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Medellin-based highway- and tunnel-construction giant Construcciones El Condor on August 12 reported a 221% year-on-year jump in second quarter (2Q) 2020 net income, to COP$15.8 billion (US$4.2 million).

The big jump in profits is explained by the COP$13 billion (US$3.4 million) net loss recorded in 2Q 2019 “due to the incorporation by the equity method of the losses originated in the ‘Vías de las Américas’ concession” last year, according to El Condor.

Other favorable financial events during 2Q 2020 included a COP$62 billion (US$16 million) arbitration award to El Condor from Colombia’s Agencia Nacional de Infraestructura (ANI) for the Cesar-Guajira Concession.

Also during the latest quarter, El Cóndor “entered into a contract for the assignment of economic rights linked to the second payment of the contract for the sale of the shares of the Tunnel Aburrá Oriente Concession for COP$39.8 billion (US$10.5 million),” according to the company. That new highway tunnel now links Medellin eastward to the Jose Maria Cordova international airport at Rionegro.

While 2Q 2020 profits jumped, income from ordinary activities in 2Q 2020 fell 18% year-on-year, to COP$337.6 billion (US$89.6 million), “explained by the paralysis in the execution of the works due to the Covid-19 pandemic, which gradually resumed depending on the particularities of the areas where the projects are being carried out,” according to the company.

Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 22% year-on-year, to COP$50 billion (US$13 million), compared to COP$64 billion (US$17 million) in 2Q 2019. EBITDA margin came-in at 14.9% in 2Q 2020 versus 15.5% in 2Q 2019.

Total assets as of June 2020 were COP$2.15 trillion (US$570 million), of which 40% are current and 60% non-current assets, according to the company.

Total liabilities closed the latest quarter at COP$1.08 trillion (US$267 million), 48% of which are current and 52% are non-current liabilities. Total assets at June 2020 were COP$1.07 trillion (US$284 million).

Construction backlog at the end of 2Q 2020 -- including the balance of works contracted and to be executed -- stood at COP$779.9 billion (US$207 million). “This calculation takes into account COP$151 billion (US$40 million) of the invoicing executed during the latest quarter,” according to El Condor.

Colombia’s Ministry of Transport announced August 12 that Medellin’s José María Córdova (JMC) international airport in suburban Rionegro will host six “pilot test” passenger routes -- once airlines obtain takeoff/landing “slots” from the Aerocivil regulatory agency.

“After being approved for the pilot plan by the Interior Ministry, the airlines must request from Aerocivil the itineraries and slots to start the commercialization of the flights,” according to Airplan, the operator of JMC airport.

First out of the gate, Medellin-based EasyFly announced August 13 that at JMC it will begin daily flights to/from Bucaramanga and to/from Pereira starting Tuesday, August 18.

The newly approved “pilot” routes will connect JMC to-and-from Palonegro de Lebrija airport (Bucaramanga), Camilo Daza airport (Cúcuta), Matecaña airport (Pereira), La Nubia airport (Manizales), El Edén airport (Armenia) and Gustavo Rojas Pinilla airport (San Andrés island).

However, before any flights can begin, “all the recommendations of the biosafety protocols of the Ministry of Health must be followed,” added Transport Minister Ángela María Orozco.

As an extra precaution, passengers booking flights between these seven cities are supposed to “take an antigen test or [get a] certificate of the other diagnostic or confirmatory alternatives, a maximum of two days prior to the flight.”

This new test requirement is an “additional measure to what is established in the [Health Ministry passenger flight] protocols,” according to an August 11 Interior Ministry order authorizing the new “pilot” flights to-and-from JMC airport.

According to a July 16, 2020 bulletin from the U.S. Food & Drug Administration (FDA), “antigen tests usually provide results diagnosing an active Coronavirus infection faster than molecular tests [PCR tests, the type most used in Colombia and the U.S.], but antigen tests have a higher chance of missing an active infection. If an antigen test shows a negative result indicating that you do not have an active coronavirus infection,[then]  your health care provider may order a molecular test to confirm the result.”

