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Roberto Peckham

Medellin-based multinational cement/concrete giant Cementos Argos announced February 17 that its full-year 2021 net profit jumped 451% year-on-year, to COP$431 billion (US$109.6 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 34% year-on-year, to COP$2.1 trillion (US$534 million), while revenues rose 9.1% year-on-year, to COP$9.8 trillion (US$2.49 billion).

As for fourth-quarter (4Q) 2021, profits skyrocketed by 1,503%, to COP$112 billion (US$28.5 million), while EBITDA jumped 45%, to COP$542 billion (US$138 million ) and revenues rose 9.3%, to COP$2.5 trillion (US$636 million), according to the company.

“Consolidated full-year EBITDA margin of 20.2% is the highest since 2005, when the internationalization of Cementos Argos began,” according to the company.

“Pricing in the U.S. gained traction due to the second price increase of the year. Cement and ready-mix prices increased 2% and 5.3% year over year, respectively. Meanwhile, the CCA [Caribbean and Central America] and Colombia regions had stability in pricing during the quarter.

“Cost inflation continued on the fourth quarter and had an impact across the regions, particularly in fuels, electric energy and freights. The residential segment continues to support solid demand conditions and provides a positive outlook in the U.S. and Colombia,” the company added.

Colombia Results

“Demand conditions in Colombia maintained the solid dynamic evidenced since the third quarter of 2021,” according to Argos.

“Cement and ready-mix volumes [in 4Q 2021] increased 8.3% and 17% respectively versus the fourth quarter of 2020. In terms of pricing, both segments remained flat sequentially. In cement, prices rose 0.2% and in ready-mix prices increased 0.4% versus 3Q 2021.

“The residential segment continued to boost the commercial dynamics in the country. Social [subsidized] and non-social housing sales increased 30% and 24% respectively year-over-year and reached historic records. Additionally, housing starts achieved the highest level in seven years, which is a signal of the continuation of strong demand in the segment.

“Total EBITDA reached COP$142 billion [US$36 million] during 4Q 2021, 9.7% higher than 4Q 2020. The strong EBITDA result was a consequence of the strong volumes in both segments and was possible despite the continuation of cost inflation pressures,” the company added.


Colombia-based cement/concrete giant Cemex LatAm Holdings (CLH) announced today (February 10) a full-year 2021 net loss of US$23 million -- a big improvement over the US$121 million net loss for full-year 2020.

Fourth quarter (4Q) 2021 net loss came-in at US$17 million, down from a net profit of US$8 million in 4Q 2020, according to the company.

“Consolidated net sales during 4Q 2021 increased 8% in comparable terms adjusted for fluctuations in exchange rates, compared to 4Q 2020,” according to CLH.

“Higher volumes in Panama and in the rest-of-CLH-region, as well as higher prices were the main growth drivers,” the company added.

Earnings before interest, taxes, depreciation and amortization (EBITDA) during 4Q 2021 fell 10% versus 4Q 2020. “The decrease was mainly due to lower EBITDA in Colombia, partially offset by higher contributions from Panama and the rest-of-CLH region,” the company added.

For all of 2021, net debt decreased by US$67 million, down 10% year-on-year.

In Colombia, cement volumes dipped 4% during 4Q 2021 but rose 8% year-on-year. Colombia cement prices “remained stable during 2021 compared to with those of the previous year, despite a challenging competitive environment with pricing pressures,” according to CLH.

Inside Colombia, “we recently implemented a price increase of around 4.5% for bagged cement at beginning in December 2021. In 2022, we expect to continue closing the gap between our cement prices and the strong input cost inflation experienced by the industry during previous quarters.We expect our volumes to grow in the low-to-mid-single-digits in cement and in the low-double-digits in concrete.

“In the ready-mix [concrete] business, our volume growth should be supported by higher demand of the market and our recent investments to increase our assets in this business, mainly in the metropolitan areas of Bogotá and Cali,” CLH added.

In Panama, “our domestic cement volumes increased during the quarter and the full year by 8% and 41%, respectively,” according to CLH.

“During 2021, our [Panama] cement plant became a relevant exporter and a key component of our regional commercial network. During the year we exported more than 200,000 tons of cement and clinker to nearby markets lacking supplies.

“In 2022, we expect our volumes to grow by mid-single digits in cement and by at least 30% in concrete. Volume growth should be supported by the recent start of construction of the ‘Line 3 project’ for the Panama Metro.”

