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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.


Cemex LatAm Holdings reported October 25 that its Colombia division saw third quarter (3Q) 2018 sales dip 5% year-on-year, to US$134 million, but operating earnings before interest, taxes, depreciation and amortization (EBITDA) rose 11%, to US$26 million.

Gross profit also rose 11% year-on-year in Colombia, to US$53 million, while operating margin rose 15.9% year-on-year, hitting 19.4%, according to the company.

Meanwhile, for the first nine months of 2018, Colombian sales fell 8% year-on-year, while operating EBITDA here fell 12%, according to the company.

Volume sales of grey cement fell 8% year-on-year in 3Q 2018, while concrete sales fell 11% and sales of aggregates also fell 12% during the latest quarter here, according to the company.

Despite the year-on-year declines, “cement volumes increased 7% sequentially during 3Q 2018, reflecting the acceleration of industry demand after the [Colombian presidential] elections,” according to the company.

“Our EBITDA margin improved by 3.5 percentage points during 3Q 2018, due to higher prices, lower costs for cement maintenance and non-recurring effects that negatively impacted our 3Q 2017 results, partially offset by higher freight costs and lower volumes.”

Meanwhile, construction permits for Colombia’s social-housing market have increased by double-digits. This should boost demand for cement, the company noted.

“The new government recently announced the pillars of its housing strategy in the next four years, with a goal building 1 million new housing units in this period, or approximately 250,000 per year, including a new lease-with-purchase option and a new home-improvement program, along with other initiatives,” Cemex noted.

“During fourth-quarter 2018, we expect the residential sector to stabilize, supported by low interest rates, as well as improvements in the consumer confidence indicator and the home-purchase intention indicator.”

As for Colombia’s highway-infrastructure-building sector, “we continue shipping our products to several ‘4G’ [fourth-generation highway] projects that include the ‘Mar 1’ highway [in Antioquia], the Magdalena 2 highway, the Bucaramanga-Barranca-Yondó highway and the Bucaramanga-Pamplona highway,” according to Cemex.

“We estimate that 4G projects will demand 430,000 cubic meters [of cement] in total for 2018, of which we already have 130,000 cubic meters [in market share] and we expect to supply approximately 30,000 cubic meters more during 4Q 2018.

“We expect the infrastructure sector to increase by double digits during 4Q 2018; our volumes should continue to be supported by projects under execution,” the company added.


Colombia’s corporate oversight agency Superintendencia de Sociedades (SuperSociedades) announced October 25 that Medellin-based clothing manufacturer Everfit won approval for its bankruptcy reorganization plan.

According to SuperSociedades, “the [reorganization] agreement has an expected duration of six years and 10 months. This [deal] seeks the conservation of about 100 direct jobs and the productive [capacity].”

The deal also includes continuation of pension payments for 60 employees, at least through end-2018, according to the agency. “The payment to workers will be made in a single installment this year,” according to the agency.

SuperSociedades director Francisco Reyes Villamizar added that “the reorganization process seeks to recover and preserve the company as an economically productive unit, normalizing its commercial and credit relationships, through the operational and administrative reorganization of its assets or liabilities."

Everfit, founded here in 1923, filed for bankruptcy on July 29, 2016, as it was unable to compete against a flood of cheap textile and clothing imports -- mainly from China and elsewhere in Asia. Its web-page today features a “Compra Colombiano” (Buy Colombian) message (see photo, above). 


Medellin’s annual list of wine-tasting events featuring local and international wines continues to grow -- along with workshops led by leading producers and marketers.

One such event here on October 20 -- organized by local daily newspaper El Colombiano -- featured a lecture by Carlos Bravo, owner and founder of the “Viña Sicilia” vineyard and production facility at Olaya, Antioquia ( about 15 minutes from Santa Fe de Antioquia).

Viña Sicilia is a boutique grower and producer, making only about 4,000 bottles per year of its most famous, award-winning “Bianco” white wine, a 50-50-blend of “grillo” and “catarratto” grapes that trace their origins from Italy’s Sicily region, Bravo explained here.

This wine just won a “double gold” award at the August 2018 annual “Vinus” competition in Mendoza, Argentina, where producers from 17 nations put their wines through blind tastings for 63 international judges, he explained.

That was just the latest of 64 international prizes for various Viña Sicilia wines this year, following 43 prizes in 2017 and 22 in 2016, he added. Besides “Bianco,” Viña Sicilia also produces Malbec, rose, Syrah and late-harvest varieties.

