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Medellin-based electric-power generation giant Isagen announced April 14 that its full-year 2022 net income soared 135% year-on-year, hitting COP$1.23 trillion (US$278 million), up from COP$523 billion (US$118 million) in 2021.

Gross revenues rose 38% year-on-year, to COP$4.81 trillion (US$1.09 billion), from COP$3.48 trillion (US$787 million) in 2021.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 49% year-on-year, to COP$3.39 trillion (US$767 million), from COP$2.27 trillion (US$514 million) in 2021 -- thanks to more power output, better prices in wholesale/industrial sales contracts and favorable capacity-charge factors.

Isagen – whose majority shareholder is Spain-based BRE Colombia Hydro Investments -- operates 19 power-generation plants -- 15 of which are hydroelectric -- in Antioquia, Caldas, Santander, La Guajira, Meta and Tolima departments, totaling 3 gigawatts (GW) capacity, or 24% of Colombia’s national-grid total.

Continuing its strategy of having 100% renewable power output, the company signed a deal to sell its “Termocentro” fossil-fuel-powered generation plant, leaving Isagen with mainly hydroelectric power and (secondarily) solar and wind-power plants.

The company has already started construction on another solar-powered plant, a 100-MW facility at Sabanalarga in Atlántico department. It also obtained environmental license permits for a 300-MW wind-power project and a 148-MW hydropower project.

Thanks to its focus on renewable power, Isagen recent won a “green power” credit line with SMBC worth US$241 million, according to the company.

The company also boasted that it has secured COP$2.1 trillion (US$475 million) in financial instruments protecting it against currency fluctuations and interest-rate volatility.

During 2022, the company inked 65 contracts with various wholesale power marketers and industrial end-users, of which 15 contracts have durations of more-than five years, representing 65% of its total power sales.

The company also boasts of numerous environmental-protection deals in the areas around its power-generation plants, including alliances with Colombia’s national-parks agency and the World Wildlife Fund (WWF).

Medellin-based Valores Industriales – now dealing mainly in real-estate, forestry and industrial/commercial operations in Colombia and Costa Rica – announced March 31 that full-year 2022 profits fell 57% year-on-year, to COP$55 billion (US$12 million), down from COP$128.7 billion (US$28 million) in 2021.

However, gross revenues quadrupled year-on-year, to COP$1.02 trillion (US$224 million), while operating earnings also improved by 81%, hitting COP$105.7 billion (US$23 million), according to the company.

The biggest single change last year occurred in June when two branches of Valores Industriales decided to swap their partial shareholdings in Medellin-based salt/chemicals producer Brinsa SA for a 51.5% share of Sodium Group Costa Rica -- a conglomerate with holdings in industry, livestock, agriculture, tourism and real-estate services, based in Costa Rica.

Valores Industriales – a 1997 spin-off from Medellin-based paper-products giant Productos Familia (now part of global forestry-products giant Essity) – has traditionally focused upon investments in forestry and real estate, but has since branched into investments in financial services, salt-based chemicals and agriculture.

Besides its new holdings in Sodium Group Costa Rica, other major holdings now include:

-- Reforestadora y Manufacturera Los Retiros S.A.S., mainly focused upon real estate, forestry, reforestation, agricultural production and livestock production, based in the Medellin suburb of El Retiro, Antioquia;

-- Valores Inmobiliarios Cinco S.A.S., focused upon real estate development, tapping third-party construction partners, also based in El Retiro, Antioquia.

The company has stated that it investigates potential investment deals in many other sectors including automotive chemicals, processed foods, brick production, dermatological products, commercial buildings, construction, potential forestry sites, small-scale hydroelectric projects and solar-power projects, according to Valores Industriales.

Medellin-based industrial/consumer plastics-ware producer Industrias Estra announced March 29 a net profit of COP$1.58 billion (US$345,000) for full-year 2022, reversing a net loss of COP$1.96 billion (US$516,000) for full-year 2021.

Earnings before interest, taxes, depreciation and amortization (EBITDA) likewise dramatically improved, to COP$15 billion (US$3.3 million), from COP$7.98 billion (US$1.7 million) in 2021.

Gross revenues also improved, to COP$96.8 billion (US$21 million), from COP$86 billion (US$18.8 million) in 2021.

“In 2022, the results achieved by the company reflect the economic dynamism of the Colombian economy and, in particular, the recovery of household consumption, which allowed the company to achieve 12% growth in revenue and 31% in operating profit compared to 2021,” according to Estra.

The company also cited “good performance of revenues generated by all the company’s business channels, and the stability achieved in the costs of raw materials, which was the main cause of the deterioration of the results of 2021.”

