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Medellin-based insurance giant Grupo Sura announced August 14 that its second quarter (2Q) 2019 net income jumped 37.4% year-on-year, to COP$951 billion (US$276 million).

“An improved performance on the part of its investment portfolios along with higher revenues obtained from its associates via the equity method were key factors in achieving this level of results,” according to Sura.

“On a consolidated level, operating revenues stood at COP$10.5 trillion [US$3.05 billion] for a growth of 13.3%, this driven by higher levels of investment income (+50.1%) revenues obtained from associates via the equity method (+48.0%) and higher revenues from services rendered (+21.9%).

“On the other hand, operating expense came to COP$9.0 trillion [US$2.6 billion] for a 11.7% increase, which is lower than that recorded for operating revenues. Here, lower adjustments to reserves compensated for higher costs of services rendered for our healthcare business as well as higher broker commissions and other expenses.

“Consequently, operating earnings came to COP$1.5 trillion [US$436 million], for a growth of 23.7%.”

Sura’s “Asset Management” division net income jumped 48% year-on-year, to COP$430 billion (US$125 million).

Meanwhile, the “Suramericana” insurance division “continues to post significant growth rates with written premiums rising by 12.3% and revenues from services rendered increasing by another 21.9%,” according to Sura.

“The reduction in the retained claims rate is worth noting -- this including net level reserves -- as well as higher investment income that rose by 15.1%. However, in spite of these good growth dynamics, year-to-date net income at the end of 2Q 2019 reached COP$173 billion [US$50 million] for a decline of 33%, this due to certain specific circumstances that are not comparable with 2018, such as:

“- Life insurance segment: an increase in expense related to the latest tax reform which taxed with value-added tax (nondeductible) the commissions paid on sales of life insurance policies.

“- Property and casualty insurance segment: showing higher reinsurance costs in Chile and the inflation adjustment expense in Argentina that began to be accounted for in October 2018.
“- Healthcare segment: the current situation of the public healthcare system in Colombia produced a considerable reduction in the net earnings of the mandatory healthcare business (EPS),” according to the company.

Grupo Sura profits during 2Q 2019 also benefited from its partial holdings in Medellin-based banking giant Bancolombia and Medellin-based foods multinational Grupo Nutresa, “along with lower interest expense and the positive [Colombian peso to U.S. dollar] exchange rate effect corresponding to hedging arrangements as well as exchange differences on the Group’s indebtedness,” according to the company.


Medellin-based highway construction giant Construcciones El Condor on August 14 posted a special COP$13 billion (US$3.7 million) net loss for second quarter (2Q) 2019, but expects to recoup this accounting loss by year-end.

“This loss is entirely associated with the result of the ‘Vías de las Américas’ [highway] concession, which will affect the company temporarily during this accounting period,” according to El Condor.

“The ‘Vías de las Américas’ concession corresponds to the third generation [3G] of highway concessions and was awarded in August 2010. The initial schedule for this project estimated its completion for 2016, but its execution period was extended due to the occurrence of various events involving responsibility over property and environmental issues, as well as different controversies around the application of the specifications and scope of the contract.

“However, the foregoing [complications] are expected to be finalized and a definitive reversal [of financial penalties] will be completed by the month of December 2019, with 98.5% progress already in execution and an 80.5% [financial penalty] reversal of the intervened [highway] sections.

“Throughout the execution of this project, the obligations of the different interested parties (client, funders, communities, suppliers, employees) have been fully complied with, although in order to achieve this it has been necessary to assume, on the part of the shareholders, the economic impact derived from the displacement in time of the interventions, the delays in the reversion and the multiple controversies that today are being solved via different mechanisms foreseen in the contract, from which in the future it is expected we will receive positive results that allow mitigating the negative impact observed today on our financial statements,” the company added.

A new joint venture between Medellin-based electric-power transmission and highways concessionaire giant ISA and El Condor – inked last December – is moving ahead, according to the companies. The alliance aims to develop new road concessions in the Colombian and Peruvian markets.

Meanwhile, the future pace of highway construction in Colombia will depend upon “financial closures and execution of other fourth-generation [4G] projects,” according to El Condor.

Revenue from ordinary activities during 2Q 2019 rose 1.9% year-on-year, to COP$413 billion (US$119 million), according to the company.

