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Colombia’s national highway institute Invias announced November 25 the partial reopening of the Medellin-Bogota highway at kilometer 73 (San Luis, Antioquia) following a November 13 landslide that blocked all traffic.

According to Invias, more than 84,000 cubic meters of rocks and dirt have been removed so far, but the job isn’t quite finished.

As a result, only one lane of the two-lane highway is now open for alternating traffic between 7 a.m and 7 p.m. daily -- “as long as weather conditions allow and the condition of the hillside [where the landslide began] does not affect the safety for users,” according to Invias.

In total, 70 pieces of heavy equipment including backhoes, dump trucks and bulldozers are working to clear the site and unblock the adjacent “La Leticia” stream crushed by the landslide. One motorist was killed in the landslide incident, but no other fatalities or injuries have since been reported.

The removed dirt and rocks have been transported to the municipality of San Luis for reuse on tertiary rural roads, according to Invias.


Medellin-based multinational utilities giant EPM announced November 15 that its third quarter (3Q) 2019 consolidated net income fell 25% year-on-year, to COP$457 billion (US$134 million), down from COP$607 billion (US$177 million) in 3Q 2018.

The 3Q decline came despite a 9% year-on-year hike in gross revenues and a 13% boost in earnings before interest, taxes, depreciation and amortization (EBITDA), according to the company.

On the other hand, nine-months 2019 consolidated profits (January through September) rose 9%, to COP$181 billion (US$53 million), from COP$166 billion (US$48 million ) in nine-months 2018 -- mainly thanks to greater demand for energy and higher power prices in Central American markets, along with higher energy sales in Colombia’s regulated power market, according to EPM.

Nine-months 2019 EBITDA also rose 15% year-on-year, while gross income rose 11% over the same nine months in 2018, according to the company.

EPM’s international affiliates generated 36% of corporate revenues, at COP$825 billion (US$241 million), up 20% year-on-year.

Its “Ensa” affiliate in Panama generated COP$361 billion (US$105 million) thanks to a boost in client numbers and higher prices. The “EEGSA” affiliate in Guatemala generated COP$272 billion (US$79 million), thanks to greater power sales, while the “Delsur” affiliate in El Salvador brought-in COP$147 billion (US$43 million) mainly due to greater residential and industrial demand along with higher power tariffs.

As for EPM’s Colombia affiliates, the energy division’s income rose 7% year-on-year, while the water, sewage-treatment and trash-collection utilities boosted income 116% year-on-year, mainly thanks to the start-up of the “Aguas Claras” sewage plant north of Medellin.

Hidroituango Outlook

Meanwhile, EPM revealed that as of September 30, 2019, the Hidroituango hydroelectric project had reached 74.4% completion.

“For commissioning, it is estimated that the first power generation unit could enter service from the last quarter of 2021. However, this date of commissioning is very dynamic, due to the changes that occur in the variable techniques and the evolution and efficiency of the measures implemented to meet the contingency,” according to the company.

As for the company’s Mapfre insurance policy covering lost power sales and physical damage at Hidroituango, “the policy establishes an insured limit of US$2.55 billion for coverage of material damage to infrastructure and equipment. It also has coverage to cover the delay-of-entry-into-operation (money no longer received for damages arising from the contingency) for US$628 million, amounts that establish the maximum responsibility of the insurer,” according to EPM.

“The amount that the insurer will recognize and its corresponding payment schedule will be the result of a rigorous analysis of the quantification of damages, the results of which will be linked to the conditions of the policy such as deductibles, limits, additional coverage, among others,” the company added.


Medellin’s “Plaza Mayor” on November 14 unveiled a COP$32 billion (US$9.4 million) expansion plan that over the next 10 years would modernize a host of convention facilities and add a new hotel.

The “2019-2029 Events with a Future” scheme includes 10 proposals both within and outside the convention center, along with “modernization of spaces and extension of complementary services,” according to Plaza Mayor, which is owned by the City of Medellin.

A new tower would be built over the current parking lot at the Yellow Pavilion, incorporating a 200-room hotel, co-working spaces and office spaces.