Gross margin also rose in 2022, hitting 32.9%, versus 28.1% in 2021, according to Estra.

“The results achieved made it possible to use internal generation of funds as the main source of liquidity for the company and meet the operating, investment and financing needs with our own resources during the year,” according to the company.

“The good operational performance of 2022 strengthened the company's operating income, liquidity, profitability and reduced indebtedness. It also allowed progress in the supplier payment policy, as well as investment in modernization of industrial equipment, injection molds and new products and in the ability to honor the commitments associated with financial liabilities.

“Finally, the result achieved in 2022 allows progress in compliance with the company's strategic plan and continue with its policy of opening new markets, payment to suppliers and technological modernization in molds and industrial equipment,” the company added.

Medellin-based pension fund, insurance and disability-benefits manager Proteccion announced April 3 a 5.5% year-on-year boost in net income for 2022, hitting COP$291.8 billion (US$63.4 million).

Gross revenues also rose 1.5% year-on-year, to COP$1 trillion (US$217 million), according to the company.

Aiding those gains was the 6.27% rise in the number of contributing affiliates (now almost 8 million) to its various pension funds, with Proteccion now administering funds totaling some COP$150 trillion (US$32.6 billion), according to the company.

“One of the main variables that favored this result was the 2.6% decrease in the national unemployment rate in 2022, which as of December 31, 2022, stood at 10.3%. This increased the number of contributors, which, in turn, represents 57% of the pension-fund administrator income,” the company explained.

Net equity dipped 7.9% year-on-year, to slightly more than COP$2 trillion (US$435 million) --mainly because of a COP$300 billion (US$65 million) capitalization move for the creation of its new “Asulado Seguros de Vida S.A.” spin-off, which offers annuities, pension insurance and disability coverage.

Meanwhile, total liabilities plummeted 64% year-on-year, to COP$494 billion (US$107 million). That benefit came as “the result of the reversal of provisions for insufficient premiums” initially mandated by government regulations in 2018, but since terminated.

Uncertainly lies ahead for Proteccion -- and other Colombian pension-fund administrators -- as recently elected President Gustavo Petro has proposed radical changes that could suffocate existing private funds by diverting nearly all contributions to the state-run Colpensiones pension fund.

However, that proposal has already drawn harsh criticism from a wide variety of political parties in the Colombian Congress -- so the Petro proposal may be drastically altered in future congressional debates.

Medellin-based cell-phone/internet/cable-TV/telecom giant UNE-EPM (commercially known as “Tigo”) on March 31 posted a COP$474 billion (US$103 million) net loss for full-year 2022 -- a small improvement over the COP$572 billion (US$124 million) net loss in 2021.

UNE-EPM also posted net losses in 2020 and 2018, while its 2019 net profit came-in at just COP$519 million (US$113,000).

Full-year 2022 gross revenues increased 6% year-on-year, to COP$5.4 trillion (US$1.17 billion), versus COP$5.1 trillion (US$1.1 billion) in 2021, according to the company.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 5.5% year-on-year, according to Tigo, which is slightly more than half-owned by EPM (Medellin’s municipal utility) and 49% owned by Spain-based telecom multinational Millicom.

“This growth [in revenues and EBITDA] represented and absorbed the great challenges of impacts of inflation and devaluation of the exchange rate on costs and expenses,” according to the company.

The net loss in 2022 is explained not only by monetary devaluation, inflation, depreciation, and higher costs of its bond debt, but also by “amortization of financial leases” as well as “higher amortization and interest expense associated with the acquisition of 700-MHz spectrum from our subsidiary, Colombia Móvil,” according to Tigo.

“Our consolidated financial debt structure -- excluding liabilities for financial leases -- closed at COP$2.91 trillion [US$632 million], which decreased compared to 2021 by around COP$284 billion [US$61.7 million],” according to Tigo.

“This reduction is mainly due to the net effect of the prepayment of US$100 million in January 2022 on the syndicated loan of our subsidiary Colombia Móvil,” the company added.

At year-end 2022, UNE-EPM assets stood at COP$9.54 trillion (US$2.07 billion) with and a net worth calculated at COP$558 billion (US$121 million), according to the company.

“Our direct costs of providing services amounted to COP$722 billion [US$157 million], representing 26% of income,” according to Tigo.

“This item increased in relation to the year 2021 mainly due to the levels of commercial investment required to increase our market share in digital services for business and government customers, plus the impacts of both the devaluation of the peso in relation to the U.S. dollar and inflation on those costs,” the company added.