“These revenues were mainly composed of the provision of construction services in different projects [mainly in Antioquia], with the greatest contribution being concentrated in ‘Ruta al Mar’ (COP$166 billion/US$48 million), ‘Pacifico 2’ (COP$80 billion/US$23 million) and ‘Pacifico 3’ (COP$76 billion/US$22 million),” according to the company.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 38% year-on-year, to COP$64 billion (US$18.5 million). However, the year-on-year quarters “are not comparable due to non-recurring expenses that affected the second quarter of 2018,” according to El Condor.

Before taxes, the company recorded a 2Q 2019 profit of COP$3.2 billion (US$925,000), “which, compared to operating income, is significantly affected by the accounting effect of the fall in value of the investment in the ‘Transversal of the Americas,’ which is in the stage of completion and closure,” according to El Condor.

As of June 2019, El Condor had a backlog of contracts worth COP$1.49 trillion (US$430 million), the company added.


Medellin-based Grupo Argos – holding company for electric power producer Celsia, cement maker Cementos Argos and highway/airports concessionaire Odinsa – on August 12 reported a 5.7% year-on-year dip in second-quarter (2Q) 2019 net income, at COP$219 billion (US$63 million).

However, 2Q 2019 earnings before interest, taxes, depreciation and amortization (EBITDA) rose 18% year-on-year, to COP$1.05 trillion (US$304 million), according to the company.

“Despite non-recurring charges that impact the figures for the [second] quarter, net income of the parent company grew 16% in the first half [1H 2019],” according to Grupo Argos.

For 1H 2019, Grupo Argos consolidated EBITDA hit COP$2.1 trillion (US$609 million), up 12% over 1H 2018. “This result has allowed the holding company, in a period of five years, to double EBITDA,” according to the group.

“The AAA [bond] rating of Fitch Ratings that Grupo Argos received for the first time in its history stands out,” the company added. “This is the highest note delivered by this entity in Colombia and demonstrates the confidence of the capital market in the strategy of the organization to achieve an increasingly efficient and profitable portfolio.

“Several [other] milestones that will positively impact the long term materialized in this period -- among others, the incorporation of [Tolima department] transmission and distribution assets in our energy subsidiary Celsia, for about COP$2 trillion [US$580 million], and financial optimization operations in our business of [highway/airport] concessions, which included bond issues for about COP$2.5 trillion [US$725 million],” stated Grupo Argos president Jorge Mario Velásquez.

“In addition, it is important to highlight two recent relevant facts: in energy, we have announced the signing of an agreement for the divestment of thermal [power generation] assets in Zona Franca Celsia, for US$420 million, which will allow for a cleaner and more balanced generation matrix, and whose resources will give greater flexibility and profitability on the capital invested in this business,” Velásquez added.

In the concession business, revenues dipped 8% year-on-year, “which is mainly explained by the decrease in income by equity method from Quiport, as a result of the decrease in the net profit of the concession after [reconfiguring] the debt in this asset to optimize the capital structure at the level of the portfolio of Odinsa. We also saw a decrease in construction activity, given the optimization of working capital in the ‘Farallones de Pacífico 2’ highway consortium.”

As for the group’s real-estate business, the “Pactia” commercial real estate joint venture [of which Argos has a 32% shareholding] “has had effective annual yields of 7.25% since its incorporation date on January 20, 2017,” according to the company.


Medellin-based multinational electric power and public utilities giant EPM announced August 14 that its first half (1H) 2019 net income rose by 29% year-on-year, to COP$1.3 trillion (US$377 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 16%, to COP$2.9 trillion (US$841 million), while gross revenues increased by 12%, to COP$8.8 trillion (US$2.5 billion), according to the company.

The city of Medellin – the sole shareholder of EPM – got COP$703 billion (US$204 million) in profit transfers for 1H 2019. EPM supplies nearly 25% of the city’s annual budget.

So far this year, EPM Group invested COP$1.3 trillion (US$377 million) in infrastructure to improve service quality, according to the company. The company put another COP$455 billion (US$132 million) this year into the 2.4-gigawatt “Hidroituango” hydropower project in Antioquia, due for initial start-up in late 2021.

Of the income obtained in the first six months of this year, international subsidiaries contributed 36%, national energy subsidiaries 15% and water subsidiaries 2%.

