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Argos 3Q 2018 Net Income Jumps 37% Year-on-Year

Thursday, 15 November 2018 09:52 Written by

Medellin-based cement, electric power and road/airport concessionaire Grupo Argos announced November 14 that its third quarter (3Q) 2018 net income rose 37% year-on-year, hitting COP$410 billion (US$128 million).

As for nine-months 2018, Argos has posted an accumulated profit of COP$864 billion (US$269 million), up 31%.

Consolidated revenues of Grupo Argos in 3Q 2018 were COP$3.6 trillion (US$1.1 billion), “which is in line with adjusted revenues in the same quarter of the previous year,” according to the company.

The revenues were “supported by positive contributions from all the strategic businesses -- cement, concessions and energy -- that were COP$97 billion [US$30 million] higher than the same quarter of the previous year,” according to Argos.

Earnings before interest, taxes, depreciation and amortization (EBITDA) hit COP$1.02 trillion (US$318 million) in 3Q 2018, with EBITDA margin at 28%.

Also in 3Q 2018, “Grupo Argos was recognized as the most sustainable company in the world of the construction materials industry by the Dow Jones Sustainability Index,” the company bragged.

The company added that it will start reporting during the next quarter “environmental, social and corporate governance” (ESG) data together with financial results.

On the electric power front, “Odinsa (through Opain) and Celsia, our subsidiaries in concessions and energy, began the installation of 10,000 solar panels that will generate 12% of the energy in [Bogota’s] El Dorado airport, which will consolidate it as the airport with the largest photovoltaic installation in Latin America,” according to Argos

Meanwhile, the under-construction “Pacifico 2” road concession in Antioquia “reached 100% of execution of ‘functional unit 1’ and has an overall works-compliance of 55%, with a 7% advance with respect to the schedule,” according to Argos.

On the cement front, “Cementos Argos closed a financing operation with a US$600 million syndicated loan which, in addition to the favorable impact in reducing the cost of debt without affecting the debt ratio, confirms the market’s confidence in the company,” according to Argos.

“Cement shipments grew 2% thanks to the better performance of the Colombian region, where we grew above the sector. At the same time, there were higher volumes of concrete sales, which grew by 3% in Colombia, thanks to higher shipments to civil works, demonstrating the leadership that Cementos Argos has taken in the infrastructure projects in the country,” the company added.


In a November 8 presentation to some 1,000 attendees for an annual construction-industry forum here, Camacol Antioquia executive director Eduardo Loaiza revealed that new-housing sales in Medellin have fallen 31% this year – mainly due to recent economic weakness in Colombia and investor uncertainly over the national elections earlier this year.

Aside from now-settled election uncertainties that previously rattled investors and “paralyzed” construction, Loaiza cited relatively weak economic growth in Colombia (just 1.7% GDP growth last year and around 2.6% growth this year) as a key reason behind relatively feeble construction growth in Antioquia.

While forecasted GDP growth in Colombia is seen rebounding to around 3.5% in 2019, new tax proposals by the national government could present further headwinds for construction growth next year and beyond, he warned.

So far this year, total construction licenses in Antioquia have fallen 10% in 2018 versus 2017, with residential licenses down 10% and non-residential down 11%, he showed.

On the other hand, Camacol Antioquia calculations indicate that it’s possible that construction licenses here could rise to as much as 4 million square meters of occupied space in 2019, up from just 2.4 million square meters this year, he estimated.

From January through September 2018, total new-housing sales in Antioquia (including Medellin, the Aburra valley suburbs, plus the western and eastern suburbs and the Uraba region) fell 15% year-on-year, he showed. Sales of non-residential buildings in Antioquia also fell 13% this year versus last, he showed.

Other than Envigado -- where 2018 new-home sales are up 25% this year versus last -- the “oriente” region (east of Medellin including Rionegro, El Retiro, Llanogrande, San Antonio de Pereira and La Ceja) and the northern suburb of Copacabana were the only other regions or municipalities in Antioquia showing new-home sales growth: up 15% in “oriente,” and up 13% in Copacabana (see chart, above).