Public transit agency Metro de Medellin – 50% owned by the Antioquia departmental government and the other 50% owned by a city of Medellin public entity – announced March 31 that its full-year 2022 net income dropped 99% year-on-year, to COP$3.2 billion (US$688,000), from COP$328 billion (US$70.5 million) in 2021.

Part of the net-income decline in 2022 is explained by the elimination of a previous COP$95 billion (US$20 million) subsidy from the national government to help cover a huge decline in passengers in 2021 caused by the Covid-19 pandemic.

Other factors include a 46% hike in operational costs during 2022 versus 2021, a 163% increase in bad debts and lawsuit costs, a 73% decline in government grants, a 43% decline in revenues from consulting and other services, and a 26% decline in patrimony, according to the filing.

On the other hand, Metro saw a 37% rise in passenger trips during 2022, hitting 300 million for the year, versus 219.8 million total passengers in 2021.

Daily average passenger trips in 2022 likewise increased by 37%, or 255,626, passengers, to a total of 952,532 average daily passengers in 2022, up from 696,906 average daily passengers in 2021.

“The increase in traffic generated a 45% recovery in fare revenue, corresponding to COP$176 billion [US$37.8 million],” according to Metro.

“With the entry into operation of the Picacho aerial tram since June 10, 2021, a total of 5.7 million trips were added from January to December 2022,” the company explained.

Meanwhile, Metro presented a debt balance that at year-end 2022 totaled COP$6.4 trillion (US$1.37billion) in principal-plus-interest.

“Of this value, 96.18% corresponds to the loan payable to the national government as originated in the construction process of the first and second lines of the Medellin Metro in the 1990s and whose restructuring materialized in a repayment agreement entered-into between the nation, the Medellin Metro, the Department of Antioquia and the Science, Technology and Innovation Division [for the city Medellín] in 2004,” the company added.

Much of the debt repayment is covered by a surtax on gasoline in the Medellin metro area, along with income gained from departmental tobacco sales.

Medellin-based highway construction giant Construcciones El Condor announced March 31 a full-year 2022 net loss of COP$69.7 billion (US$14.9 million), a sharp reversal from the COP$8.8 billion (US$2.2 million) net profit for full-year 2021.

El Condor blamed the profit decline on “the unrealized net exchange difference” between Colombian pesos and U.S. dollars, along with “accounting effects that do not have an impact on the company's cash. If this effect is discounted, the net loss is COP$$14 billion [US$3 million) and the net margin is a negative1.62%,” according to the company.

“This effect will continue for several periods while the highway concessions begin to generate accounting profit, a behavior that obeys the normal cycle of concessions due to its project-finance nature,” the company added..

Despite the net loss, gross income from ordinary activities in 2022 rose 55% year-on-year, to COP$876.7 billion (US$188 million), according to the company. Gross margin hit 10%, better than in 2021, “since new projects gain revenue share over fourth-generation highway EPCs [engineering, procurement and construction contracts],” according to El Condor

“The increase reflects the upward curve in the execution of the following works: EPC with the Concesiones Autopista Rio Magdalena, Ruta al Mar and Pacífico Tres, public works for the El Toyo tunnel and Putumayo project with Invias, and the standardization contract with the Ruta al Sur Concession,” according to El Condor.

Meanwhile, operating costs in 2022 rose 50% year-on-year, hitting COP$790 billion (US$170 million), increasing 50% compared to 2021. Operating profit came-in at COP$57 billion (US$12 million), with an operating margin of 6.56%.

Earnings before interest, taxes, depreciation and amortization (EBITDA) came-in at COP$128.7 billion (US$27.6 million), “equivalent to an EBITDA margin of 14.68%,” up from 12.5% in 2021.

“Interest expense increased 72% compared to 2021. Of this effect, 54.3% is due to the increase in interest rates and 18.13% is explained by the increase in the company's indebtedness,” according to El Condor.

At year-end 2022, total assets hit COP$2.45 trillion (US$526 million), “of which our investment portfolio at book value is COP$1 trillion [US$214.7 million]. The ratio of current and non-current assets is 61% and 39% respectively,” the company added.

“Liabilities closed at COP$1.47 trillion [US$316 million], while current liabilities are 86% and non-current 14%. Current liabilities increased due to the maturity of the structured loan in less than one year. This does not have a negative effect on the company's liquidity, since the Pacífico 3 Concession was classified as an asset held for sale and is a source of payment for the structured credit,” according to El Condor.

Medellin-based multinational agricultural packaging, construction, crop-protection and natural fique-fiber producer Grupo Excala announced this month that its full-year 2022 net income dipped 30% year-on-year, to COP$22.3 billion (US$4.8 million), from COP$31.8 billion (US$6.8 million) in 2021.