As for antibody (serology) tests, such tests “may provide quick results, but should not be used to diagnose an active infection,” according to FDA. “Antibody tests only detect antibodies the immune system develops in response to the virus, not the virus itself. It can take days to several weeks to develop enough antibodies to be detected in a test.”

By contrast, while PCR molecular tests are by far the most reliable for Covid-19 detection, actual reporting of PCR test results typically take several days or even a full week in Colombia (and in most of the U.S.), because PCR test labs here are currently overwhelmed.

Hence a PCR test doesn’t seem a practical option for meeting the new Interior Ministry rule requiring passengers to get a Covid-19 test result within two days prior to a booked flight.

According to the Health Ministry, the other mandatory biosafety protocols for these new flights include:

1. Passengers must arrive a maximum of two hours in advance of the scheduled time of their flight, and with their electronic check-in ready to avoid delays and congestion.
2. Passengers should only carry personal luggage, bags or small backpacks that can be stored under the passenger seat. The rest of the luggage will go into the plane’s baggage compartment.
3. Passengers should have already downloaded the CoronApp-Colombia application onto their cell phones, with all required information filled out.
4. Only passengers and those who work at the airport can enter the terminal. 
5. Temperature control will be carried out for all persons entering an airport and upon the arrival of flights.
6. “All people, without exception, passengers and workers who are in an airport must use personal protection elements (face masks).”
7. All airport users, crews and employees are obliged to respect the physical distance of two meters in areas such as counters, scanners and in the lines to board aircraft.
8. Boarding will be authorized only when the aircraft is ready.
9. Inside the aircraft, on-board service will not be provided, and travelers will be asked not to use inflight entertainment systems such as screens, mobile phones, among others. As far as possible, aircraft toilets should not be used.
10. Passengers and crew will wear masks at all times during the flight.
11. Passengers must remain seated during the flight.

Medellin-based electric power giant EPM announced August 11 that it just filed a COP$5.383 trillion (US$1.44 billion) claim against Mapfre Insurance (Colombia) as part of parallel conciliation procedures that seek to resolve an estimated US$2.6 billion in losses resulting from a 2018 tunnel collapse at the Hidroituango hydroelectric project in Antioquia.

The claim against Mapfre is a “request for prejudicial conciliation” in a Medellin Administrative Court “based on the occurrence of a loss in the ‘Construction All Risk Policy’” that EPM had previously bought to protect itself against potential damages and losses during and after construction of its 2.4-gigawatt, US$5 billion Hidroituango project, according to EPM.

The April 28, 2018 collapse of the "auxiliary deviation gallery" (GAD) diversion tunnel inside the Hidroituango project resulted in both physical and financial damages “that have been estimated, to date, in a sum close to COP$10 trillion [US$2.6 billion],” according to EPM.

“Taking into account the coverage, protections and limits of the [Mapfre] policy, the claims of the conciliation request amount to the sum of COP$5.383 trillion [US$1.44 billion],” according to EPM.

EPM previously had announced a parallel conciliation process involving Hidroituango’s construction and design contractors as well as their insurors --Suramericana and Chubb (see Medellin Herald August 10, 2020).

EPM Board Resigns in Protest

Meanwhile, EPM’s entire board -- except for Medellin Mayor Daniel Quintero -- announced August 10 that they have resigned en-masse in protest over EPM general manager Alvaro Guillermo Rendon and Mayor Quintero’s failure to consult them in transcendental decisions -- including the new Hidroituango conciliation process as well as a prior proposed scheme that would radically alter EPM’s entire business model (see Medellin Herald July 3, 2020).

While EPM and the Mayor legally are required to consult with the Medellin City Council on transcendental matters affecting city-owned EPM, the company’s management also “ought to discuss in detail and seek the counsel of the Board of Directors” before making radical decisions, according to the joint letter of resignation signed by the board members.

“We are worried that [top EPM management] are not observing good practices of corporate governance that have characterized Grupo Empresarial EPM,” the letter continues.

Rather than embarking on far-reaching schemes without prior Board consultation, EPM instead ought to prioritize completion of the Hidroituango project, successfully integrate the recently acquired “Caribe Mar” power utility in northern Colombia, and focus on Covid-19 impacts that potentially threaten the finances of its power customers, according to their letter.