“Having a wide, diversified portfolio of investments in several latitudes allows us to earn more to add to the quality of life of millions of people in the regions where we have a presence,” added EPM general manager Jorge Londoño de la Cuesta.

The year-on-year boost in EBITDA “is mainly explained by the increase in income greater than the increase in costs and expenses,” according to the company.

“The good performance of revenues is due, in part, to higher energy sales, both from EPM matrix [which includes water, sewage, trash and natural gas services] and from national and foreign subsidiaries,” the company added.

Financial indebtedness of the EPM Group and EPM matrix stood at 42% and 40%, respectively, compared to 40% and 36% presented in 2018. “The increase [in debt level] is due to loan disbursements to finance the general investment plan and the Hidroituango hydroelectric project,” according to EPM.

Total assets grew by 6% year-on-year, to COP$55.4 trillion (US$16 billion), while liabilities rose 9%, to COP$33 trillion (US$9.6 billion), according to the company.


Medellin-based multinational cement/concrete giant Cementos Argos announced August 12 that its second-quarter (2Q) 2019 net income hit COP$73 billion (US$21 million), from COP$29 billion (US$8.5 million) in 2Q 2018.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 44% year-on-year, to COP$475 billion (US$140 million), according to the company.

As for first half (1H) 2019 results, “revenues increased 10.6%, driven mainly by higher cement volumes in the United States and the start of price recovery in Colombia,” according to Argos.

“Cement shipments were close to 8 million tons, 1.2% higher than in the first half of 2018, and concrete shipments were 5 million cubic meters, with a decrease of 2.5% due to the impact of heavy rains in some regions of the United States.”

“In the first half of 2019 we continued to strengthen our operation and our presence in the United States with the execution of the ‘BEST 2.0’ efficiency plan, which, together with better price dynamics that we began to see in Colombia, allowed us to compensate for the pressure we experienced in energy costs," said Juan Esteban Calle, president of Cementos Argos.

“The significant progress of our divestment plan in non-strategic assets allows us to continue to focus on improving the competitiveness of the company and innovating in products, services and solutions to accompany the growth of our customers,” he added.

In the USA, 1H 2019 revenues rose 3.5% year-on-year, to US$781 million, while EBITDA remained stable at US$108 million.

Cement shipments in 1H 2019 in the USA increased 6.9%, exceeding 3 million tons, while concrete shipments decreased 3.8%, mainly due to heavy rains in the south-central region.

In Colombia, 1H 2019 revenues rose 3.3% year-on-year, to COP$1.1 trillion (US$324 million), but EBITDA dipped 4%, to COP$186 billion (US$55 million) because of higher energy costs.

Colombian cement shipments totaled 2.4 million tons in 1H 2019, down 2.5%, but concrete shipments held steady, at 1.4 million cubic meters.

As for its Caribbean and Central American markets, Argos stated that “operations in the Dominican Republic and Haiti continue with a positive performance, compensating to some extent the challenging political environment that was evident during the period in Honduras and Panama.”

In Caribbean/Central American region, 1H 2019 revenues dipped 4.5% year-on-year, to US$286 million, while EBITDA fell 19.8% year-on-year, to US$79 million. Cement shipments dipped 1.5% year-on-year, to 2.5 million tons, while concrete shipments declined 3%, to 194,000 cubic meters, according to the company.

Despite the regional declines, “Argos maintains its favorable outlook in a region that advances important infrastructure and housing plans, which add to the progress in the reconstruction of Puerto Rico,” according to the company.


Medellin-based construction giant Constructora Conconcreto announced August 9 that its second quarter (2Q) 2019 earnings jumped 70% year-on-year, to COP$57 billion (US$16.8 million).

Earnings before interest, taxes, depreciation and amortization came-in at COP$105 billion (US$31 million), essentially flat year-on-year, while EBITDA margin was 25%.

Consolidated revenues hit COP$417 billion (US$123 million), down 9.5% year-on-year.

“The business segment that contributed most to the ordinary income was construction, at COP$312 billion (US$92 million)," according to Conconcreto.

The company also cut its consolidated financial liabilities by COP$120 billion (US$35 million) compared to year-end 2018 debt levels.

Among other 2Q 2019 highlights:

• “The CCC Ituango consortium met the objective of bringing the Hidroituango dam [in Antioquia] to 435 meters above sea level, its maximum height. This is one of the most important milestones for the safety of the communities downstream of the project. The top of the dam will be the road to the municipality of Ituango,” according to the company.