In contrast, sales in Medellin and Sabaneta both fell 31% this year, while Bello was off 18% and La Estrella down 9%, he showed. Homes available for sale in Antioquia also have declined 4.2% this year versus last, he showed.

On the other hand, Camacol estimates that sales of new houses in Antioquia in 2019 could rise about 7% year-on-year, to nearly 22,000 units, he said.

Meanwhile, on the hotel construction front, 19 new hotels were announced this year as in-development for Antioquia, nine of which are in Medellin and three in Rionegro, he showed.

In a separate presentation here, Camacol president Sandra Forero Ramirez explained that subsidized “social housing” has been the one segment of the construction market that has shown the greatest resilience through economic cycles -- and this is the single-biggest market segment for housing construction growth, at 58% of the total.

In contrast, housing for middle-class and upper-income sectors have seen declines in construction over the past two years, she said. However, a Colombian national mortgage “stabilization fund” for housing construction has helped to slow the contraction in these markets, she added.

For 2019, Camacol expects continuation of more building in the subsidized “social housing” sector rather than in the middle and upper-income sectors.

So far in 2018, Colombia housing starts have fallen 7% year-on-year, she said. But that’s better than the 11% contraction in 2017, she pointed-out. Over-all Colombian housing demand also declined, to 155,000 units this year, compared to 170,000 in 2017, nearly 200,000 in 2016, and 180,000 in 2015.

Middle-income housing accounts for  30% of the total Colombian market, but demand in this sector could fall in 2019 if government interest-rate subsidies are trimmed. Construction in this sector has already fallen 14% this year, she showed.

Upper-income housing construction is 12% of the national market. This sector faces potentially devastating consequences in 2019 if the national government’s proposed 18% value-added tax (VAT) is imposed on all housing sales at or above COP$888.5 million (US$280,000 at today’s exchange rates) along with proposed curtailment of interest-rate deductions. Construction in this sector is already down 22% so far this year, she showed.

Velocity of housing sales also has slowed over the 2017-2018 period, with only 40% of newly constructed units sold within six months, compared to nearly 50% in the comparable 2016-2017 period. What’s more, only 55% of new units were sold within 12 months over 2017-2018, whereas 67% of new units were sold within 12 months during the 2016-2017 period.

The slowest sales rates are in the middle- and upper-income units; the fastest in the subsidized “social housing” sector, she showed.

In a separation presentation here, Victor Saavedra Mercado, Colombia’s Vice-Minister of Housing, stated that 4 million Colombians in urban areas continue to live in “inadequate” housing that may lack full water, sewer, gas and power utilities, lack legal property titles, occupy spaces that lack updated zoning, lack paved street access, and suffer from substandard building construction.

In total, some 44% of Colombians today live in rented housing, compared to 19% in Chile, 18% in Brazil, and 13% in Mexico and Peru, he said. Hence well-designed government programs could help a lot more lower-income Colombians move from renting to owning, he said.

To address this, new Colombian President Ivan Duque’s administration is putting more emphasis on subsidies for upgrading existing substandard housing, including rent-to-buy subsidy options, along with aid to municipalities that must update zoning to encourage investments, he said.

Construction: Huge Economic Engine for Antioquia

Antioquia accounts for 14% of Colombia’s entire gross national product (PIB), while the construction sector here by itself accounts for no-less-than 11.6% of Antioquia’s total GDP,  Saavedra said -- 6% of local PIB via buildings-construction, and 5.6% of local PIB in civil-works construction (roads, bridges, dams, airports), he explained.

While one-third of Antioquia’s population lives in rented housing, another 31% live in irregular housing and 35% are homeowners, he showed. Meanwhile, household formation (new marriages, new children) is running at a faster rate than new-housing construction, he warned. In addition, 80% of the municipalities in Antioquia lack updated zoning, which further complicates new-construction initiatives, he showed.

As for the densely-populated, densely-built land within Medellin, the city has now established plans to “renovate” 41% of its occupied lands with even higher-density housing, he showed.