In Guatemala, cement volumes “remained strong during 2021 driven by higher activity in the self-construction sector and a recovery in the formal sector. Our cement prices in local currency terms increased 4% and 3% during the quarter and the full year, respectively, compared to the same period of the year last,” according to CLH.

In Nicaragua, “cement volumes remained strong during the year mainly driven by the cement sector in self-construction and government-sponsored projects. Cement consumption was supported by the increase in remittances” from Nicaraguans living and working in North America, the company added.


The just-released, annual “Medellin Como Vamos” (MCV) citizen survey reveals that Medellin Mayor Daniel Quintero has delivered the worst performance of any Medellin Mayor in the entire 16 years of MCV annual citizen surveys.

The result undercuts progress made in the last two decades here, during which Medellin citizens historically have indicated relatively positive, consistent improvements -- aside from ever-worsening traffic-jams -- in over-all quality-of-life and in relatively good performance of local Mayors.

Having overcome the horrific years of Pablo Escobar narco-violence in the 1980s and 1990s, Medellin has more recently become widely regarded as either the best or (at least) among the top-three-best-governed cities in Colombia, for quality-of-life, for work opportunities and for relatively outstanding public transit systems -- thanks to enormous investments by both public and private sectors over the past two decades.

The full MCV 2021 survey (in Spanish) is available here: https://www.medellincomovamos.org/calidad-de-vida/encuesta-de-percepcion-ciudadana .

While Medellin Mayors over the past 16 years have typically enjoyed favorability rankings in the 80-percent-to-90-percent range, Mayor Quintero has seen his favorability plunge to an all-time-worst 54% in the MCV 2021 survey, conducted among all social classes in all Medellin neighborhoods. The survey has a margin-of-error of just 4.1%, according to MCV.

Confidence in Mayor Quintero likewise has plummeted to an all-time-low of 34%, while only 33% of citizens have much or any faith in his management of city affairs – by far the worst mayor in all prior MCV surveys.

Relative satisfaction with Mayor Quintero’s use of public funds likewise has collapsed to an all-time-low of 36%, the survey shows. What’s more, 54% of citizens perceive that corruption in city government has gotten twice as bad in the past year -- far worse than in prior years.

Even more discouraging, only 45% of Medellin citizens now feel the city is headed in a positive direction -- down from positivity ranges of 65% to 85% in all prior MCV surveys.

 

 


Colombia’s Controller-General announced today (January 28) that because of recent insurance payments to EPM by Mapfre, Axxa, Suramericana and SBS – collectively totaling US$1.1 billion -- all companies, politicians and officials who previously faced allegations of errors or omissions that supposedly contributed to a 2018 diversion-tunnel collapse at the US$5 billion Hidroituango hydroelectric project are now absolved of fiscal responsibility.

“The Controller's Office declares the property damage of COP$4.3 trillion [US$1.1 billion] in the Hidroituango case fully repaired,” according to the Controller’s official announcement.

“By virtue of this decision, the precautionary measures that weighed on those declared fiscally responsible are lifted” -- hence liberating 26 companies and individuals that previously were facing fiscal responsibility charges, according to the Controller.

Because of the Hidroituango insurance payments, the Controller “determined and declared that the damage has been fully repaired,” according to the official announcement.

In the wake of the Controller’s decision, Wall Street bond rater Fitch Ratings subsequently announced that it now sees financial liquidity improving not only for EPM (part-owner of Hidroituango) but also for the construction and consulting contractors at the Hidroituango project.

While Fitch now has a more positive view of EPM’s financial liquidity, the bond rater nevertheless has continued its “negative watch” alert because of “continued uncertainty regarding the permanent closure of Hidroituango's blocked water deviation tunnel since April 28, 2018, and final cost overruns of its Hidroituango project, which Fitch estimates to be US$1.73 billion or US$721,000 per megawatt (MW) as of December 2021. 

Hidroituango Progress Update

Immediately following the Controller’s announcement, EPM revealed that it is making significant progress on permanent closure of that collapsed diversion tunnel.

“In 2019, as a result of the tunnel-collapse contingency, the two floodgates installed for this diversion tunnel -- weighing 300 tons each -- were closed to prevent further passage of water,” according to EPM’s announcement.

“In recent days it became possible to enter the [collapsed] Auxiliary Deviation Gallery (GAD), very positive for the recovery of the project and for the tranquility of the downstream communities.

