year 2020 net income dipped 14% year-on-year, to COP$31 billion (US$8.5 million).

Gross revenues also dipped 7% year-on-year, to COP$825 billion (US$226 million), according to the company.

Covid-19 shutdowns during March-to-May 2020 caused some of the revenue and profit declines.

In addition, 2020 profit differences versus 2019 are partially explained by a one-time, COP$40 billion (US$10.9 million) boost in income in 2019, via the sale of El Condor’s stake in the “Tunel de Oriente” highway project between Medellin and its eastern suburbs. No such large-scale sales benefitting El Condor occurred in 2020.

“We also emphasize that the 2020 revenues are not comparable with those of the previous year because the paralysis in the mandatory quarantine on the occasion of the Covid-19 pandemic implied the non-execution of works from the end of March to May, and the resumption of these at levels lower than normal during the months of May, June and July,” according to El Condor.

“Additionally, the effects of the ‘La Niña’ weather phenomenon generated an increase in rainfall above the average during the second half of 2020, generating impacts on the execution of works with respect to the budgeted [planning] curves.

“The company assumed during all those months of paralysis the idling costs, the stand-by costs of machinery and equipment and production facilities,” although government road-building contracts also include compensation mechanisms, which eventually would help offset those extra costs, according to El Condor.

Earnings before interest, taxes, depreciation and amortization (EBITDA) came-in at COP$100 billion (US$27.4 million), with an EBITDA margin of 12.62%, down sharply from 18.5% in 2019.

However, “we consider that the EBITDA margin is not comparable, because during 2020 the company could not carry out work at the usual rate and assumed all the costs” of the Covid-19 shutdowns and weather issues. “If this paralysis had not occurred, then the EBITDA margin would have been in a range between 17 to 18%,” according to El Condor.

Future anticipated earnings – the backlog of works contracted and to-be-executed -- stood at COP$1.1 trillion (US$27.4 million) at year-end 2020, the company added.


Medellin-based insurance, health care, pensions and investment giant Grupo Sura announced February 26 that its full-year 2020 net income fell 80% year-on-year, to COP$336 billion (US$91 million) as a result of the Covid-19 crisis.

Operating revenues dipped 2.3% year-on-year, to COP$20.8 trillion (US$5.6 billion), while operating income fell 44%, to COP$1.6 trillion (US$435 million), according to the company.

The Sura Asset Management division (pension funds, investments and asset management) net income fell 39% year-on-year, to COP$431 billion (US$117 million), although assets under management rose 8.4%, to COP$523.9 trillion (US$152.6 billion), according to the company.

The Suramericana division (insurance and risk-management) net income fell 46%, to COP$211 billion (US$57.2 million), on COP$18.7 trillion (US$5 billion) in premiums for sectors including life, property, health care, automotive and computer digital insurance.

“The generally good levels of performance throughout the region with regard to property and casualty insurance, especially in Argentina, Chile and Colombia, largely offset higher claims for the life insurance segment as well as higher health care expense incurred with the pandemic,” according to Sura.

In total, Grupo Sura allocated COP$1.4 trillion (US$379 million) during 2020 “in order to address the pandemic on all fronts,” mainly including health-care services and financial aid to stricken patients, families and businesses, according to the company.

Despite the heavy costs, Sura nevertheless cut its debt and foreign exchange exposure and “secured the liquidity required to meet its upcoming financial obligations in 2021 and improve its debt profile in the medium-term,” according to the company.

Suramericana’s “mandatory health care subsidiary in Colombia expanded its telemedicine capabilities, providing more than 19.5 million health care services during the pandemic, thereby ensuring a substantially lower death rate of just 0.63% among infected patients, which was a quarter of that recorded nationwide (2.63%) and a third of the world average (2.18%), at the end of 2020,” according to the company.

As for Sura Asset Management, “the procedure for our clients to withdraw their [annual employer bonus] severance payments was expedited and made more flexible in Colombia, the same applied to those claiming unemployment insurance in Chile and Mexico, this so as to help those who lost their jobs due to the pandemic. Various types of financing funds were also made available, thereby providing liquidity to 1,282 small and medium-size companies in Colombia, Peru and Chile,” according to the company

At year-end 2020, Sura boasted of 37.5 million clients in 10 countries in Latin America.

“Thanks to the ability of our subsidiaries to adapt, maintain their pace of business performance as well as increase client loyalty, together with the benefits of Grupo Sura’s well-diversified portfolio, we were able to partially offset the impact of the volatility prevailing on the capital markets on the subsidiaries' own investment performance as well as the drop in revenues received from [stock holdings in other companies] via the equity method, especially from Bancolombia,” explained Ricardo Jaramillo, Chief Finance Officer.


Medellin-based Grupo Argos – parent of cement/concrete giant Cementos Argos, electric power producer Celsia and highway/airport concessionaire Odinsa – on February 24 reported an 87.7% plunge in 2020 net income, to COP$154 billion (US$43 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 30% year-on-year, to COP$3.35 trillion (US$935 million), while EBITDA margin dipped to 24%, from 28.5% in 2019.