Governor Perez Hails Tunnel Projects

In a final presentation here, Antioquia Governor Luis Perez cited several highway tunnel projects that will stimulate more residential and non-residential building in growing areas including Medellin's suburban “oriente” region, the “occidente” region (around Santa Fe de Antioquia), the northern suburbs and (eventually) the Uraba region, once the “Mar 2” and “Toyo Tunnel” projects are completed during the next decade.

Some 74% of the total length of all new highway tunnels in Colombia are in Antioquia, Perez boasted. At least in Antioquia, tunnel construction is moving at a much faster pace than the long-delayed, vastly over-budget “Tunel de la Linea” tunnel strategically connecting Bogota to highways heading south-westward toward the Pacific port of Buenaventura, he bragged.

The “doble calzada oriente” project linking the Las Palmas highway east of Medellin to the Rionegro airport highway (see Medellin Herald August 1, 2018) only lacks one more bureaucratic approval before the project can be put-out for bid. Once built, this highway will attract even more construction investment to the “oriente” region east of Medellin, he added.

On another front, a proposed 19.9-kilometers-long highway linking the southern Medellin suburb of Caldas to the “oriente” municipality of El Retiro – including an 8.6-kilometers-long tunnel – is in “pre-feasibility” stage, he said. That new highway potentially could efficiently redirect much southern-Antioquia traffic bound for the “oriente,” which currently is forced to travel through Medellin to get there.

‘Colombian Property’ Sees Huge Growth Coming in Oriente

On a related front, El Retiro-based, bilingual real-estate agency specialist Colombian Property (www.colombianproperty.com) told Medellin Herald in a separate interview that “huge” housing growth is coming to the “oriente” region over the next five to 10 years -- on top of tremendous growth over the past 10 years.

Colombian Property president Miguel Homsey – Colombian-born but New York-raised – pointed to the impact of new highways including the Tunel de Oriente linking Medellin to the international airport at Rionegro; the “doble calzada oriente” highway project between Sancho Paisa and the airport; the explosive growth of “parcelacion” gated community projects around El Retiro, Llanogrande, Rionegro and La Ceja; a newly proposed, upscale “wellness” retirement community project near La Ceja; a new highway that will link this area to Llanogrande and onward to Medellin; and future development of a second runway at the Rionegro international airport, triggering many more international flight connections.

“Foreigners are piling-in” to the oriente region thanks to its favorable climate, abundant “green” space, better air quality, relatively upscale neighborhoods and amenities, and a favorable dollar-to-peso exchange rate, he told us.

“El Retiro is going to change in a big way, with four to five thousand new luxury homes and apartments coming soon, and more properties coming later. There are 9,000 people living in El Retiro now but it’s going to double in population in the next few years.

“But people here don’t want to repeat the Sabaneta experience, where construction outran road and water infrastructure,” he said.

Asked about Colombian Property’s market focus, “we try to focus on certain mid-to-high-range properties in certain locations. We have a bilingual lawyer available to help the process, and an accountant that helps with certain documents, advice on doing foreign money transfers here, and the Colombian investor-residency process,” Homsey added.


Medellin-based banking giant Bancolombia announced November 7 that its third quarter (3Q) 2018 net income rose 20.5% year-on-year, to COP$543 billion (US$172 million).

However, this positive year-on-year result in 3Q 2018 was offset by an 8.2% decline in net income compared to 2Q 2018.

“Gross loans [in 3Q 2018] grew by 4.0% when compared to 3Q 2017 and 0.9% during the quarter. This annual growth shows moderation in the credit demand in Colombia,” according to Bancolombia.

Colombian peso-denominated loans grew 5.8% in 3Q 2018 versus 3Q 2017.

“Net interest income was COP$2.57 trillion [US$813 million] for 3Q 2018, increasing by 0.6% when compared to 3Q 2017. This positive performance is mainly explained by the growth in the loan book [as] net interest income increased by 0.9% during the [latest] quarter,” according to the company.