“With the pumping-out of the water that was in this tunnel area, it was possible to allow entry of sufficient personnel and machinery to carry out the proper cleaning and extraction of debris and mud. After the adaptation and cleaning of the GAD, the construction of the two definitive plugs -- 22 meters long -- will need to be installed there,” according to EPM.

In total, the Hidroituango project at year-end 2021 was 86.9% complete, with entry-into-operation of the first two generating units -- totalling 600-MW -- seen in the second half of 2022, according to EPM.

“The powerhouse shows considerable progress in its recovery, civil works and assembly of equipment,” according to EPM, while the water reservoir upstream of the dam and the engineered spillway “are closely monitored with permanent with special equipment and expert personnel,” the company added.


Colombia Health Minister Fernando Ruiz announced this morning (January 24) that total vaccinations against Covid-19 here have now surpassed 70 million.

What’s more, as of January 22, 2022, 30.78 million Colombians had received complete dosages (in most cases two shots, or else the single-shot Johnson & Johnson vaccine).

In addition, 5.1 million Colombians have now gotten a “reinforcement” dose (in most cases, a third shot), according to Minister Ruiz (see graphic, above).

Meanwhile, Health Ministry epidemiology director Julián Fernández announced January 21 that the Omicron variant continues as the overwhelming type of Covid-19 now found here.

Nationwide, more than 90,000 Colombians are (on average) tested daily for Covid-19, and “peak” Omicron infection rates are now “evident,” Fernández stated.

While hospital intensive-care unit (ICU) capacities are at 100% in some areas as a result of the Omicron surge, there’s still spare ICU capacity in other areas, he said.

Unfortunately, Covid-related deaths have risen over the past week in Antioquia, Medellin, Cali, Valle del Cauca and Bogotá, he said.

The rise in Covid-related deaths “isn’t proportional as in past [Covid-case surges],” he said, as the Omicron variant appears to be less-severe than prior variants – about 40-to-70% less severe.

However, to stem the rising tide of Covid cases, the remaining unvaccinated Colombians should get vaccinated, while vulnerable populations – especially those over 50 years old -- should get the reinforcement shot, he added.

As for children, the Sinovac vaccine appears to be the most effective, with the fewest numbers of side-effects, he added. This is an encouraging sign as more and more Colombian children are returning to in-person classes this year, rather than home-based internet learning.

In total, just 0.05% of vaccinated Colombians have reported adverse side effects from the Covid shots, he said. In contrast, unvaccinated Colombians remain five times more likely to suffer severe illness and death from Covid infections, he added.


A stunning final report from Finland-based hydroelectric-project engineering consultant Pöyry finds that the current contractors building the US$5 billion Hidroituango hydroelectric project in Antioquia should continue to finish the project as quickly as possible, rather than be replaced.

Contractor continuation is the safest and fastest route to avoid a possibly catastrophic collapse of the dam, the report concludes.

The current situation -- where 100% of Cauca River flow goes over Hidroituango’s engineered spillway rather than through still-under-construction power turbines -- eventually could cause catastrophic erosion at the base of the dam, as years-long 100% spillway evacuation was never part of the engineering design, the report finds.

The Pöyry report -- contracted by Hidroituango project manager EPM but until now kept secret – not only fails to support conspiracy narratives pushed by Medellin Mayor Daniel Quintero, who chairs EPM’s Board of Directors.

Instead, the Pöyry report –just unveiled by investigative journalists at IFM Noticias (see: https://ifmnoticias.com/aparecio-el-informe-poyry/) – completely contradicts Quintero’s frantic push to replace the current Hidroituango contractors with some new contractors, who (unlike the current contractors) presumably would become politically beholden to Quintero.

The 427-page report not only reveals details of undiscovered, dangerous geological faults in and around the Hidroituango project – faults that unfortunately triggered an enormously costly 2018 collapse of a crucial diversion tunnel – but also recommends crucial measures to avoid a potentially catastrophic dam collapse.

According to the report, any change of the current project consultants and main contractors would cause a “delay in the definition of mitigation measures and in the execution of stabilization works.

“Changing the main actors in this project should be avoided. It would mean significant delays -- minimum one year -- and reduce the traceability in the recovery of the project. In addition, it will increase the overall cost of the project,” the Pöyry report finds.

“Hiring a new contractor for a project the size of Hidroituango will take several months just to define the terms and conditions. Even more so given that there are still parts of the project where it has not been possible to access or define the repair engineering.

