Thursday, August 18, 2022

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Roberto Peckham

Medellin-based cement, electric-power, real-estate and airport/highways conglomerate Grupo Argos announced May 12 that its first quarter (1Q) 2022 net income rose 65% year-on-year, to COP$315 billion (US$77 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA rose 28%, to COP$1.2 trillion (US$293 million), while revenues rose 23.6%, to COP$4.6 trillion (US$1.12 billion), according to the company.

“Increased revenues from the sales of goods and services during 1Q 2022 is mainly explained by increased contributions from the Celsia electric power group (+COP$328 billion/US$80 million), Cementos Argos (+COP$260 billion/US$63 million), and the Opain concessions business (+COP$139 billion/US$34 million),” according to Grupo Argos.

“Increased costs and expenses for the period (+ 24% YOY) were due to increasing variable costs due to higher sales volumes during the period and to cost inflation occurring in all sectors, but particularly in the cement business where the cost of fuel has increased substantially.

“Financial expenses for the quarter increased 27.5% year-over-year due to higher index rates even with a reduction in overall debt during the period,” the company added.

Real Estate Business Boost

“The real estate business achieved historical figures in 1Q 2022, with positive net cash flow and EBITDA,” according to Grupo Argos.

“This is a milestone for the real estate business as all property taxes are paid during the first quarter and deeding plots is difficult because of a lack of free-and-clear certificates.

“This was achieved thanks to property tax management by the team, where this expenditure was reduced by 11%, and deeding of a plot for building a Four Seasons Hotel in Baru [near Cartagena].

“This business deal, signed in November 2021, required timely management of the land division license with the Cartagena authorities. This procedure was approved in December 2021, and, after meeting certain legal deadlines, we were able to divide and sell the property,” netting Argos COP$40 billion (US$9.7 million).

“We also highlight the signing of a promise of sale for COP$17 billion [US$4 million] for a housing project in Barranquilla of which we received COP$5 billion [US$1.2 million) this [first] quarter. The above figures plus customer interest and ongoing negotiations allow us to foresee a positive year for the real estate business,” the company added.

Odinsa Concessions Revenues Dip

As for the Odinsa airport/highway concessions business, gross revenues dipped 15% year-on-year.

Revenues from the road concessions business fell 30% year-on-year, to COP$157 billion (US$38 million). “This decrease is mainly due to deconsolidation of the concessions in the Dominican Republic concessions, which were terminated in advance at the end of 2021,” according to Grupo Argos.

“All other concessions in Colombia -- Túnel de Oriente, Autopistas del Café, Malla Vial del Meta, and Green Corridor -- made positive contributions to year-over-year variations in revenue, except for Pacifico 2, with a 33% decline in contributions via the equity method,” according to Argos.

In the airport concessions business, Odinsa saw 1Q 2022 year-on-year gains in revenue, EBITDA, and net income “as a result of an evident recovery in passenger traffic,” according to the company.

Over-all, Grupo Argos consolidated financial debt ended 1Q 2022 at COP$1.9 trillion (US$464 million), down 35% year-on-year.

“This reduction corresponds mainly to deconsolidation of the debt from Autopistas del Nordeste and Boulevard Turístico del Atlántico and early payment of debt in Odinsa Holding and Odinsa SA,” according to the company.

During the latest quarter, cost of debt in as expressed in U.S. dollars rose 39 basis points, while cost of debt expressed in COP increased 475 basis points “explained by the increases Bank of the Republic interest rates, higher inflation, and other index rates,” according to Grupo Argos.


Medellin-based multinational banking giant Bancolombia announced today (May 12) that its first quarter (1Q) 2022 net income skyrocketed 219% year-on-year, to COP$1.73 trillion (US$421 million), from COP$542 billion (US$132 million) in 1Q 2021.

Interest income grew 26% year-on-year, while interest expense rose only 13.7%, thus yielding a net 31% gain.

Assets likewise grew 15% year-on-year, to COP$291 trillion (US$70.8 billion), while liabilities rose 13.7%, to COP$259 trillion (US$63 billion), according to the company.