Sales nevertheless rose 6% year-on-year, to COP$649 billion (US$139 million), from COP$613 million (US$131.7 million) in 2021, while earnings before interest, taxes, depreciation and amortization (EBITDA) dipped 11% year-on-year, to COP$61.4 billion (US$13 million), from COP$68.4 billion (US$14.7 million) in 2021.

Grupo Excala -- which includes its foundational “Compaָñia de Empaques” fiber-bag products -- produces agricultural packaging and agricultural-aid inputs in Colombia, Ecuador and Mexico, besides exporting its products to 20 countries.

“In 2022 we continued with the consolidation of our operations at Mexico Excala Packaging,” the company noted in its year-end 2022 management report.

“In the first 12 months of that operation, we expanded installed capacity to 2 million bags per month, which led us to start expansion phase number two.

“In the export businesses, we consolidated Mexico and the USA as our main export destinations. We doubled sales in the Venezuelan market compared to 2021 and we supported the start of the agricultural productivity business unit in Ecuador through Texco.

“We also strengthened our presence in Central America and we continue advancing in the penetration of the retail market in the United States,” according to Excala.

“In construction and infrastructure divisions, we improved our service indicators, expanded our customer base, built new alliances with key players in the market, and strengthened our product portfolio in the soil-stabilization segment, which grew 49% compared to the previous year.

“In the packaging business, we had a growth of 11% versus 2021. We incorporated new products into our portfolio, which allowed us to achieve 6% of our total income from new products.

“All these strategies allowed us to obtain positive results -- despite the difficulties that arose from low demand for crop [inputs] due to the winter weather and, in the fertilizer sector, due to high costs as a result of the war between Russia and Ukraine.

“In our bio-solutions segment, we focused on three main work fronts: the use of residual biomass from processing fique, the conventional use of fique fiber, and the use of fique fiber where it is used as a source of cellulose.

“We have made progress with fique byproducts as raw material for the production of animal feed, for combustion briquettes, for fertilizer production, for biogas, among others. Likewise, we continue to expand the search for new uses of fique in international markets that replace other fibers of natural origin that are currently market leaders,” the company added.

Medellin-based chemicals, personal-products and industrial-piping giant Grupo Imsa – a spinoff from Medellin-based Grupo Orbis, the latter now part of global chemicals giant AkzoNobel – announced March 31 that its full-year 2022 profits jumped 176% year-on-year, to COP$39.9 billion (US$8.6 million).

That compares to COP$1.7 billion (US$366,000) net profit in 2021, when Imsa operated as an entity separate from Grupo Orbis for about three months.

Comparable-period sales jumped 41% year-on-year, to COP$817 billion (US$176 million), according to the company.

It total, 34% of 2022 sales came from Brazil, 25% from Colombia, 23% from Mexico and 18% from Argentina, indicating “adequate territorial diversification in Latin America,” according to Imsa.

Consolidated gross margin in 2022 rose to 27%, from 21% in 2021, while gross profit rose 80%, to COP$221 billion (US$47 million), according to the company.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 51% year-on-year, by COP$90 billion (US$19 million), with an EBITDA margin at 11.1% of sales, up from a previous goal of 10%, according to the company.

Despite rising costs for freight and feedstocks during 2022, “the economic environment in the region contributed to obtaining significant growth in the business units,” according to Imsa.

“The volatility of the U.S. dollar impacted the prices of raw materials in pesos, demanding greater controls over the costs of the companies, but in turn granted opportunities for exports that could be capitalized.

“Faced with this situation, alternative procurement strategies for raw materials, renegotiation with suppliers, search for substitute products, price increases and efficient capacity management were developed for production plants and optimization of portfolios,” the company added.

The improved EBITDA results “allowed leveraging business growth, additional funding in terms of working capital, and making investments of approximately COP$11 billion [US$2.3 million], mainly in the purchase of assets for the improvement of plants and safety in all businesses,” according to Imsa.

As for 2023, Imsa aims to invest about COP$25 billion (US$5.4 million) in assets, including “updating of a production line of pipeline products and purchase of a new machine for the production of poles in O-tek Argentina,” according to the company.

Meanwhile, the O-tek Colombia subsidiary plans to “update the layout and some adaptations in the Cartagena plant, in order to streamline processes with a different configuration and process flow,” according to the company.