“Considering additionally the history and background of the [2018 diversion-tunnel collapse] contingency, it will be a challenge to find a company or a consortium that accepts these conditions without limitations. All guarantees and global responsibility for the proper execution of the works will be lost.

“On the engineering side of the project, it should be estimated that a new consultant would take months to verify all the information provided and generated by the consultancy before it can develop new engineering with solutions for the completion of the project,” the report adds.

“From the point of view of the project and the main interest in advancing as quickly as possible in starting up the first generation units, a change of the main contractor and the consultancy is not recommended and puts at risk the progress of the works currently accumulated. Additionally, there will be a risk that there will be no immediate attention to emergencies on the ground once the current contractor is demobilized.

“Mitigating this risk requires, above all, the following measures:

“Maintain the level of the reservoir at a maximum level of 408 meters above sea level, in order to:

“(i) Allow time to inspect, frequently enough, the landfill along its length and carry out the necessary maintenance and repair work. During the inspection and execution of maintenance and repair work, the spillway gates will be closed, and a temporary increase in the level of the reservoir would be admissible.

“(ii) Improve the stability of the dam, duly considering that to date a hydraulic effect remains to be clarified that indicates the possible existence of a percolation path not captured by the geophysical exploration.

“(iii) Maintain a wide, free edge in case of tsunamis caused by landslides of the slopes along the reservoir or the right abutment of the dam.

“(iv) Increase the retention volume during flood peaks, at least until a sufficient number of generation units are available to contribute to flood evacuation.

“(v) Implement an intermediate discharge independent of the main intakes on the right bank with sufficient capacity to lower the reservoir level below 380 meters above sea level.

“Based on the analysis carried out by Pöyry, this report concludes that the only feasible and reliable way to ensure the total safety of the project works, thus avoiding major environmental and social disasters in the short, medium and long term, is to complete and operate the project safely, as soon as possible,” the report concludes.


Airplan – the operator of Medellin’s José María Córdova (JMC) international airport in Rionegro – confirms that runway repaving will require a partial halt to flights at JMC on Saturday and Sunday February 19-20, then again on Saturday and Sunday February 26-27.

The two weekend closures – each lasting 36 hours -- start 2-am on each of those two Saturdays and then continue until 2-pm on each of those two Sundays. Airlines are notifying passengers of resulting flight changes.

“The maintenance work will be carried out at two specific points of the runway track that require the intervention of the pavement: milling, removal and disposal of the material to install asphalt layers,” according to Airplan.

“The closing dates were previously arranged with the different airlines that operate at JMC, thus enabling timely notification to passengers and, consequently, the reorganization of flights.”

Second-Runway Talks Underway

Meanwhile, Colombia’s Transport Minister Ángela María Orozco announced January 13 that a multi-government work group is pushing ahead with negotiations that would involve an estimated US$2.78 trillion (US$699 million) expansion of JMC -- including construction of a second landing/take-off runway.

“The investments would be focused on the acquisition of land, a new runway with a length of 3.5 kilometers, a new terminal, taxiways, a connectivity system between terminals, a new control tower, a new perimeter road, an electrical substation and a commercial platform,” according to the Transport Ministry announcement.

The multi-party talks include JMC airport concessionaire Airplan, the departmental government of Antioquia, the Mayor's Office of Medellín, the Mayor's Office of Rionegro, business-promotion group ProAntioquia, the Medellín Chamber of Commerce, the Chamber of Commerce of Oriente and Ferrocarril de Antioquia, according to the Ministry.

“What we want is that all the actors and sectors of the region that are involved in these decisions have the same technical information, to be able to debate what is convenient and what is not, in a framework of transparency and equality,” explained Minister Orozco.

JMC is now handling more than 1.1 million passengers each month -- even despite travel declines caused by the Covid-19 health crisis, according to the Civil Aeronautics authority.

While officials had previously envisioned a second-runway expansion by around 2033, passenger and air-freight traffic at JMC is growing so much that accelerated expansion now would seem more convenient if completed by 2030 or even 2028, according to Civil Aeronautics.


Medellin-based textiles and plastics-recycling specialist Enka de Colombia announced in a January 18 filing with Colombia’s Superfinanciera oversight agency that it has finally completed a financial restructuring that has satisfied its creditors and cut net debt to near-zero.

The company has “successfully completed the restructuring agreement under Law 550 of 1999, after fully complying with the commitments with our creditors, among which were financial entities, suppliers, bondholders and government entities,” according to the filing.