Gross loans amounted to COP$222 trillion (US$54 billion), up 12.9% year-on-year. When excluding the COP/U.S. dollar effect, the loan bookings rose 12.1%.

During the latest quarter, the Colombian peso appreciated 5.7% against the U.S. dollar, but had depreciated 2.1% against the dollar over the last 12 months. The average peso/dollar exchange rate was 4.4% higher in 1Q 2022 versus 4Q 2021 and 9.9% higher in the last 12 months.

Meanwhile, “retail loans continue with an increasing dynamism while gaining share within the total portfolio on a consolidated basis,” according to Bancolombia.

“Net interest margin expanded from 5.3% in 4Q 2021 to 6.0% in 1Q 2022. This performance is due to higher interest rates driven by the current contractionary monetary policy in Colombia.

“Total provision charges net for 1Q 2022 was COP$267 billion [US$65 million], which indicates a low cost of risk when compared to a normalized level, led by loan-losses provision releases in line with better asset quality trends,” the company added.

During the last 12 months peso-denominated loans grew 14.3% and dollar-denominated loans grew 7.8%.

At the end of 1Q 2022, Bancolombia’s “Banco Agricola” operations in El Salvador, “Banistmo” in Panama and “BAM” in Guatemala represented 26% of total gross loans.

“Gross loans denominated in currencies other than COP -- generated by operations in Central America, the international operation of Bancolombia Panamá, Puerto Rico and the U.S. dollar- denominated loans in Colombia -- accounted for 33.3% of the portfolio, and decreased 3.8% in the quarter when expressed in COP terms,” according to the company.

“During 1Q 2022, as seen in previous quarters, a growing trend on the loan portfolio persists at the consolidated level, increasing across all geographies.

“Banco Agromercantil [BAM] denotes the highest quarterly growth (6.1% when measured in U.S. dollars), showing good results in all loan categories. The increase of 11.3% in the consumer portfolio is in-line with the strong performance from 2021, gradually gaining market share in Guatemala.

“The operation in Colombia shows a 3.1% growth in the loan balance, again with a positive performance in individuals. When analyzing the annual variation, products such as payrolls and credit cards stand out in retail, as well as mortgages growing 15.9%.

“Banco Agricola reports a positive performance across all segments, growing 1.2% (measured in U.S. dollars) during the latest quarter. The credit portfolio continues to show a balanced share in commercial and retail, representing 43% and 42% respectively within the total loan book, without major changes over the past 12 months.

“Banistmo reveals a 0.1% growth (measured in U.S. dollars) during the quarter. Originations maintain an encouraging trend not only in commercial loans but also in retail and home-lending.”

As for electronic digital-banking efforts, “Bancolombia shows a positive trend in line with 2021 results. As of March 2022, the bank has 6.8 million active digital customers in the retail app, as well as 17.6 million accounts in its financial inclusion platforms -- 6.1 million users in ‘Bancolombia a la Mano’ and 11.5 million in ‘Nequi,’” the company added.


Medellin-based multinational gold miner Mineros SA announced May 9 that its first quarter (1Q) profits fell to US$10.47 million, from US$13.77 million in 1Q 2021.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also dipped to US$41 million, from US$45 million in 1Q 2021.

Revenues dipped 1% year-on-year, to US$124.7 million, although the average price per ounce of gold sold rose 6% year-on-year, to US$1,884, according to the company.

Despite the profits decline, Mineros president Andres Restrepo added that the company is “on track to achieve its projection for 2022,” having already produced more than 66,000 ounces of gold so far this year, up 1% over 1Q 2021.

While cash costs for producing gold were up 8% year-on-year, all-in sustaining costs (AISC) actually dropped 6% year-on-year.

The company’s main operations are in Antioquia, Colombia (alluvial mining), Nicaragua (Hemco, underground mining) and Argentina (Gualcamayo, open-pit mining), with “significant gold exploration projects in Chile (La Pepa),” according to Mineros.


Medellin-based multinational cement/concrete giant Cementos Argos announced May 9 that its first quarter (1Q) net income dropped 60.6% year-on-year, to COP$55 billion (US$13.46 million).