Given the “repeated ignoring of the Board of Directors, we are obliged to present our resignation,” the letter concludes.

EPM Management Response

Reacting to the Board resignation, EPM filed an August 11 statement with Colombia’s Superfinanciera oversight agency giving its response.

In the statement, EPM claims that the earlier joint proposal (since withdrawn) by EPM and Mayor Quintero that would radically alter EPM’s business model “had been presented to the board members” even though “the competence for the reform of the statutes is not the Board of Directors, but the City Council, at the initiative of the Mayor.”

In addition, decisions about the new Hidroituango conciliation scheme “did not belong to the Board of Directors,” according to the EPM filing.  What's more, the conciliation decision bypassed the Board because “the terms conferred by the procedural regulations for submitting claims were close to being fulfilled, under penalty of expiration” by a crucial deadline, according to EPM.

Antioquia’s Business Associations Rip EPM Leadership

Meanwhile, the influential “Comite Intergremial de Antioquia” (the Inter-Trade Committee of Antioquia) -- which includes all 29 of Antioquia’s main business trade associations and all five Chambers of Commerce -- issued an August 12 bulletin denouncing EPM’s top management for actions that triggered the EPM Board’s mass resignation.

“We consider [EPM management’s] ignoring of its statutory Board of Directors in matters of enormous and strategic transcendence -- ignoring basic and fundamental aspects of the norms of its own corporate governance -- puts at risk the stability and interests of the institution,” according to the Committee bulletin.

The resulting mass resignation of the Board “generates a loss of credibility in the management of the enterprise, gravely affecting its operation, its relationship with lenders and investors, triggering future problems that will result in dire social and economic consequences that will affect millions of persons,” according to the group.

“The Inter-Trade Committee of Antioquia respectfully requests a clear, coherent and sensible explanation on behalf of the legal representative of [EPM] about this confused, questionable and unfortunate situation.”

Because of the EPM Board’s mass resignation, “we announce a decision to promote immediately the formation of a Civic Committee which, acting in oversight, will jealously guard the interests of EPM -- which are the interests of Medellin and Antioquia -- and [the Committee] will act solely under technical and sensible criteria, opposing and denouncing irregular actions,” the bulletin concludes.

Medellin-based electric power giant Celsia announced August 10 that its second quarter (2Q) 2020 net profit soared to COP$96.6 billion (US$25.8 million), from COP$43 billion (US$11.5 million) in 2Q 2019.

As for first-half (1H) 2020, consolidated net profit hit COP$183 billion (US$48.9 million), up sharply from COP$96.8 billion (US$25.8 million) in 1H 2019.

While profits are up, 2Q 2020 consolidated revenues still dipped 2.4% year-on-year, to COP$891 billion (US$238 million).

“The decrease in revenues is the result of a lower consolidated generation that reached 971 GWh [gigawatt-hours] with a reduction of 18.1% compared to 1Q 2020 in Colombia, due to lower water contributions and the greater need for [maintaining] reservoir [levels], and in Central America due to the dry period and the lower energy demand due to the [Covid-19 quarantine] preventive isolation period,” according to Celsia.

In the latest quarter, “revenues from Colombia represented 90% of the consolidated total and Central America the remaining 10%,” according to Celsia.

“In Colombia, the retail market [division] sold 769 GWh, a decrease of 12.2% compared to the first quarter [2020] as a result of the [Covid-19 quarantine] that had an effect on energy demand in both the regulated and non-regulated sectors,” according to Celsia.

Consolidated EBITDA for 2Q 2020 was COP$312.4 billion (US$83.5 million), down 5.5% from 1Q 2020 but up 8.8% compared to 2Q 2019. However, the year-on-year EBITDA figures “are not comparable due to operations carried out in 2019,” according to Celsia.

For 1H 2020 so far this year, EBITDA has hit COP$643 billion (US$172 million), including a COP$13 billion (US$3.5 million) gain from divestment of its former Zona Franca Celsia power plant.

During the current Covid-19 health crisis, “relief programs deployed by the company to support customers totaled COP$73 billion [US$19.5 million] and relief to suppliers totaled COP$50 billion [US$13.4 million],” according to the company.