The tower also would offer “small- and medium-sized salons and other services such as restaurants, spa, beauty salon and commerce,” according to the organization.

Plaza Mayor general manager Juliana Cardona Quirós pointed out that the additions and upgrades would capitalize on Medellin’s growing global event-marketing successes, with the city having hosted more than 371 international events in just the last four years.

As a result, Plaza Mayor would extend its offer of convention services to other areas of the city.

At Plaza Mayor, projects would include expansion and adaptation of annexed areas at the Yellow Pavilion, relocating the garbage-recycling zone and making the Blue Pavilion independent.

The scheme also includes developing “pleasant spaces for rest, work and meetings, to ensure comfort and connectivity for our visitors,” according to the organization.

A new electronic signaling system would help visitors orient themselves around the various spaces, while a new “Innovation Center” aims to boost business tourism.

A new food area would replace the existing area “providing more and better offers for customers and visitors,” according to Plaza Mayor.

The scheme also includes creation of a single event-ticket window (replacing multiple sites) for greater customer convenience, as well as storage lockers and improved connectivity.


Medellin-based multinational Grupo Orbis – producer of “Pintuco” paints, “Otek” water-handling systems and numerous chemical products – on November 14 posted a COP$10 billion (US$2.9 million) net profit, a big reversal from the COP$8 billion (US$2.3 million) net loss in 3Q 2018.

Gross revenues rose 6.3% year-on-year, to COP$1.08 trillion (US$315 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 125%, to COP$87.7 billion (US$25.6 million).

These positive results are mainly due to a 9% jump in paint sales and a 71% jump in paints-division EBITDA -- spurred by architectural-sector demand along with general repainting demand in Colombia, according to the company.

Meanwhile, the Orbis chemicals division is benefitting from efficiencies resulting from the recent transfer of production to its Cartagena, Colombia facilities.

The company also credited better financial results from its affiliates in Brazil, Argentina and Central America.

Meanwhile, corporate financial obligations -- net of cash and short-term investments -- declined year-on-year, to 2.9-times, versus 4.2-times, the company added.


Sura 3Q 2019 Net Income Jumps 35% Year-on-Year

Friday, 15 November 2019 10:27 Written by

Medellin-based multinational insurance and investment specialist Grupo Sura on November 14 posted a 35% year-on-year jump in third quarter (3Q) 2019 net income, to COP$1.5 trillion (US$438 million).

The biggest contributor to net income (COP$682 billion/US$199 million) in the latest quarter came from the Sura Asset Management (AM) division, which manages a growing basket of profitable pension funds in Central and South America.

Second-biggest net-income contributor was the Suramericana insurance division, at COP$300 billion (US$87.7 million), according to the company.

Corporate-wide operating revenues rose 14.8% year-on-year, to COP$16.2 trillion (US$4.7 billion), while operating expenses hit COP$13.8 trillion (US$4.03 billion), up 13%.

“This produced operating earnings amounting to COP$2.4 trillion (US$701 million), for a growth of 26.3%, thanks to our ongoing efforts to gain greater efficiencies, optimize the profitability of our operations and the positive returns on the investment portfolios,” according to Sura.

“Likewise, fee and commission income continued to show a resilient level of growth (+9.9% in COP or +2.4% in local currencies) due to lower fee and commission rates in certain operations,” the company added.

Meanwhile, the Suramericana insurance division’s written premiums hit COP$9.5 trillion (US$2.78 billion), up 15.1%, while revenues from services rendered came to COP$2.8 trillion (US$818 million), up 23.7% year-on-year.

While Suramericana’s 3Q 2019 net income dipped 24% year-on-year, this fall “does not reflect the positive of its main operations due to the non-comparable impacts that affected the company’s performance,” according to Sura.

“These mainly included the macroeconomic and political situation in Argentina, the current situation of [lagging cost recovery] in the public health sector in Colombia and the VAT [value-added tax] expense incurred with life insurance commissions, also in Colombia.