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also dipped 17.8%, to COP$437 billion (US$107 million), but gross revenues actually increased 11.2% year-on-year, to COP$2.57 trillion (US$629 million), according to the company.

Cementos Argos produces cement and ready-mix concrete (RMC) in 16 countries including the U.S., Colombia, and Caribbean-Central America (CCA) region, with total annual capacity of 23.1 million tons of cement and 14.7 million cubic meters of concrete.

Explaining the profits dip, Argos cited cost increases of COP$395 billion (US96.7 million), whereas price increases didn’t keep pace, at COP$330 billion (US$80.7 million).

“Cost increases were mainly related to raw materials and energy, which had a consolidated negative impact of COP$120 billion [US$29 million] and COP$80 billion [US$19.5 million] respectively. Other costs associated with freight, distribution, maintenance and labor also impacted the cost of sales,” according to the company.

On the upside, “dynamic conditions in our key markets have led to the continuation of a solid volume performance and the highest sequential cement price increase in the last seven years, allowing us to achieve all-time high quarterly revenues,” according to the company.

“Cement dispatches decreased 1%, while ready mix volumes increased 6.3% on a comparable basis year over year,” the company added.

U.S. Volumes Rise

In its U.S. operations, Cementos Argos realized “annual increases in cement and ready-mix volumes of 7.3% and 2.6%, respectively on a comparable basis. Prices across the region were increased in January and generated a 9% increase in the cement business and 9.5% in ready-mix,” according to the company.

“We remain optimistic regarding the willingness of the current [U.S.] government to close the gap of underinvestment in infrastructure, through the approved bipartisan infrastructure bill that will come into effect in the mid to long term,” according to the company.

Colombia Exports Rise 31%

In Colombia operations, cement volumes were flat year-on-year, but exports rose 32.3%. Ready-mix concrete sales also rose 13.4% year-on-year, but adjusted EBITDA fell 18%, according to the company.

“The solid demand conditions in Colombia continued during the first three months of the year, driven by the retail segment, residential construction and infrastructure projects,” according to Argos.

“Despite lower-than-expected volumes during the first few weeks of the year, we evidenced a strong recovery, which led to reaching in March the highest figure of monthly cement dispatches for Cementos Argos during the past five years.

“The residential segment in Colombia continues delivering positive signals. During the quarter, social and non-social housing sales grew 6.4% and 5.5% respectively year-over-year, despite a challenging comparison base. Additionally, housing starts grew 11% and remain on the highest level in seven years.

“On infrastructure projects, we remain optimistic due to the positive advances being made on ‘fourth-generation’ [4G] projects, 5G projects that are expected to begin their construction phase by 2023, the Bogota Metro which is underway and is projected to generate an important demand during the next three to four years, and other projects such as Puerto Antioquia, a port located in the Uraba region with an estimated investment of US$700 million, that is currently set to begin its construction phase and its contract is in the process of being awarded to bidders,” the company added.

Caribbean-Central America Region Prices Rise

“Positive market conditions in the [Caribbean-Central America] region continued, leading to the continuation of solid pricing dynamics. Cement prices increased double-digit sequentially and 6% year over year,” according to Argos.

However, “cement dispatches decreased 11% compared to the same period of last year, due to operational difficulties in Haiti and Dominican Republic, the government transition in Honduras and lower trading volumes.

“In Honduras, cement dispatches for the quarter were 9% lower versus the same period of last year as self-construction remained strong but the transition to a new government slowed down demand in public infrastructure construction.

“In Dominican Republic we evidenced solid demand conditions but mechanical difficulties in our cement mill resulted in a 5% decrease in cement dispatches.

“Haiti experienced lower volumes during the quarter due to technical challenges at the plant and social unrest in the country combined with complications in fuel supply. Additionally, trading volumes decreased 11% during the quarter, mainly due to the increase in exports, which allowed us to supply our Puerto Rico operation from Cartagena, but we postponed two shipments due to high FOB prices,” the company added.