“The annualized net interest margin for the quarter was 5.8%. The margin decreased by 10 basis points during the quarter and registered the same number when compared to 3Q 2017, mainly affected by the reductions in the reference rate in Colombia that were reflected in the repricing of the loan portfolio.

“Provision charges for the quarter were COP$1.0 trillion [US$316 million] and the coverage ratio for 90-day past due loans was 160.7%. Provision charges increased by 4.3% when compared to 3Q 2017 and by 3.8% compared to 2Q 2018.

“These provisions allow us to maintain a solid coverage ratio amid a challenging environment [even as] new past-due loans totaled COP$847 billion [US$267 million] for the quarter.

“Net fees were COP$631 billion [US$199 million] and increased by 4.1% compared to 3Q 2017. This growth was mainly driven by an increase in fees related to credit and debit cards and trust services, [although] net fees decreased by 2.1% during the quarter,” the bank added.

Bancolombia “maintains a strong balance sheet supported by an adequate level of loan loss reserves,” according to the company. Allowances for the principal for loan losses were 5.7% of total loans at the end of 3Q 2018, increasing as compared to 2Q 2018, the company added.

 


ISA 3Q 2018 Net Income Jumps 30% Year-on-Year

Thursday, 08 November 2018 09:43 Written by

Medellin-based multinational electric power transmission and highway concessionaire ISA announced November 7 that its third quarter (3Q) 2018 net income rose 30.2% year-on-year, to COP$413 billion (US$131 million).

Gross revenues rose 8.3% year-on-year, to COP$1.9 trillion (US$605 million), with power transmission revenues showing the biggest yearly gain, by 16.7%, according to the company.

Earnings before interest, taxes, depreciation and amortization (EBITDA) hit COP$1.4 trillion (US$446 million), up 15% year-on-year, while EBITDA margin came-in at a hefty 71.7%, according to ISA.

The positive results don’t include any extra income from a one-time-only power-transmission tariff “regularization” program in Brazil last year, but do include power-tariff increases this year.

Revenues improved this year mainly thanks to recent entry-into-operation of power-transmission and highway-concession operations in Peru, power-transmission expansions in Colombia and Chile (since September 2017), and the incorporation of results from recently acquired Brazilian and Chilean power operations.

As for investments, ISA so far this year has invested COP$1.9 trillion (US$605 million) in infrastructure expansions and upgrades, according to the company.

Colombia revenues rose 8.4% year-on-year, to COP$447 billion (US$142 million), while Chile revenues rose 12.8%; Brazil revenues rose 12% and Peru operations declined 7.6%, according to the company.

Power transmision revenues in Colombia rose mainly because of a boost in national power tariffs, favorable COP/US dollar exchange rates, plus a new transformer connection, the company added.


Medellin-based electric-power giant Celsia announced November 6 that its third quarter (3Q) 2018 net profit dropped 31% year-on-year, to COP$64 billion (US$20 million).

However, nine-months 2018 net profits so far have risen 35% year-on-year, to COP$243 billion (US$77 million), according to Celsia.

Consolidated revenues for 3Q 2018 rose 8.5% year-on-year, to COP$852 billion (US$271 million), with Colombian revenues rising 18%, to COP$698 billion (US$222 million).

Earnings before interest, taxes, depreciation and amortization fell 12% year-on-year in 3Q 2018, to COP$259 billion (US$82 million), but nine-months 2018 consolidated EBITDA rose 0.5%, to COP$818 billion (US$260 million).

“In Colombia, accumulated energy demand during the [latest] quarter rose 4% with respect to the same period of 2017. The regulated market demand grew at a rate of 3% and the increase exceeded 6% in the unregulated market,” according to Celsia.

While Colombian average energy prices fell 4% year-on-year in 3Q 2018, the average marginal cost of energy in Panama was US$73 per MW-hour, 98% higher than in 3Q 2017, according to Celsia.

Commenting on the results, Celsia president Ricardo Sierra emphasized that the company “has a great emphasis on the development of renewable energies . . . The wind and solar projects that we have will lead us to add, over the next five years, 560-megawatts [MW] of renewable power in addition to the current 77-MW,” he said.