“The current growth in the number of users of our healthcare services, which also benefits the other healthcare provider companies such as ‘IPS’ and ‘Dinamica,’ accounted for the growth posted in both healthcare revenues and the cost of services rendered.

“The retained claims ratio increased from 54.1% to 54.8%, which was mainly due to the increase in car and mandatory road insurance [SOAT] in the non-life [insurance] segment,” the company added..

As for Sura’s life-insurance segment (including Seguros de Vida Colombia, Asesuisa Vida in El Salvador, Seguros de Vida SURA Chile and Seguros Sura Vida in México), “the merger between the life insurance and workers’ compensation subsidiaries in Colombia took place during the first quarter of this year, with the former now posting the results of their combined operations,” the company noted.

“The life insurance segment shows a growth of 39.3% in written premiums thanks in part to the acquisition of Seguros de Vida SURA S.A. in Mexico in 4Q 2018, which contributed a total of COP$22 billion (US$6.4 million) to the consolidated production figure for this past quarter.

“If we were to exclude the contribution from this recent acquisition, the group life solution would have recorded a growth of 11.2% mainly due to the positive dynamics seen with the affinity channel in Colombia and El Salvador.

“The workers’ compensation solution also showed a growth of 16.2%, with this uptrend in revenues generated by a greater number of affiliates.

“The pension insurance solution also provided a significant amount of growth thanks to new business obtained in El Salvador for the 2019 policy.

“Furthermore, this past quarter marked one year since the capital optimization strategy was first deployed with the healthcare insurance solution in Colombia. This consisted of matching premiums as posted on the income statement with the actual collections of such, for which the corresponding adjustments were made to both reserves and capital requirements to levels consistent with the company’s collection patterns, which in turn had a positive effect on the working capital invested in this solution.

“This new initiative, upon completing its first year of having been introduced, generated a 167.5% increase in written premiums, which in turn implied higher reserves to be set up which leveled off the growth in earned premiums to 27.3%,” according to Sura.


Medellin-based multinational supermarket giant Grupo Exito on November 14 posted a COP$11 billion (US$3.2 million) net income for third quarter (3Q) 2019 – not comparable to 3Q 2018 since its former Brazilian operations are now officially listed as a “discontinued operation.”

Following a September 12 decision by most Exito stockholders and its board, Grupo Exito sold its stock holdings in the “Grupo Pão de Açúcar” Brazil operation to its France-based Grupo Casino holding company.

Exito’s corporate-wide gross income in 3Q 2019 rose 7.5% year-on-year, to COP$3.6 trillion (US$1.05 billion), while recurring earnings before interest, taxes, depreciation and amortization (EBITDA) rose 11% year-on-year, to COP$275 billion (US$80 million), according to the company.

Colombia operations saw their best sales in three years, posting 5.1% year-on-year growth, while recurring EBITDA margin grew 12.8% in 3Q 2019 and 4% in the first nine months 2019.
As a result, Colombia generated a net profit of COP$11 billion (US$3.2 million) for Grupo Exito.

“The results in Colombia show the positive impact of the implementation of innovative strategies, both in the ‘Exito Wow’ and ‘Carulla Fresh Market’ [store formats] and the maturation of the ‘Surtimayorista’ format. In addition to e-commerce and home sales, these accounted for 76% of total sales growth in the quarter,” according to the company.

In its Uruguay division, Grupo Exito bragged that this operation “continues to be the most profitable of the organization with an EBITDA margin of 8.4% and growth of 17%.”

In Uruguay, sales grew 4.1% year-on-year, “mainly due to the fresh-market format that already represents 34.5% of total sales,” according to Exito.

As for Argentina, “in the middle of a very challenging macroeconomic context, the company’s figures show a good commercial performance with sales growth of 36.7% in local currency,” according to Exito.

The company’s real estate business in Argentina “continued to leverage the results with more than 170,000 square meters of leasable commercial area and 93.4% occupancy.”

Grupo Éxito ended 3Q 2019 with 651 food outlets: 535 in Colombia, 91 in Uruguay and 25 in Argentina, with a consolidated sales area of more than 1 million square meters.