A sometimes-popular belief that just legalizing cocaine would eliminate Colombia’s bloody wars among violent gangs (and their left-wing or right-wing extremist allies) – while providing a policy alternative to the Colombian government’s flawed attempts to corral the trade -- is pure nonsense, according to a remarkable Brookings Institution publication quoting Colombian experts.

“Legalizing Drugs and Illegal Economies is No Panacea for Latin America and the Rest of the World” is the title of the report, by Colombian drug-policy experts Vanda Felbab-Brown and Catalina Niño (see: https://www.brookings.edu/on-the-record/legalizing-drugs-and-illegal-economies-is-no-panacea-for-latin-america-and-the-rest-of-the-world/).

Felbab-Brown and Niño -- both experts at the Friedrich-Ebert-Stiftung Foundation here in Colombia (FESCOL) -- originally published their findings (in Spanish) in Colombia’s intellectual magazine, “El Malpensante.”

Fortunately, the Washington, DC-based Brookings Institution – one of North America’s leading independent think-tanks – has since translated that report to English, enabling a much-wider global audience to understand why hard-drug legalization in Colombia (or elsewhere) is no panacea.

The experts instead offer alternative -- but not simple -- solutions for Colombia’s (and the world’s) chronic drug-trade problems.

The report is a fair warning to those who look for an “easy way out” to Colombia’s problematic drug wars -- and the massive social violence and population displacements that result.

One such nebulous proposal is the recent “amnesty” scheme that socialist-populist Colombian presidential candidate Gustavo Petro has proposed for Colombia’s drug kingpins and their affiliated corrupt politicians.

Such a scheme would merely institutionalize and further incentivize violent drug gangs and their political pals in Bogota and elsewhere, the report finds.

Below we summarize and highlight the remarkable findings of this report, now freely available on the Brookings Institution web-site:

“Organized crime and illicit economies are enormously varied and diverse, highly dynamic and adaptive and innovative, with innovation often emerging in response to law enforcement actions,” Felbab-Brown explains in the report, presented in question-and-answer format.

“The illicit economies involve a wide scope of commodities and services, with some of the most iconic ones including drug trafficking, human smuggling and trafficking, illegal logging and mining, poaching and wildlife trafficking, smuggling in counterfeiting of goods, cybercrime, gun smuggling and money laundering.

“Illicit economies and organized crime groups pose a wide variety of threats to states and societies, but they also bring various socio-economic and semi-public-goods services to vast segments of marginalized populations around the world.

“Hundreds of millions of people are dependent on illicit economies for basic livelihoods, social mobility, and access to public goods, such as street security [like protection rackets], and thus the sponsors of illicit economies – criminal and militant groups or corrupt states and politicians – derive vast political capital from sponsoring them,” she explains.

While mass imprisonment of ordinary drug users has to date proved ineffective and wasteful, “with the exception of cannabis, I do not support drug legalization,” she explains.

The rationale: “Drugs such as cocaine, heroin, synthetic opioids, and methamphetamine are highly addictive and the substance-use disorder can destroy the lives of users, their families, and communities as much as imprisonment can.

“The United States has been going through the most devastating drug epidemic ever in U.S. history – the opioid epidemic. It started with legal prescription drugs and eventually mutated into heroin and then synthetic opioids,” she explains.

“Those who believe that legalization will solve problems of drug policy should learn from the U.S. disaster, and its equivalent in Canada where extensive harm-reduction approaches almost melted underneath the onslaught of commercialized legal prescription opioids.

“Those very same companies and their international branches that unleashed the opioid epidemic in the United States are actively promoting the same disastrous and nefarious policies abroad, including in Latin America, in places such as Brazil and Mexico.

“On the supply side, I warn of premature and highly counterproductive eradication of drug crops without alternative legal livelihoods being in place. Such policies strengthen the political capital of criminal and militant groups.

“But that doesn’t mean, once again, that I believe drug trafficking should be legalized. Instead, I often urge prioritizing in targeting the non-intensive-labor-side of drug trafficking, such as by targeting trafficking. Creating legal jobs on a sufficient scale should be a critical element of most strategies for dealing with drug economies . . .