As for financial debt, Imsa reported that total liabilities represented 31% of total assets, compared to 30% at the end of 2022. Meanwhile, Imsa’s current ratio of debt to assets stood at 2.2 times, up from 2.1 times in 2021

“The main variations in the balance sheet at the consolidated level correspond to the increase in cash and temporary investments, attributable to the better generation of operating cash from the businesses and to advances received, mainly for the execution of projects in manufacturing at O-tek,” according to the company.

“Additionally, there is a 24% increase in equity attributable to shareholders due to the increase in profits for the year and the revaluation of investments abroad,” the company added.

Imsa now operates in six Latin American countries including Colombia, Panama, Argentina, Brasil, Mexico and Chile.

Subsidiaries include MCM Colombia (personal-care products and industrial cleaning products); Andermex and Andercol México (basic chemicals); Andercol International (Colombia, basic chemicals); Anderpol Brasil (finance and investments); Novaforma Fiberglas Brasil (distributor of basic chemicals); Novapol Plásticos Brasil; Inversiones ADS Panama (finance and investments); O-Tek Internacional (industrial plastic tubing) and five more O-Tek subsidiaries in Brasil, Mexico, Argentina, Chile and Colombia.

Medellin-based multinational electric power, utilities and telecom-internet giant EPM announced March 27 that its full-year 2022 net income declined 10% year-on-year, to COP$3 trillion (US$645 million).

The decline is explained by a COP$1 trillion (US$215 million) write-down in the value of its partial holding in the Tigo-UNE telecom/internet company, according to EPM.

As a result of that write-down, EPM – 100% owned by the city of Medellin—will cut its contribution to the city of Medellin’s 2023 finances by COP$330 billion (US$71 million), according to the company.

Excluding that Tigo-UNE write-down, Grupo EPM otherwise posted in 2022 a 26% profit gain year-on-year, hitting COP$4.1 trillion (US$881 million), according to the company.

Grupo EPM revenues likewise rose 28% year-on-year, to COP$32.2 trillion (US$6.9 billion), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 32%, to COP$9.8 trillion (US$2.1 billion), according to the company.

EPM owns and operates electric-power-generation and public utility operations in Colombia, Chile, El Salvador, Guatemala, Mexico and Panama.

Other financial highlights during 2022:

Investments in infrastructure projects totaled COP$4.8 trillion (US$1.03 billion). “Investments in the Hidroituango [hydroelectric project in Antioquia] and progress in the construction of the Tepuy Photovoltaic Solar Park stand out, a project that is in tune with the energy transition and that will provide 83 megawatts of non-conventional renewable energy to Colombia,” according to EPM.

“In the natural-gas business, the expansion and biogas projects at the San Fernando plant stood out. Likewise, investment was made in the expansion and modernization of wastewater treatment plants, guaranteeing the supply of water for the coming decades.”

As for its international subsidiaries, EPM invested in expansion project of a desalination plant in Chile, Advanced Measurement Infrastructure (AMI) in Guatemala; extensions and replacement of assets in the distribution system in El Salvador and the expansion of networks, replacement of assets and loss reduction programs in Panama.

Meanwhile, EPM’s TICSA subsidiary in México benefited from construction of treatment plants for the Don Julio tequila manufacturing plant in the state of Jalisco, along with water treatment plants for the city of León (Guanajuato state) and for Mexico City.

In Colombia, TICSA made progress in the construction of the “Tranvía” wastewater treatment plant in the municipality of Rionegro, near Medellin.

Meanwhile, to finance infrastructure projects, in December 2022 EPM signed its first “sustainable credit line” for US$700 million for various ventures.

During 2022, EPM contributed COP$1.8 trillion (US$387 million) to the city of Medellin, up 32% over 2021.

Hidroituango Cost Update

Meanwhile, EPM announced that it has updated the project cost of the 2.4-gigawatt Hidroituango hydroelectric project to COP$19.4 trillion (US$4.17 billion), up from a previous estimate of COP$17.6 trillion (US$3.78 billion).

“This change is due to the increase in direct investment and financial expenses and pre-operational costs, equivalent to COP$1.7 trillion [US$366 million],” according to the company.

The latest cost projection doesn’t include “possible variations in the value of the offers received as part of the of the new contracting process in which the company has been advancing to undertake the works for the completion of the second stage, which includes units 5 to 8,” the company cautioned.

As of February 28, 2023, EPM reported that Hidroituango construction is 90.68% complete, with total executed cost to date at COP$14.6 trillion (US$3.14 billion).

“In accordance with the evolution of the work fronts and the concentration of efforts of the company, generation units 3 and 4 are expected to come into operation before November 30, 2023, for compliance with the firm-energy obligations assigned in the reliability auctions in which it has participated in the project,” 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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