“The result of Grupo Éxito is very positive in sales growth and consolidation of its operating profit,” said Carlos Mario Giraldo Moreno, President of Grupo Éxito. “In the midst of very competitive markets, this profitable growth responds fundamentally to innovation in formats, digital transformation, complementary businesses such as real estate, credit, insurance and travel.

“In Colombia, the 'Éxito Wow, 'Carulla FreshMarket' value formats, and the cash-and-carry format brand, 'Surtimayorista,' continue to grow in double digits, and the electronic and direct commerce channels already represent 4.4% of the total sales of the company in this country, ” added Giraldo.


Colombia’s Controller General (Contraloria General de la Republica, CGR) Carlos Felipe Córdoba Larrarte announced November 14 that his agency has opened an investigation into two former Medellin Mayors, two former Antioquia Governors and three EPM representatives potentially responsible for construction errors and financial losses resulting from the collapse of a diversion tunnel last year at the US$5 billion “Hidroituango” hydroelectric project.

The decision to probe the former politicians, EPM officials and “Hidroituango” board members – including 29 others involved in the construction – comes on the heels of a CGR announcement in September determining that EPM could lose as much as US$1.17 billion in certain revenues and costs resulting from that tunnel collapse (see Medellin Herald September 20, 2019).

Immediately following the November 14 CGR announcement, EPM general manager Jorge Londoño de la Cuesta stated that EPM hasn’t yet been notified of the probe, but will cooperate with the investigation.

While the CGR didn’t name which politicians or officials are under investigation, the press release implicitly excludes current Medellin Mayor Federico Gutierrez and current Antioquia Governor Luis Perez.

Incoming Governor Anibal Gaviria was a Medellin Mayor during the time-frame cited in the CGR probe, as was former Medellin Mayor Alfonso Salazar.

Former Governors Luis Alfredo Ramos and Sergio Fajardo (another former Medellin Mayor) also were serving as Antioquia Governors during the time cited in the probe, as noted in a report by Colombian daily newspaper El Tiempo.

Former EPM general manager Juan Esteban Calle and current general manager Londoño de la Cuesta also would face questioning, along with former EPM and Hidroituango project board members.

The CGR announcement states that Hidroituango losses would include COP$2.97 trillion (US$860 million) in “loss or destruction of value of the project” as well as another COP$1.1 trillion (US$318 million) “due to resources no longer received by the government as a result of the non-operation of the hydroelectric plant,” which originally was supposed to have started-up at end-2018 -- initially at one-quarter (600-megawatts) of its eventual 2.4-gigawatts capacity.

EPM now estimates that first power output (at 600-MW) won’t happen until end-2021, three years after the original, planned start-up – hence costing hundreds of millions of dollars in lost power sales.

The CGR report alleges that missteps in Hidroituango construction, engineering and spending decisions were “not justified, because they obeyed the need to address situations that arose as a result of serious problems in the planning and execution of the project, attributable to improvisation and the lack of follow-up and control of the related parties as presumed responsible.

“These greater unjustified investments destroyed the value of the project as it was conceived from its baseline, thus generating damage to the state’s assets [including its part-owners: the city of Medellin and the Department of Antioquia] in the form of impairment or loss.

“In turn, as a result of the non-operation of the hydroelectric plant [that is, at the initial December 2018 start-up deadline], due to the unjustified increases in the work schedule, which were due to planning problems and construction errors, damage to the state’s assets was generated in the form of impairment,” according to the CGR report.

“After completing the respective notification process of this opening order, the CGR’s Office of the Intersectorial Comptroller Delegate No. 9 of the Unit of Special Investigations against Corruption will proceed to cite the alleged perpetrators,” according to CGR.

“After this process, the Office of the Comptroller General of the Republic will proceed to make the corresponding decision” on whether to impute charges or dismiss the case.


Mineros SA 3Q 2019 Net Income Triples Year-on-Year

Thursday, 14 November 2019 11:12 Written by

Medellin-based multinational gold mining giant Mineros SA on November 13 reported a 227% year-on-year boost in third quarter (3Q) 2019 net income, hitting COP$64.7 billion (US$18.7 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) likewise jumped 122%, to COP$127 billion (US$37 million), while EBITDA margin also rose to 35.8%, from 31% in 3Q 2018.