“Legalization will merely allow criminals to operate in a newly legal economy, often with the same violent practices as they practiced in the illegal space. Thus, avocado farming in Mexico is dominated by extortion by violent criminal groups, and fights over land and territorial control among them are as much about access to legal economies as to local drug retail markets or drug routes.”

Felbab-Brown then specifically cites historic problems of the war on drug trafficking in Colombia.

“Colombia is unique in the Andean region in how its political leaders and government officials are wedded to the so-called zero-coca policy – namely, that all coca needs to be eliminated in a particular area or community before the community receives any kind of socio-economic, alternative livelihoods, support from the state,” she explains.

“The zero-coca policy was the hallmark of the [former President Alvaro] Uribe administration, and is again a key feature of [current President Ivan] Duque administration – such as in the way the administration ties titles to all coca being eradicated in a community. It was also a policy of prior governments, including that of the [former President Juan Manuel] Santos administration, and goes back to the 1980s. Yet this zero-coca approach in Colombia has failed over and over again, and it will continue to fail.

“Destroying all coca rapidly is easy. Bringing in adequate legal livelihoods is hard and takes many more years than eradicating a particular coca plot, which only takes days.

“I’ve often urged, and want to emphasize again, that Colombia would benefit enormously from moving away from the zero-coca mindset. It should learn from effective strategies in Thailand and policy experimentation in Bolivia — demanding, for example, that in a development area, such as a PDET [‘Programas de Desarrollo con Enfoque Territorial,’ or (in English) Territorial Development Programs], each family eliminates 30% of its coca fields to start with, and once certain development targets are reached, another 20% or 30%, for example, would be eliminated.

“Such a sequenced approach gives both the communities and the state a stake in working toward the establishment of viable legal economies and livelihoods without leaving farmers who agree to eradicating their drug crops high-and-dry and without income, thus making them sour on collaborating with the state. The community could also be informed that once certain development targets are reached and legal income reaches and stays at certain level, all coca will be eradicated, forcibly if necessary.

“Eliminating all coca without alternative livelihoods already being actually in place, not merely promised, also generates violence, alienates local communities from the state, and thrusts them into the hands of violent nonstate actors.

“The right response from the state instead would be to prioritize secure delivery of goods and services to communities selected for legal rural development efforts, and to minimize access by violent trafficking groups.”

While anti-drug policies in the U.S., Europe and elsewhere may change in future, “I am skeptical, however, that in the next 15 years we will see any equivalent effort to legalize cocaine, heroin, or synthetic drugs,” she added.

“A rogue regime like the [President Nicolas] Maduro regime of Venezuela could possibly fantasize about it – but even that is unlikely, given its dependence on Russia and China. China and Russia have emerged as determined drug cops, increasingly active in promoting rigid, doctrinaire, unreconstructed tough-on-drug policies like the United States embraced in the 1980s, not just in regional settings like East or Central Asia but also at global multilateral fora.

“Any Latin American government that would seek to legalize the drug trade beyond cannabis and beyond permitting personal use would end up contending with strong opposition from China and Russia as well as the United States.

“The more likely shock to the drug systems in Latin America, and one that is potentially transformational, is a wholesale switch away from plant-based drugs in the United States -- with the exception of cannabis -- toward synthetic drugs.

“Already, a significant reason why U.S. drug users are still interested in cocaine is that fentanyl is being mixed into cocaine quite frequently. That also means that cocaine users are encountering fentanyl and synthetic drugs.

“Traffickers, and even dealers, prefer highly potent synthetic drugs such as fentanyl that are much superior to cocaine or heroin: Smuggling those drugs is very easy and does not require the same territorial control, nor therefore as much violence or corruption.

“Thus, one can contemplate a world in which the U.S. drug market is predominantly not supplied either by cocaine or drugs from Latin America – with the exception of Mexico, where fentanyl smuggling is already strongly established and production can easily develop.

“In such a world, Latin America, particularly the Andes, would lose a lot of relevance to the U.S. in terms of anti-coca and cocaine policies.

“Latin America itself could easily become the principal consumer of cocaine produced there, surpassing the market in Europe.

“Pressures to reduce its supply and production may start coming strongly from within Latin America, with countries such as Brazil and Argentina demanding that the Andean countries crack down on production.