Operating income also fell by 16.7% year-on-year, to COP$14 trillion (US$3.9 billion), according to the company.

Facing the impact of the Covid-19 pandemic, “a shock-and-austerity plan allowed the company to ensure liquidity of COP$3.4 trillion [US$947 million] through operational savings, rationalization of investments and expenses, liquidity credits and tax refunds,” according to the company.

As a result, the company “managed to close with the same level of consolidated net debt in a year with a high cash requirement,” according to Argos.

“During 2020 the company implemented a crash plan that allowed it to achieve efficiencies in operating expenses by COP$541 billion [US$151 million] and postpone investments totaling COP$1.4 trillion [US$390 million] that gave it greater flexibility to adequately face the situation.

“Additionally, we obtained credits totaling COP$1.4 trillion [US$390 million] to guarantee liquidity and that during the year were duly prepaid thanks to the solid cash generation of the organization,” the company added.

As for its three main business units, the fourth quarter of 2020 began to show improvements, the company noted:

Cementos Argos closed the fourth quarter with 4 million tons of cement sold, 2% higher than the volume of the same period of 2019;

Celsia closed the fourth quarter with 876 gigawatt-hours sold, “in line with what was registered in the same quarter of the previous year,” according to the company.

Odinsa reported a total of 123,000 vehicles per day going through its toll booths in December 2020, 3% lower than 2019, while the El Dorado Airport in Bogota registered 1.4 million passengers in December 2020, 54% lower compared to December 2019, “but with a marked recovery compared to the months of total closure” in 2020, the company noted.


Medellin-based multinational banking giant Bancolombia announced February 24 that its full-year 2020 net income fell 91% year-on-year, to COP$276 billion (US$77 million), down from COP$3.1 trillion (US$917 million) in 2019.

As for fourth quarter (4Q) 2020, Bancolombia posted a net loss of COP$266 billion (US$74 million), down from COP$878 billion (US$260 million) in 4Q 20219, according to the company.

As for its Colombia national operations, Bancolombia posted a 4Q 2020 net loss of COP$253 billion (US$71 million) here, a huge reversal from 4Q 2019 positive net income of COP$397 billion (US$111 million) in Colombia.

Corporate-wide, gross loans in 4Q 2020 totaled COP$191 trillion (US$53.6 billion), up 5% from 4Q 2019 but declining by 3.7% during the last quarter. Colombian peso-denominated loans in 3Q 2020 grew 5.8% when compared to 4Q 2019, according to the company.

Loan provision charges for the last quarter were COP$2 trillion (US$561 million), up 20% compared to third-quarter (3Q) 2020, while the coverage ratio for 90-day past due loans was 213.2%.

“This level of provisions was largely explained by the deterioration of the consumer portfolio, Covid-19 and the update of macroeconomic variables in our expected losses models,” according to Bancolombia.

Meanwhile, Bancolombia continued to boost its electronic banking strategy in 2020 “with a robust growth in its mobile platforms. As of December 31, 2020, the bank has 9.4 million digital accounts, 4.6 million users in ‘Bancolombia a la Mano’ and 4.8 million in ‘Nequi,’” according to the company.

“Shift of sales to digital channels continues to grow. During 2020, Bancolombia managed to distribute more than 3 million products through its web and mobile platforms, which represents 44% of the total sales completed in all channels,” the company added.

As of December 31, 2020, company operations at Banco Agricola in El Salvador, Banistmo in Panama and BAM in Guatemala represented 26% of total gross loans.

“Gross loans denominated in currencies other than COP, originated by the operations in Central America, the offshore operation of Bancolombia Panama, Puerto Rico and the U.S. dollar-denominated loans in Colombia, accounted for 32.3% and decreased by 12% during 4Q 2020 (when expressed in COP),” according to the company.

“Total reserves -- allowances in the balance sheet -- for loan losses increased by 9.9% during the latest quarter and totaled COP$16.6 trillion [US$4.65 billion], equivalent to 8.7% of gross loans at the end of the quarter,” the company added.

At year-end 2020, Bancolombia’s net investment portfolio totaled COP$29.5 trillion (US$8.3 billion), up 6.6% from 3Q 2020 and up 75.7% from 4Q 2019.

Liabilities at year-end 2020 totaled COP$227.4 trillion (US$63.8 billion), down 3.7% from the end of 3Q 2020 but up 9.7% compared to 4Q 2019, according to the bank. Deposits by customers totaled COP$180 trillion (US$50.5 billion), equal to 79.5% of liabilities, at year-end 2020 -- down 1.5% when compared to 3Q 2020 but up 15% compared to year-end 2019.

“The net loans-to-deposits ratio was 96.7% at the end of 4Q 2020, decreasing when compared to 100% at the end of 3Q 2020,” but “Bancolombia’s liquidity position continues to be adequate. During 4Q 2020, total funding cost indicates the undertaken efforts to sustain a high share of deposits over the total funding mix,” the company 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.

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

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