“We do so strengthened as a profitable and solid company, with a net debt level close to zero and ample financing capacity to continue undertaking our growth plans,” the company explained.

“Today the company is a leader in the recycling of post-consumer PET [polyethylene terephthalate] bottles in the country and has the largest PET recycling plant in South America.

“In addition, we are the main producer of ‘Nylon-6’ in America, a strategic ally of the world’s leading tire manufacturers, and the main producer of fibers and synthetic filaments in the Andean region with an export focus,” Enka added.

In 2002, Enka had suffered a financial crisis “due to an economic liability amounting to COP$320 billion [US$80 million], which led us to take advantage of Law 550 of 1999 through a 19-year restructuring agreement, seeking the best alternatives to transform the organization and protect our direct and indirect jobs,” according to the company.

“In 2007, following the debt capitalization plan, we entered the Colombian Stock Exchange, managing to capitalize, that year alone, COP$180 billion [US$45 million] and close to COP$226 billion [US$56.5 million] throughout the agreement, corresponding to 70% of the debts.”

Meanwhile, technological updates “played a relevant role in the growth of the company, enabling us to focus investment on the development of more specialized products and the opening of new high-value markets,” according to Enka.

As a result, in 2009, Enka entered the PET bottle recycling market for manufacture of synthetic fibers, and then in 2014 it launched “bottle-to-bottle PET recycling,” first in Colombia.

“Recycling has become one of the company’s most important and promising businesses. Currently more than 50% of our products are manufactured from recycled raw materials, with which we not only contribute to the environment, but also generate great benefits for the country’s recycling sector,” the company added.


Medellin officially confirmed today (January 13) that it will switch to a two-digit “pico y placa” driving restriction scheme – from 5 am to 8 pm daily -- starting Monday, January 17, initially for a “pedagogic” period, until January 31.

Cars with plate numbers ending in 6 or 9 are restricted starting Monday, switching to numbers 2 and 3 on Tuesday, and so on (see chart, above).

Area Metropolitana de Valle de Aburra (AMVA, the metro-Medellin government coordinating agency) actually announced the new policy, indicating that the other neighboring municipalities north and south of Medellin likewise aim to adopt this scheme.

Initially, vehicles traveling on Las Palmas highway and the La 33 connection to Avenida Regional, plus the entire length of Avenida Regional, plus the La Iguana highway and its laterals (between Carrera 63 and Carrerra 80) will be exempted from controls, as will rural areas of Medellin, according to the announcement.


Colombian banker Jaime Gilinski’s JGDB Holdings and its financing partner Royal Group (Abu Dhabi) on January 12 reported to Bolsa de Valores de Colombia (BVC, Colombia’s stock exchange) that it has finally acquired more than 27% of the shares of Medellin-based multinational foods giant Grupo Nutresa – far short of its 50.1% to 62% goal.

Meanwhile, the JGDB-Royal group simultaneously has now acquired at least 25% of Medellin-based multinational finance giant Grupo Sura -- also far short of any controlling interest.

However, the new shareholdings in Nutresa and Sura assure that Gilinski’s group will gain board seats on those companies, part of the so-called “Grupo Empresarial Antioqueño” (GEA), where each company holds significant shares in the others.

Beyond gaining board seats, no-one knows for sure what Cali, Colombia-born Gilinski proposes in order to make profitable changes with those companies -- although there’s an assumption that his GNB Sudameris bank eventually would merge with Bancolombia, the latter of which Grupo Sura already holds a commanding interest.

There’s also speculation that Gilinski eventually will launch further rounds of stock bids, in order to boost shareholdings above the 50% required for controlling interests.

Gilinski years ago had been in a lengthy legal battle over control of Bancolombia -- a lawsuit that essentially terminated with no winners or losers.

But some see his new shareholding in Sura (with Sura’s simultaneous holding in Bancolombia) as a sort of sweet revenge, given that he and his dollar-rich Abu Dhabi backers bought the new holdings using an historically favorable dollar-to-peso exchange rate.

The total investment by the Gilinski group in the new share acquisitions of Sura and Nutresa are just shy of US$2 billion – providing a big shot-in-the-arm to what had been a sagging Colombia stock market, as the value of the U.S. dollar against the Colombian peso has soared to around COP$4,000/US$1 in recent months.

BVC now only has to certify the Sura/Nutresa stock deals in the next few days, in order to make the Gilinski acquisitions official.


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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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