Four of the wind-power generation projects are in the Guajira region (northern Colombia), totaling 330-MW. These power projects already won environmental licenses and grid-connection approvals, according to Celsia.

In solar projects, Celsia Central America acquired in Panama its first photovoltaic plant, incorporating 33,000 solar panels, with a net capacity of 9.9-MW and a transmission line of 2.8 kilometers, according to the company.

“In Colombia, the Celsia Solar Bolívar photovoltaic farm is about to enter into operation. Located in Santa Rosa de Lima in Bolívar, Colombia, with a capacity of 8.06-MW and an estimated generation of 15,542-MW-hours per year, it will deliver the equivalent of the energy consumed by 7,400 households,” according to Celsia.


Medellin-based electric power giant EPM on November 4 heralded the start-up of the engineered spillway over the giant “Hidroituango” hydroelectric project in Antioquia (see photo, above).

That start-up soon will allow EPM to close a makeshift diversion tunnel through the dam, ensure steady, safe, adequate water-flow of the Cauca River downstream of the dam, and enable repairs to begin in the machine room -- temporarily used to evacuate water following a collapse of the main diversion tunnel last April.

The start-up also means that Medellin eventually would start to recover billions of dollars of future revenues expected to be generated by Hidroituango, as city-owned EPM supplies about 25% of the city’s annual revenues.

“With the start-up of the spillway, a new milestone is reached in compliance with the schedule set for 2021 for the recovery of the project,” according to EPM, which also posted a video of the initial water-flow through the spillway (see: https://www.facebook.com/epmestamosahi/videos/2116900111960032/?fref=ts).

“The structure of the dam remains stable and in optimal conditions to ensure the passage of water through the spillway and the safety of the communities downstream. EPM will close the water passage through the machine house once we are fully confident that the technical conditions of the project allow it.”

The reservoir behind the dam rose to 405 meters above sea level on the afternoon of Sunday, November 4, enabling safe evacuation of Cauca River water through the spillway.

The spillway has a horizontal length of 405 meters and includes four radial gates, 15.4 meters wide by 19.5 meters high. Opening more gates enables controlled increase of water-flow through the spillway. At the bottom of the structure is a settlement well, enabling smooth, continuous flow of the Cauca River downstream of the dam.

The left channel of the spillway was the first put into operation on November 4, initially enabling evacuation of 200 cubic meters-per-second of Cauca River water.

“These 200 cubic meters-per-second are now added to the 750 cubic meters-per-second of water flowing through the machine house, for a total of 950 cubic meters-per-second on average,” according to EPM.

“This ensures an ‘ecological flow,’ or what’s necessary for a normal flow of the Cauca River, which is 450 cubic meters-per-second -- and this also guarantees the safety of the communities that live downstream of the project,” according to EPM.


Fabricato Trims Losses in 3Q 2018

Sunday, 04 November 2018 08:19 Written by

Medellin-based textile giant Fabricato on November 2 posted a third quarter (3Q) net loss of COP$9 billion (US$2.8 million), an improvement over the COP$19 billion (US$5.9 million) net loss in 3Q 2017.

Earnings before interest, taxes, depreciation and amortization (EBITDA) also improved year-on-year, with a positive COP$909 million (US$285,000) in 3Q 2018 versus a COP$6 billion (US$1.9 million) net EBITDA loss in 3Q 2017.

Sales also rose 13.6% year-on-year, to COP$96 billion (US$30 million), from COP$84.9 billion (US$26.6 million) in 3Q 2017.

As for nine-months (January through September) 2018 results, Fabricato’s net loss rose to COP$28 billion (US$8.8 million) versus a net loss of COP$13 billion (US$4 million) in nine-months 2017. However, EBITDA improved to a positive COP$5.6 billion (US$1.7 million) versus a negative COP$1.5 billion (US$471 million) in nine-months 2017.

Commenting on the latest results, Fabricato pointed out that “the third quarter of 2018 continued presenting the trend of moderate recovery of the [Colombian] economy, perceived since the beginning of this year.