“In social support programs during the [Covid-19] contingency, Celsia has donated COP$10.44 billion [US$2.8 million] in initiatives that have reached 73 hospitals and health institutions and 14,000 nutritional kits to communities neighboring its operation,” the company added..

“At the end of June [2020], 373,403 clients availed themselves of the different payment facility schemes for [electric power] consumption for a value of COP$32 billion [US$8.5 million]. Similarly, 623,156 invoices from [low-income] strata 1 and 2 in the months of April, May and June received a 10% discount that represented COP$2.4 billion [US$641,000]” in customer savings.

To offset subsidies to lower-income customers and suppliers during the Covid crisis, Celsia cut other spending by COP$27 billion (US$7 million), according to the company.

The company closed 2Q 2020 with consolidated debt of COP$4.4 trillion (US$1.17 billion) and a debt-to-EBITDA leverage ratio of 3.1-times.

During 2Q 2020, the company obtained net credits totaling COP$415 billion (US$110 million) “to maintain financial flexibility during Covid-19 and COP$40 billion [US$111 million] for the development of the San Andrés de Cuerquia [small-scale hydropower project in Antioquia, Colombia] and the Comayagua solar-power project in Honduras,” according to the company.

Medellin-based multinational gold mining giant Mineros SA on August 10 reported a US$6.7 million net profit for second quarter (2Q) 2020, up from US$2.4 million in 2Q 2019.

Earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 82% year-on-year, to US$52.8 million, with EBITDA margin hitting 34%.

Revenues likewise rose by 35% year-on-year, to US$126 million, according to the company.

The full-year 2020 gold production estimate for Mineros continues at between 290,000 to 310,000 ounces of gold equivalent.

As for first half (1H) 2020, “accumulated results reflect a similar behavior, where EBITDA grew 62%, to US$94.8 million, with an EBITDA margin of 39%, and the net profit reached US$22.7 million, up 150%,” according to Mineros.

Production in Colombia during 2Q 2020 rebounded by 37% year-on-year, mainly due to environmental permitting delays in 2019 that had penalized Mineros’ alluvial operations in Antioquia. As a result, alluvial gold production in Colombia during 2Q 2020 rose to 17,960 gold-equivalent ounces, up from 11,727 ounces in 2Q 2019. But Colombian underground mining production fell to 2,871 gold-equivalent ounces in 2Q 2020 versus 3,445 ounces in 2Q 2019.

Meanwhile, since the definitive sale of Mineros SA’s underground mining operations at El Bagre, Antioquia, to Soma Gold on May 13, 2020, those underground operations are no longer contributing to corporate earnings. Mineros received an initial US$1 million payment on that sale and will receive the remaining US$4.5 million over the next 90 days, according to the company.

Elsewhere, Nicaragua production rose to 32,844 gold equivalent ounces in 2Q 2020 versus 31,610 ounces in 2Q 2019. Argentina 2Q 2020 production dipped to 18,867 equivalent ounces, down from 23,395 ounces in 2Q 2019, according to Mineros.

Medellin-based electric power giant EPM announced August 10 a new conciliation process with the “Hidroituango” design and construction contractors to resolve an estimated US$2.6 billion in losses resulting from a diversion tunnel collapse at the hydroelectric dam project two years ago.

The conciliation process aims to avoid a lengthy court battle over damage claims at the 2.4-gigawatt, US$5 billion Hidroituango project, according to EPM. The first generation units at Hidroituango are now expected to go on-line in 2022 -- delayed by more than four years.

Hidroituango project insurers Suramericana and Chubb Insurance are also involved in the proceeding, according to EPM.

The decision to enter conciliation follows a “root-cause study by the international specialized firm Skava Consulting and a meticulous review of all the documentation in legal matters,” according to EPM.

Those studies found that the Hidroituango design consortium (Integral and Solingral SA), the “CCCI” construction consortium (Camargo Correa, Conconcreto and Coninsa-Ramón H) and the consortium controller (Ingetec-Sedic) alarmingly had discovered “problems to correctly comply with the ‘milestone of entry into commercial operation of the generation units,’” according to EPM.