Gold production also jumped by 44% year-on-year – mainly because of additional output via the December 2018 acquisition of Argentinian assets (Gualcamayo).

In its financial report, Mineros noted that at the end of 3Q 2019, “the [global] price of gold had a positive behavior” at US$1,485 per ounce, up 5.41% over 2Q 2019 and up 15.8% over end-2018.

Meanwhile, Colombian peso depreciation against the U.S. dollar hit nearly COP$3,500/US$1 during 3Q 2019, Mineros noted. However, “for the remainder of the year, we expect interest rate reductions by the U.S. Federal Reserve and [investor] appetite for risk in emerging countries will strengthen the Colombian peso.”

Corporate-wide production in 3Q 2019 hit 73,078 ounces of gold-equivalent, of which Colombia accounted for 15,213 ounces, Nicaragua at 33,843 ounces and Argentina at 24,021 ounces.

Colombian output will rise again as long-pending environmental permits finally were approved at end-August, with production levels beginning to show a rebound in September, the company noted.

For the rest of 2019, Mineros projects a 20,000-ounce boost in production, likely delivering a full-year range of 300,000 to 320,000 ounces of gold-equivalent.

As explained in a separate November 12 presentation here at the annual Colombia Gold Symposium by Eduardo Flores, Mineros SA business development vice-president, Mineros continues to enjoy its best EBITDA results in relatively low-cost, low-environmental-impact alluvial mining in Colombia.

Over the next five years, Mineros aims to expand production in its four operating countries (Chile debuting last), boosting prospects for an envisioned US$1-billion market cap by 2025. Such a jump from “junior” to “intermediate” size will help attract more capital and hence better liquidity, Flores added.

Five projects in the pipeline eventually would enable another 10 million ounces of gold-equivalent production, he said. Resources and reserves likewise would hit around 18 million ounces by 2025, he estimated.


Medellin-based cement, electric power and highway/airport concessionaire Grupo Argos on November 13 reported a 26% year-on-year rise in third quarter (3Q) 2019 consolidated net income, to COP$516 billion (US$150 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) likewise rose 39% year-on-year, to COP$1.4 trillion (US$408 million), according to the company.

Gross revenues likewise jumped 44% year-on-year, to COP$5.2 trillion (US$1.5 billion), according to the company.

Consolidated results “show double-digit growth in all [business] lines,” according to Argos, which boasted that its Odinsa concessionaire subsidiary bought 53% of the new “Tunel de Oriente” road tunnel between Medellin and the international airport at Rionegro.

“In the energy business, thermal power assets in Zona Franca Celsia were disinvested, progress was made in the consolidation of the [electric power] distribution operation in Tolima and the largest investment platform in solar projects in Colombia was established with the alliance with Cubico Sustainable Investments,” Argos noted.

Its “Cementos Argos” cement/concrete subsidiary boosted deliveries by 36% year-on-year for the “fourth generation” (4G) highway projects in Colombia. That division also boosted sales volumes 10% in the USA, helping Cementos Argos realize a 13% income rise year-on-year, to COP$2.5 trillion (US$729 million), according to the company.

Corporate-wide consolidated cement volumes increased by 0.9% year-on-year, although concrete volumes dipped 1.1%.

“Cement volumes reflect a positive dynamic in the United States, as well as a reduction in Colombia and in the regional Caribbean and Central America, which continues to be impacted by the Panama market and the complex political situation in Honduras,” the company added.

As for its real-estate division, “cash flow for the [latest] quarter amounted to COP$32 billion [US$9.3 million], growing more than 2.8 times, reflecting the business concluded in previous periods,” according to Argos.

Real estate sales in 3Q 2019 totaled COP$24 billion (US$7 million), up sharply from COP$4 billion (US$1.1 million) in 3Q 2018.