“Alternatively, or simultaneously, new cocaine markets in East Asia, such as in China -- the development of which Latin American criminal groups are actively promoting -- could reinforce China’s embrace of a new role for itself as an international drug cop.

“And if Latin American countries allow themselves to be entrapped in China’s debt diplomacy, particularly as a result of seeking Chinese financial flows with bad terms as a result of Covid, then China would have high influence in demanding doctrinaire drug policies,” Felbab-Brown explains.

“Latin America may thus finally see the de-narcoticization of U.S. policy toward Latin America, for which the region so often asks.

“But such a de-narcoticization of U.S. policy toward Latin America could also come with an undesirable reduction of U.S. interest in and resources for economic and rural development, law enforcement institutions, and rule of law.

“The United States should avoid such a flip: Even if Latin America stops being a large source of illegal drugs for the United States, the United States should still strongly want to promote multifaceted policies to reduce violence and all kinds of criminality in the region, and to foster effective law enforcement and public safety, equitable development, and expansion of justice and rule of law to all citizens of Latin America,” she concluded.


Medellin-based textile/clothing giant Fabricato announced May 5 that its first quarter (1Q) 2022 net income jumped to COP$5.9 billion (US$1.45 million), a big year-on-year improvement over the COP$2.4 billion (US$590,000) net loss in 1Q 2021 -- and the best 1Q result in eight years.

Textile sales also jumped 40% year-on-year, to COP$126 billion (US$31 million), the best result in 10 years.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) likewise showed dramatic improvement, at COP$17.9 billion (US$4.4 million), up 114% over 1Q 2021 and a smashing 1,059% improvement over 1Q 2020, according to the company.

In total, "96% of the result achieved at the EBITDA level corresponds to the textile operation,” with the other 4% coming from Fabricato’s emerging real-estate operations.

“Fabricato has a new direction, better results and evolving with vision, innovation, commitment and action to meet the challenges that arise in the textile industry,” according to the company.

The positive changes emerge even despite a “complex national environment and the vicissitudes of a textile-clothing policy that the government has to resolve,” according to the company.

Unlike clothing industries in many neighboring countries, Colombia has strong potential to take advantage of an “integrated production chain -- from spinning to the making” of finished products, according to Fabricato.

“Our textile offerings -- with sustainable and environmentally friendly products – meet the satisfaction of clients and consumers, and help revive the Colombian industry,” the company added.


Medellin-based multinational electric-power generator Celsia announced May 4 that its first quarter (1Q) net income rose 43% year-on-year, to COP$166 billion (US$40.4 million).

Revenues also rose 33.6%, to COP$1.3 trillion (US$317 million), while consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 35%, to COP$455 billion (US$108 million).

Celsia – a division of industrial giant Grupo Argos – credited the profits jump to “higher generation, a better energy sale price, and income from the use and connection of networks driven by the higher independent power producer price (IPP).”

As for future “green” power growth, Celsia noted that it currently has six solar-photovoltaic farms under construction, collectively representing nearly 100 megawatts (MW) of additional installed capacity.

The company also touted its recent investment platform deal with Grupo Bancolombia “for the development of solar generation projects” with various companies aiming to install nearly eight MW.

Operations in Colombia accounted for COP$1.13 trillion (US$275 million) or 86.3% of 1Q 2022 revenues, “driven by higher generation and a better sale price,” while Central America operations added COP$180 billion (US$44 million), accounting for the remaining 13.7%.

The EBITDA improvement “was mainly led by the positive contribution of all businesses in Colombia,” but Central America EBITDA actually fell 20.4% year-on-year “due to the dry period that affected hydropower generation and increased the amount of energy purchased at a much higher price,” according to Celsia.

Also during 1Q 2022, “investment was almost COP$355 billion [US$86 million], including the expansions and technological updates of networks, as well as the growth of solar farms,” according to the company.

Consolidated debt finished 1Q 2022 at COP$4.8 trillion (US$1.17 billion) with a leverage ratio of 3.03-times net-debt-to-EBITDA, according to the company.