“Some indicators such as controlled inflation, the low basic interest rate and the price of oil above US$80 per barrel allow us to believe that this scenario will remain positive, which generates a favorable environment for the country's economic activity.

“In relation to the textile sector, a resumption of the natural business cycle is perceived, that is, an increase in sales was noted in the third quarter of this year, a sign that the garment industry is preparing for a higher volume of sales for the end of the year.

“The retail sale of garments, accumulated to September 2018, indicated an estimated growth of 5% [year-on-year], which should reflect a resumption of the garment production sector and consequently of the textile sector.

“However, what’s important to note in this case is the increase in the imports of garments made for the large retail chains, which will surely reduce the transfer of the positive impact of their sales to the Colombian productive sector.

“When the new [Colombian national] government took office [this year], hopes were renewed regarding the fight against smuggling and informality, the main problems of the textile and clothing sector in Colombia.

“Some campaign promises, such as the reduction of VAT [value-added tax] for the textile sector, may face political resistance and face difficulties in its processing. However, measures such as the review of import tariffs and thresholds for imports are expected in the short term, as well as anti-dumping measures, which would be the beginning for the restoration of an environment of legal competition in Colombia and the consequent reactivation of this sector so important for the generation of jobs.”

As for the future, “we remain convinced that all of Fabricato’s efforts should be aimed at generating value for our clients, either because of the excellence in the product offer, or because of the speed of response, which is increasingly relevant in the purchase decision, with adequate prices.”

As for Fabricato’s real-estate business ventures, the company reported that its “Ciudad Fabricato” project continues to generate more revenues, while the former “Riotex” factory in Rionegro has achieved 55% leasing of available space to commercial third parties.

“In the case of full occupation [of the former Riotex factory], the leases of the industrial park should generate annual revenues between COP$5.5 billion [US$1.7 million] and COP$6 billion [US$1.9 million]. To this value should be added what will be received for the services available to the tenants, such as water and steam,” Fabricato added.


Medellin-based multinational power and utilities giant EPM announced October 31 that its nine-months 2018 net profits rose 12% year-on-year, to COP$1.7 trillion (US$528 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) also rose 12%, to COP$3.9 trillion (US$1.2 billion).

So far this year, EPM has spent COP$251 billion (US$78 million) in compensation costs to cover problems arising from a diversion-tunnel collapse in the US$5 billion, 2.4-gigawatt Hidroituango hydroelectric project. But this hasn’t stopped EPM from generating profits, general manager Jorge Londoño de la Cuesta said.

“As complicated as it has been for our company to address the contingency in the Hidroituango hydroelectric project, thanks to our EPM people and their commitment to the quality of life of the community and the development of the country, we have achieved growth in the group’s profits,” Londoño added.

The city of Medellín – EPM’s sole shareholder -- has netted COP$806 billion (US$250 million) in profit transfers so far this year, while EPM’s gross revenues rose 10% year-on-year, to COP$12 trillion (US$3.7 billion), the company noted.

EPM’s main holding company contributed 49% to earnings, foreign subsidiaries 33%, national energy subsidiaries 16%, and national water subsidiaries 2%, according to the company.

A hike in Colombian national power sales this year mainly explains the boost in revenues and profits, according to the company.

Meanwhile, EPM so far this year has invested COP$2.3 trillion (US$714 million) in infrastructure, 84% of which has been in Colombia, the company added.


The Medellin City Council early this morning (October 30) voted 16-5 to approve EPM’s sale of an estimated COP$4 billion (US$1.25 billion) worth of non-strategic assets in order to fill a gaping fiscal hole left by problems with its under-construction “Hidroituango” hydroelectric dam here in Antioquia.

The vote followed dozens of public hearings, City Council subcommittee hearings, briefings with local, departmental and national politicians, regulatory agencies, interest groups, debt-funding sources and Wall Street analysts, plus massive public information campaigns.