Gross revenue rose 59% year-on-year, to COP$54 billion (US$15.7 million), which included “valuations, dividends and leases,” according to Argos. In addition, “we signed promises of sale for around COP$50 billion [US$14.6 million] that we hope to write at the end of this year or early 2020,” according to Argos.

In the real estate rental business, the “Pactia” real estate fund has been delivering effective yields of 6.84% since its incorporation date on January 20, 2017, the company added.


Medellin-based textiles and plastic-bottles recycling specialist Enka Colombia reported November 8 that its third quarter (3Q) 2019 net income hit COP$6.9 billion (US$2 million), up sharply from COP$1.8 billion (US$539,000) in 3Q 2018.

Earnings before interest, taxes, depreciation and amortization (EBITDA) likewise rose, to COP$26 billion (US$7.8 million), versus COP$19.8 billion (US$5.9 million ) in 3Q 2018, “favored by the devaluation of the [Colombian] peso” versus the U.S. dollar, according to Enka.

“Sales to the U.S. market [measured in Colombian pesos] increased participation to 13% of total sales, replacing less-profitable sales to other destinations,” according to Enka.

Meanwhile, collection and recycling of PET (polyethylene terephthalate) plastic bottles “reached historical highs, covering all the demands of our current recycling plants, which makes a new ‘EKO-PET’ plant viable, with a [required] investment of US$28 million,” according to the company.

The new plant -- which will be located in the current Enka facilities just north of Medellin -- enables “significant synergies in land, buildings, machinery already approved for the project and industrial services, which allow the investment to be significantly reduced,” according to the company.

“The new plant will have a capacity of 24,000 tons per year and is expected to enter into operation in 2022. With this investment Enka becomes one of the largest PET ‘bottle-to-bottle’ plants worldwide, reaching a total capacity of 42,000 tons of ‘EKO-PET’ per year.

“In addition, this new investment will allow Enka to double its collection levels, going to 63,500 tonnes per year of post-consumer bottles, which will significantly improve recycling rates in Colombia, offering great benefits for the environment and the recycling sector,” the company added.

In the latest quarter, total corporate sales rose 1% year-on-year, to COP$306 billion (US$91.6 million), “mainly due to the higher [COP to U.S. dollar] exchange rate for the period, which offset the lower sales volume. Exports totaled US$43 million, representing a 46% share of total sales, similar to the previous year,” according to Enka.

Meanwhile, net liabilities declined by COP$8 billion (US$2.4 million), to COP$202 billion (US$60 million), “mainly due to the decrease in the financing of letters of credit, which compensates the increase in debt for investment projects,” according to Enka.

“National revenues grew by 3%, driven by the increase in the TRM [tasa representativa del mercado, the number of pesos to the U.S. dollar as calculated by Colombia’s Banco de la Republica], which offset the 2% lower sales volume, compared to the situation of higher sales in 2018 during the implementation of the minimum import thresholds” on foreign textile imports.

Export revenues decreased by 2%, “mainly due to lower external sales of ‘EKO-Fibers,’” according to Enka.

However, “EKO-Fibers” sales to the North American market netted a 42% income boost and accounted for 13% of total “EKO-Fibers” sales, “compensating the lower demand in Brazil and replacing less profitable sales to other destinations,” according to Enka.

As for “EKO-PET” sales, which totaled 12,600 tonnes, this volume remained stable and enables Enka to produce this product at maximum capacity.

As for “EKO- Polyolefins” sales, volume rose 180%, to 542 tonnes, the company added.

In the conventional textile businesses, cumulative sales totaled COP$212 billion (US$63 million), accounting for 70% share of total revenues. Exports accounted for US$39.7 million of total textile sales.

As for industrial threads, sales dipped 7% year-on-year, to 9,352 tonnes, “mainly due to lower demand for tire tires in Brazil and Mexico. The increase in sales of special technical threads to the North American market has improved the profitability of this line, replacing more demanding destinations.,” according to Enka

As for textile filaments, sales declined 5%, to 8,031 tonnes, “mainly due to the situation of higher sales in 2018 due to the implementation of minimum import thresholds and lower sales to Argentina,” according to the company.


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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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