The company’s “Caoba” transmission division saw a 14.5% hike in income and 15.1% in EBITDA. “This platform today has assets of COP $1.4 trillion [US$341 million] and an expansion projection for the next four years of more than COP$1.0 trillion [US$244 million],"  the company added.

Meanwhile, the “C2 Energía” solar-power division grew 31.6% in revenues, 21.2% in EBITDA and continues to add assets. “Between this and next year the solar division will reach a total operating capacity of 300-MW,” according to Celsia.

As for the “Tesorito” thermal-power generation project, this unit “is in the final phase of construction, which will start operating in the second half of this year, with 200-MW of natural-gas-fired generation capacity, equivalent to supplying approximately 950,000 homes,” according to Celsia.

On another front, Celsia’s recent alliance with Medellin-based supermarket giant Grupo Éxito is committed to planting 1 million native trees in Colombia.

“The goal is for Grupo Éxito, together with its collaborators, allies, clients and suppliers, to contribute 500,000 trees and Celsia an additional 500,000, which will be planted through the ‘ReverdeC’ program in strategic ecosystems to increase forest cover and the ecological restoration of hydrographic basins throughout the country,” Celsia added.


Medellin-based multinational electric-power-transmission builder-operator, highways concessionaire and telecom services provider ISA announced May 4 that its first quarter (1Q) 2022 net income fell 15% year-on-year, to COP$431 billion (US$105 million).

The company blamed the profit decline “mainly due to higher financial expenses caused by higher inflation levels, mainly in Chile and Brazil,” according to ISA.

Despite the profits dip, earnings before interest, taxes, depreciation and amortization (EBITDA) actually rose by 16.7%, to COP$2 trillion (US$488 million), exceeding its budgeted 1Q 2022 EBITDA target by 20.7%, according to the company.

Operating revenues rose 17% year-on-year, to COP2.8 trillion (US$684 million), “mainly due to the positive impact of macroeconomic variables in Brazil and Colombia, and the entry into operation of transmission projects since 1Q 2021,” according to ISA.

During the latest quarter, corporate assets rose 3.7% year-on-year, to COP$64 trillion (US$15.6 billion). Investments hit COP$789 billion (US$193 million), while consolidated financial debt totaled COP$27.8 trillion (US$6.8 billion), 1% lower than in 1Q 2021.

By business unit, the electric power transmission group saw revenues rise 23% year-on-year, thanks to entry-into-operation of transmission lines in Peru and Brazil.

The road concessions unit saw revenues rise 5.4%, “mainly due to higher returns on financial assets and higher revenues from the operation and maintenance of concessions and toll management in Chile,” according to ISA.

The telecommunications unit saw a 9% hike in revenues “mainly due to higher sales of connectivity services, sales of capacities and other telecommunications services in Colombia and Peru, and the growth of the ‘Over-the-Top-Operators’ segment in Colombia,” according to ISA.

Corporate-wide net financial expenses rose 67% year-on-on-year, because of higher interest expenses, a higher debt load to finance growth, and a temporarily-unfavorable Colombian-peso exchange rate in Chile, which included dollar-denominated investments in Chilean energy projects, according to the company.


EPM announced this morning (May 4) that -- following years of efforts – engineers have finally achieved permanent closure of a problematic auxiliary diversion tunnel (“GAD” in Spanish initials) that collapsed in 2018 and subsequently threatened to destroy the US$5 billion “Hidroituango” hydroelectric project here in Antioquia.

“This is a milestone for the stability of the project and mitigation of risks for the communities located downstream of the future hydroelectric generation plant,” according to EPM.
“With concrete plugs 23 meters long and 14 meters high, the GAD is permanently closed.”

Along with continuing reconstruction progress inside the dam's machine room, EPM is now confident of “starting to generate energy with the first two [power] units in the second half of 2022,” added EPM general manager Jorge Andrés Carrillo.

According to EPM, “closing the GAD was not an easy task, since it was naturally clogged [with rubble and Cauca River water], with the risk that it could unblock naturally at any time.”