To overcome the estimated start-up delays, “recommendations, decisions and actions that were taken brought with them a risk which ultimately led to the collapse of the auxiliary diversion gallery (GAD) and forced unprecedented management of the environmental, social and infrastructure risks inside the [damaged] transformer cavern,” according to EPM.

As a result of the tunnel collapse, EPM not only suffered losses to internal dam infrastructure, expensive power generation equipment, damage to downstream buildings, bridges and compensatory payments to downstream populations temporarily dislocated, but also massive financial losses in delayed power sales, financial interest, lost profits and offsetting payments to Colombia’s power grid as ordered by the national CREG energy regulator.

“Before going to court and raising the claim for COP$9.9 trillion [US$2.6 billion] against the consortia, EPM must exhaust the requirement of conciliation with those involved,” according to EPM.

“This process will take three months and its maximum duration will be until November 10. In the event that conciliation fails, the administrative litigation jurisdiction, headed by the Council of State, will be the one to settle the economic controversy between EPM and the consortia. In the event that conciliation is not achieved, this would be the biggest lawsuit filed by a public law entity against any contractor in Colombia.”

To oversee conciliation, “EPM requested the participation of the [Colombian] Attorney General, the Office of the Comptroller General, and the Agency for Legal Defense of the State. A delegated attorney will be in charge of coordinating the conciliation between the parties in dispute within the three months following the filing,” according to the company.

Medellin-based highway, dam and buildings construction giant Constructora Conconcreto announced August 6 that its second quarter (2Q) 2020 net income fell 61% year-on-year, to COP$22 billion (US$5.87 million), from COP$57 billion (US$15 million) in 2Q 2019.

Ordinary income likewise fell 37% year-on-year, to COP$264 billion (US$70.5 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) dropped 43%, to COP$59.7 billion (US$15.9 million).

“Despite the Covid-19 contingency the world is going through, the company maintained positive profits and margins,” according to Conconcreto.

“Compared against 2019, there is a decrease at the level of income and gross profit due to the affectation of the volume of work and the behavior of investments due to the affectations of the Covid-19. This decrease was partially offset by lower expense and lower financial cost.”

Construction Backlog

At end of 2Q 2020, the company’s construction backlog totaled COP$2 trillion (US$534 million), “which corresponds to around 2.6 years of operation,” according to Conconcreto. Of that total, 81.7% corresponds to infrastructure projects and 18.3% corresponds to buildings, including housing projects.

The company’s engineering and design division meanwhile has a backlog totaling COP$14.87 billion (US$3.97 million) “focused on projects such as Rubicon Plaza, Vivienda Contree, Contree Castropol, Transmilenio Soacha and Transmilenio Troncal 68 Section 5 and 8,” according to Conconcreto

Government Dismisses ‘Collusion’ Charges in Bogota Project

On a positive front, Colombia’s Superintendent of Industry and Commerce dismissed charges over alleged collusion in the bidding process for construction of a third lane in the Bogotá-Girardot project.

“The decision confirms the fair, transparent and competitive behavior of Conconcreto and especially its commitment to the development of infrastructure in our country,” according to the company.

On another positive front, the Superintendent of Industry and Commerce granted Conconcreto a patent on a novel construction and connection system from precast beams and columns. “This system allows to improve the yields and productivity in the construction process of buildings, guaranteeing a structural behavior,” according to the company.

Meanwhile, Conconcreto’s participation in EPM’s 2.4-gigawatt “Hidroituango” hydroelectric plant in Antioquia will continue through at least December 31, 2020, under a recently modified contract agreement.

ISA 2Q 2020 Net Income Jumps 25% Year-on-Year

Thursday, 06 August 2020 12:58 Written by

Medellin-based multinational electric-power transmission, highways concessions and telecom infrastructure provider ISA on August 5 reported a 25% year-on-year hike in second quarter (2Q) 2020 net income, to COP$550 billion (US$147 million).

Operating revenues rose 32%, to COP$2.28 trillion US$609 million), while total earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 30%, to COP$1.85 trillion (US$494 million).