While the ambient temperatures around Viña Sicilia are relatively hot and dry -- the terrain is at just 550 meters above sea level and not far from the equator – the nearly complete “Hidroituango” hydroelectric dam is now raising the water level of the Cauca River adjacent to the vineyard.

This vertical and horizontal rise in Cauca water levels next to Viña Sicilia likely will drop average ambient temperatures by about 2 degrees Celsius, hence favoring the evolution of wine grapes, he said.

Also favoring production of finer wine-quality grapes is the sedimentary nature of the local soils -- left by thousands of years of rising and falling Cauca water levels -- as well as a relatively high luminosity enhanced by reflected sunlight off the waters, he said.

Meanwhile, with each year that passes, Colombia’s wine growers are gaining more experience, raising hopes that Colombia might one day be better known for producing several world-class wines, he added.

Villa de Leyva Wineries

Meanwhile, Boyaca boasts a growing number of specialist vineyards and wine producers, with two of them in the vicinity of the picturesque town of Villa de Leyva.

One of these is Viñedo Ain Karim, producers of the “Marques de Villa de Leyva” brand wines, including Cabernet Sauvignon, Sauvignon Blanc and Merlot varieties -- with vines imported from France -- as well as a Chardonnay from grapevines that came from California’s Napa Valley, according to the company.

“Ain Karim is an unusual vineyard, at 2,110 meters above sea level, nestled in the Andes mountain range,” according to the owners. “This place -- with ideal microclimate and calcareous [chalky] soil, with very high solar radiation and low temperatures at night -- incorporates a wine tradition from the colonial days, when the Spanish friars cultivated vines to make their own wines [for Catholic masses],” according to Ain Karim.

Meanwhile, the neighboring “Umaña Dajud” winery in nearby Sáchica – with vineyards at just-above 2,000 meters – has six hectares devoted to Cabernet Sauvignon (red and rose varieties) with most of the vines coming from France, according to the owner.

Another two hectares at Umaña Dajud are devoted to recently planted vines for a France-derived Chardonnay, but these aren't yet in production, the company added.

Elsewhere in Boyacá is the relatively large “Marqués de Puntalarga” winery at the little town of Nobsa, specializing in Pinot Noir and Riesling varieties -- thanks to its climate and soil conditions.

The “Rubi” and “Coral” Pinot noir varieties trace their vine origins to Borgoña, France, first planted at the Puntalarga winery in 1984, according to the owner.

As for the two types of Riesling wines, these grapes trace their origins to the Rhine Valley in Germany, also first planted at Puntalarga in 1984. Yet another novel wine offered at Puntalarga is a “Boyacau Nouveau” variety similar to Beaujolais, according to the owner.

Meanwhile, Puntalarga is organizing a consortium of 35 small grape producers in the nearby “Valle del Sol” area, aiming to expand total production capacity for Pinot noir, Riesling and Silvaner varieties.

Casa Grajales: Large-Volume Producer

Elsewhere, near Cali (Colombia's third-largest city), Casa Grajales -- Colombia’s biggest-volume marketer of both imported and locally produced wines – is now offering 27 national wine varieties and 17 imports, according to the company

“Using a combination of imported must (wine-grape juice) and locally produced grapes, we have been making wines since 1978, when we produced 1 million bottles that year, in 13 varieties,” according to Grajales.

Today, Grajales boasts of 4 million bottles/year of local wine production capacity, with 10 million bottles/year of total bottling capacity, plus 3,000 hectares of proprietary grape and fruit production as well as 1,300 employees.

Grajales offers five Colombia-produced wines under the “Valtier” brand: two whites including “Vino Blanco Semi-Seco” and "Vino Blanco Seco;” one rose dubbed “Vino Rose Semi-Seco;” and one red: “Vino Tinto Semi-Seco.”

Under its separate “Reservado” brand, Grajales offers two types: a white “Vino Blanco Seco” and a red "Vino Tinto Seco.”

Under its generic “Tinto” brand, Grajales also offers what it calls a “classic” red table wine, while its “Rose” generic brand is described as a “classic” table wine.

The company also makes four cooking wines (red and white varieties) as well as five fairly sweet wines (red and white) for the Catholic mass, plus two “fruit wines" (apple and peach, both sweet) and three other very sweet wines including a Moscatel variety.

Rounding-out the Grajales offer of nationally produced wines are two sparkling wines and two “Don Luis” branded premium wines.

Santander Wineries

Colombia’s other two wineries are both very small, and both in Santander: Viñedo Sierra Morena, maker of the “Perú de La Croix” red wines, and the nearby Viña Aldana, which combines boutique red-wine making with an “eco-oriented” hotel, according to the owner. 


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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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