The deal ultimately overcame objections from some Council members arguing that EPM would be better-off selling its half-interest in the telecom/internet company TigoUne rather than its 10% stake in Colombia power generator ISA.

EPM estimates that it should be able to complete the sales of all these assets by third-quarter 2019. Revenues from the sales will help EPM maintain its annual payments to the city of Medellin, its sole shareholder, as well as maintain its crucial investments in power, water and sewer infrastructures.

The approval also means EPM will sell its stakes in Chilean power and water companies and its small stakes in a handful of Colombian companies including Gas Natural de Oriente, Terpel, BBVA, Acerias Paz del Rio and others.

EPM also plans to slash some COP$1 billion (US$313 million) from operating costs and delay COP$2 billion (US$626 million) in investments in order to recoup an estimated COP$7 billion (US$2.2 billion) in lost electricity sales, repair costs and compensation costs from the three-year-delay in Hidroituango’s start-up.

In a question-and-answer document provided to the City Council and the public, EPM explained the rationale behind its sale decisions.

As to why the company decided against selling its Tigo-Une shares (also called “Une-Millicom”), EPM stated: “The approval of the sale of Une-Millicom would take more time, and the current situation demands greater agility to obtain the necessary resources for the development of the investment plan.”

Asked why it would sell its 10% stake in ISA, “if it is a profitable asset, even above other less strategic investments,” EPM stated: “As it is a non-controlling minority stake of 10.17%, EPM has no interference in the major decisions of ISA. Therefore, this investment does not contribute EBITDA [earnings before interest, taxes, depreciation and amortization] or income and its sale would not affect the covenants of the credit agreements and EPM bonds.

“Additionally, ISA is a highly recognized company in Latin America whose shares are listed on the stock exchange, so its sale has a high probability of execution. Finally, the sale of the shares of ISA would generate a significant amount of resources to EPM, which would be comparatively more favorable than the annual amount of dividends received annually, which on average in the period 2014-2018 represent approximately 3.5% annually on the capital that EPM has invested in ISA.”

Dam Nears Completion, Spillway Starts Operating

On another crucial front, EPM reported that the Cauca River is just about to pass over the engineered spillway at the Hidroituango power project, which will enable closure of the tunnel to the mechanical room -- that room temporarily being used as an emergency diversion tunnel ever since the main diversion tunnel collapsed last April.

Once the mechanical room has been cleared of water, EPM can begin repairs to the project, hopefully leading to start-up of power production no later than 2021.


Medellin-based multinational foods giant Nutresa reported October 26 that its third quarter (3Q) 2018 net profit rose 19% year-on-year, to COP$386 billion (US$121 million).

“This growth is the result of a balanced equation that includes rising sales, efficiency in purchase of basic materials, productivity programs, lower growth in operating expenses and a continuing decline in financing costs,” according to Nutresa.

Consolidated sales of Grupo Nutresa grew by 3.4% year-on-year, hitting COP$6.6 trillion (US$2.07 billion) while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 5.1% year-on-year, to COP$841 billion (US$264 million). EBITDA margin was steady at 12.7%.

Sales in Colombia rose 4.1%, to COP$4.2 trillion (USS$1.3 billion) thanks to a volume hike of 2.3% plus a price hike of 1.5%. Sales abroad also rose 4%, to US$829.8 million.

“Innovation continues to be an important driver of growth for the Group -- and sales resulting from this concept represent 22.1% of the total,” according to Nutresa.

Gross profit rose 5.2% year-on-year, to COP$3.0 trillion (US$943 million), “the result of the increase in sales accompanied by a strategy to improve productivity,” according to the company.

“Operating income amounted to COP$634 billion [US$199 million], equivalent to an operating margin of 9.6%, and representing an improvement of 4.7% compared to the same period of 2017. This result is a consequence of the efficiencies in sales, administration and production during the period.

Net post-operative expenses fell 46% year-on-year, to COP$100.7 billion (US$31.6 million), “mainly explained by the significant reduction in financial expenses, resulting from lower indebtedness, and better interest rates in the main markets where the Group operates,” according to Nutresa.


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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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