First half (1H) 2020 net income rose 17%, to COP$929 billion (US$248 million), while 1H 2020 gross revenues rose 19%, to COP$3.17 trillion (US$846 million), according to the company. Operating revenues for 1H 2020 hit COP$4.8 trillion (US$1.28 billion), up 21% year-on-year.

ISA credited the jump in profits to several factors including favorable increases in electric-power transmission tariffs at its Brazil operations, entry into operation of energy transmission projects in Colombia, Chile and Peru, as well as an “increase in the construction activity of the [highway and power-transmission] concessions.”

For 1H 2020, administration, operation, and maintenance (AOM) costs declined 1.7%, to COP$909 billion (US$243 million), “which shows an efficient management in the control of AOM costs and expenses on which the company is constantly working, and even more due to the current Covid-19 pandemic,” according to ISA.

During 2Q 2020, construction costs rose 80%, to COP$373 billion (US$99.6 million), “due to the progress of works in Chile, Peru, and Brazil,” according to the company.

Operating income for 1H 2020 rose 19.7% year on-year in part because of “higher depreciations and amortizations of new projects that entered into operation” along with “higher provisions for major maintenance in Peru” as well as “higher portfolio provision in Maipo [Chile],” according to the company.

So far this year, ISA’s investments total COP$1.8 trillion (US$480 million), of which 87% is in power transmission, 10% in road concessions 10% and 2.2% in telecom.

The Covid-19 crisis caused temporary suspension of some projects at the beginning of 2Q 2020 – since restarted – while “projects in Brazil continued constructions with some delays in supplies, maintaining at all times the appropriate measures enacted by the authorities and the new protection protocols,” ISA added.

Medellin-based multinational banking giant Bancolombia on August 5 posted a second quarter (2Q) 2020 net loss of COP$73 billion (US$19 million), a huge reversal from a COP$936 billion (US$249 million) net profit in 2Q 2019.

“The current situation associated with Covid-19 has caused uncertainty and business disruption globally, therefore significant impacts are anticipated on the performance of the global economy and macroeconomic variables in the countries in which Bancolombia operates,” according to the company.

“As a result, the banking sector in general, including Bancolombia, is exposed to changes in its business performance and outlook. The bank is exposed to deterioration of the loan portfolio by impacts on customers and by the materialization of losses from operational risk,” the company added.

In the meantime, “Bancolombia has focused its efforts on maintaining business continuity, the safety of its employees, operating the network of channels in an efficient way and structuring payments plan for lines of credit of its customers. These actions have impacted more than 2.2 million clients with loans that amounted more than COP$69 trillion [US$18 billion] in Colombia."

Corporate-wide gross loans grew 12.4% in 2Q 2020 versus 2Q 2019, while Colombian peso-denominated loans grew 9.6%.

“Deposits by customers reached COP$182 trillion [US$48 billion] during the quarter, increasing 24.8% in the last twelve months,” according to Bancolombia.

Net-loans-to-deposits ratio was 102.5% at the end of 2Q 2020, down from 104.0% at the end of 1Q 2020.

“Bancolombia’s funding strategy during the last months has been to maintain the average life and cost of time deposits and promote saving and checking accounts in the consumer segment in order to keep the funding cost at a minimum. The objective is to build and maintain ample liquidity and stable margins,” according to the company.

At end of 2Q 2020, capital adequacy ratio was 12.6%, “above the minimum regulatory [level] in Colombia,” according to the company.

Meanwhile, “the digital footprint and banking penetration in Colombia strengthened. The [latest] quarter closed with 6.6 million digital accounts, 3.4 million ‘Bancolombia a la mano’ users and 3.2 million users in ‘Nequi.’”

Loan provision charges for the quarter were COP$2.4 trillion (US$638 million), up 76% from 1Q 2020 and up 198% year-on-year. Coverage ratio for 90-day past due loans was 208.3%.

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

During 2Q 2020, net fees and income from services totaled COP$683 billion (US$181 million), down 14.2% compared to 1Q 2020, and by 9.5% compared to 2Q 2019. “The performance in fees was due to lower volumes of transactions and the reduction in the cost of some services, both as a result of Covid-19 pandemic,” according to the company.