So, during December 2019, the 300-ton blockage gates for each section of the GAD were lowered, which allowed for partial plugging. However, “despite this barrier, at least eight cubic meters per second of water continued to pass through a discharge system installed in the upper part of the gates, a considerable quantity that did not allow safe access for machinery and personnel” to enable permanent closure, according to EPM.

“To circumvent the situation, a maneuver called bypass was developed, which consisted of installing a piping system that allowed the water that entered through the GAD to be diverted to an intermediate discharge [tunnel] and, from there, to the spillway basin to rejoin the channel leading to the Cauca River.

“At the beginning of 2022, once this part of the GAD was dry, the auxiliary gates (right and left) were accessed to build the two concrete plugs -- 23 meters long and 14 meters high,” a job that took 600 workers and engineers four months to complete, according to EPM.

The GAD initially was constructed to divert the waters of the Cauca River while two other diversion tunnels were deliberately plugged in order to enable the required GAD to take-over the diversion job.

“In March 2018, when the process of pre-plugging the right tunnel began, the flow of the Cauca River continued to flow only through the auxiliary diversion tunnel, GAD,” according to EPM.

“This auxiliary tunnel was designed and built for temporary use. It was planned to operate only from September 2017 to July 2018, when it was planned to start filling the reservoir [behind the dam]. Afterward, it would be closed permanently.

“Its operation was interrupted as of April 28, 2018 when it became clogged and then reopened naturally on several occasions, which caused sudden flooding downstream and the destruction of the two closure gates that were already installed at that point.”

As a result, EPM rushed to close the GAD with temporary measures -- and accelerated completion of the dam along with the dam’s engineered spillway, enabling the Cauca River to flow over the spillway -- until reconstruction of the machine room will allow that water to flow through the power turbines, as originally intended.


Medellin-based multinational supermarket and dry-goods retailer Grupo Exito announced May 3 that its first quarter (1Q) 2022 net income dropped 24% year-on-year, to COP$64 billion (US$15.9 million), from COP$85 billion (US$21 million) in 1Q 2021.

However, sales actually rose 22% year-on-year, to COP$4.37 trillion (US$1.08 billion), while recurring earnings before interest, taxes, depreciation and amortization (EBITDA) likewise rose 15.8% year-on-year, to COP$355 billion (US$88 million).

The company blamed the profits decline on “a higher tax rate than in the same quarter of the previous year and higher interest rates.”

On the other hand, the boost in EBITDA came as a result of “great commercial dynamism and operational efficiencies in the three countries where it has a presence,” namely Colombia, Argentina and Uruguay.

“The strengthening of the omnichannel strategy in Colombia allowed e-commerce and direct channels to reach a share of 11.8% of [Exito’s total Colombia] sales in the quarter,” according to the company.

Meanwhile, “innovative formats continue to be important levers of differentiation and competitiveness. ‘Success Wow’ represented 29.5% of the brand’s total sales while ‘Carulla FreshMarket’ took 46.3%. Likewise, ‘Super Inter Vecino’ took 47% and ‘Surtimayorista’ took 4.7% of the total sales of the operation in Colombia.

“Sales from electronic and direct commerce channels in Colombia reached $395.8 billion [US$98 million] in the quarter and already represent 11.8% of the company’s total sales,” according to Exito.

“The diversification strategy of complementary businesses, mainly real estate, continued to contribute to the result. The occupancy rate of shopping centers reached 93.1% in Colombia and 89.6% in Argentina in March.

“The gradual recovery of the economy in Uruguay, benefited by the tourist season, was reflected in a growth in sales of 11.8% in local currency, higher than the annualized inflation. A higher recurring EBITDA margin of the operation in that country (11.2%) was the result of greater productivity and strict control of expenses.

“The participation in sales of direct and electronic commerce channels in Uruguay was 2.6%. The stores that operate under the ‘Fresh Market’ model participated with 46.6% of total sales, growing 13.7 points more than the non-reformed stores.

“In Argentina, ‘Grupo Libertad’ sales in local currency grew by 62.4% -- above the high level of inflation -- and benefited by economic reactivation and the result of electronic and direct commerce channels, which reached a share of total sales of 2.3%,” the company added.


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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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