“Fees from credit and debit cards decreased by 19.5% compared to 1Q 2020 and by 12.9% compared to 2Q 2019. Fees from asset management and trust services decreased by 12.5% compared to 1Q 2020 and by 10% compared to 2Q 2019. Fees from our bancassurance business increased by 6.8% compared to 1Q 2020 and by 19.9% with respect to 2Q 2019,” the company added.


Medellin-based multinational cement/concrete giant Cementos Argos reported August 6 that its second quarter (2Q) 2020 net profits dropped 79% year-on-year, to COP$12 billion (US$3.2 million).

Revenues likewise declined by 9%, to COP$2.1 trillion (US$555 million), while adjusted earnings before interest, taxes, depreciation and amortization fell 6.4%, to COP$414 billion (US$109 million).

For all of first half (1H) 2020, profits dropped 77.8%, to COP$16 billion (US$4.2 million), while revenues are down 4.6%. Adjusted EBITDA for 1H 2020 is essentially unchanged versus 1H 2019, according to the company.

Colombia Results

In Colombia, adjusted EBITDA for 2Q 2020 fell 62%, to COP$43 billion (US$11 million), while revenues fell 44%, to COP$316 billion (US$83.5 million), according to Cementos Argos.

Cement volumes fell 46% while ready-mixed concrete (RMC) volumes were down 56%. Aggregate sales likewise fell 61%.

“At the beginning of the second the quarter, Colombia experienced a complete lockdown across the country, with a gradual reopening starting from mid-April,” the company noted.

“The cement market has experienced a gradual recovery ever since, as evidenced by the monthly increases in cement consumption published by [Colombia’s economic statistics agency] DANE, up 191% month-on-month [MoM] in May and 28% MoM in June -- but still presenting monthly consumptions below last year’s levels,” according to Argos.

“Regarding the market dynamics per sectors, the residential segment has evidenced an improvement during the last two months, but it has not achieved yet its full potential. Sales of new houses during June increased 60% MoM, still implying a decrease of -13% year-on-year.

“On this segment, the government has announced a subsidy for200,000 houses, to be equally split between social housing and non-social housing, which we expect will have a positive impact in the residential segment in the mid-term.

“On the infrastructure front, the government has announced that around 90% of all the construction sites related to this sector have been already reactivated in the country, in line with our expectations of a good performance of the sector during the current year.

“The government has also announced the ‘5G’ [fifth-generation highway] infrastructure projects with an estimated investment of COP$20 trillion [US$5.3 billion] for the first package of concessions to be awarded, which could start its structuring process in early 2021,” according to the company.

U.S. Results

“The U.S. market continued to prove its resilience during the second quarter of 2020, with healthy market dynamics despite the evolution of the pandemic in states such as Texas and Florida,” according to Argos.

“Cement volumes experienced a decrease of 5.8% year-over-year, affected mainly by lower volumes in the Northeast region, due to the strictness of the lockdown measures, as well as by a reduced demand from the wholesale segment.”

Caribbean & Central America (CCA) Results

During 2Q 2020, “most of the countries within the CCA region experienced total or partial quarantines, affecting the volumes of the region,” according to Argos.

“Cement and RMC volumes decreased 23.9% and 90.6% respectively as a consequence of these lockdown measures. Honduras and Dominican Republic experienced a gradual recovery from mid-April on, to the point that the monthly volumes of June 2020 surpassed in 7% and 16% respectively when compared to the same month of 2019.

“Panama, on the other hand, only started its partial reopening from the first weeks of June, when some infrastructure projects were allowed to be reopened. During that month, the country managed to recover volumes in a 65%, when compared to the volume of June 2019,” Argos added.

“Haiti not only remained open during the whole quarter, but also experienced a 5.3% increase in volume, and a 9.7% increase in prices when compared to the same quarter of last year, as a result of the positive market dynamics that the country exhibits.

“This positive evolution within the [CCA] region indicates that some countries may recover faster than initially expected. We remain cautiously optimistic about the second half of the year, considering that countries such as Dominican Republic will face a change of President, and also taking into account the limited public budgets that these countries have to face the later consequences of the pandemic,” Argos concluded.

Page 9 of 66

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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