• “On June 12, we proudly received recognition for the ‘Contree’ project [in Medellin] as the best vertical housing project during the celebration of the LADI [Latinoamericanos de Desarrollo Inmobiliario] awards, a Latin American event that seeks to highlight innovation, development, architecture and marketing applied to the real estate industry.”

• Construction of the “Logika Siberia” warehouse portal gateway in Cundinamarca, employing Conconcreto’s novel large-format concrete “3D Printer” to build the portal building.


Medellin-based electric power giant Celsia reported August 8 that its second quarter (2Q) net income fell 56% year-on-year, to COP$43 billion (US$12.6 million), mainly because of financing costs for its purchase of Tolima departmental power company EPSA.

Another COP$19 billion (US$5.6 million) of the difference between 2Q 2019 versus 2Q 2018 profits was the one-time 2Q 2018 cancellation of foreign credits, according to the company.

The EPSA purchase involved issuance of ordinary bonds totaling COP$1.1 trillion (US$324 million) as well as contracted loans with national and international banks for COP$800 billion (US$235 million), according to Celsia.

“Additionally, on July 11, the first issue and private placement of EPSA shares since its establishment was completed, in which resources were obtained in excess of COP$450 billion (US$132 million), which will be used for early payment of short-term loans,” according to Celsia.

“The results of this [latest] quarter reflect, to a large extent, the profound strategic changes we have made in the last 18 months and, additionally, are greatly influenced by the recent acquisition of the distribution and commercialization operation in Tolima,” said Ricardo Sierra Fernández, Celsia director.

Consolidated 2Q 2019 revenues rose 11% year-on-year, to COP$913 billion (US$269 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 7%, to COP$287 billion (US$84.6 million), according to the company.

“Colombia represents 83% of the consolidated revenues and Central America 17%,” according to Celsia.

“Revenue from retail [power] sales was COP$338 billion (US$99 million), up 35%, also favored by higher revenues from Tolima’s assets (COP$78 billion/US$23 million),” according to the company.

“The operation of the assets acquired in Tolima contributed favorably,” the company added. “With the integration of Tolima, the company reaches nearly 1,135,000 customers, meeting our goal of exceeding 1 million customers by 2025 -- well in advance” of its earlier forecast.

“The priority in the [Tolima] department is to improve indexes in quality and reliability in the provision of power service, for which COP$600 billion [US$177 million] will be invested in the first five years of operation,” the company added.

During the latest quarter, Celsia also hit a total capacity of 100 megawatts of solar energy in Colombia and Central America. The company also exceeded its goal of 3 million trees planted in the “ReverdeC” program, designed to offset “global warming” emissions from fossil-fueled power production.


Medellin-based specialty textiles and fibers giant Enka announced August 8 that its second-quarter (2Q) 2019 profits came-in at COP$4.9 billion (US$1.4 million), a big improvement over the 2Q 2018 net loss of COP$999 million (US$294,000).

Earnings before interest, taxes, depreciation and amortization (EBITDA) likewise improved by 35% year-on-year, to COP$14 billion (US$4.1 million), “driven by increasing the collection of PET [polyethylene terephthalate] bottles [as an environmentally friendly feedstock for specialty fibers] and the increase in the Colombian peso to U.S. dollar exchange rate,” according to Enka.

So far in 2019, Enka’s exports to the U.S. market are up 46%, and up 300% over the last two years, with the U.S. now representing 12% of total company revenues.

Meanwhile, first-half (1H) 2019 corporate-wide sales are up 1.8% year-on-year, hitting COP$200 billion (US$59 million), while total exports to all countries hit US$29 million, now representing 46% of the company's revenues.

In the local Colombian market, revenues grew 5% year-on-year, “driven by a higher exchange rate, which offset the lower volume compared to 2Q 2018 (-2%),” according to Enka.

Total export revenues to all markets dipped slightly (by 1%), “mainly due to spot [one-time sales] business carried out in 2018 and lower dynamics of the Brazilian economy, which has been compensated with the higher exchange rate and greater growth in the North American market,” according to Enka.

The three main specialty lines of synthetic fibers, filaments and resins products collectively showed steady revenues year-on-year, at COP$62 billion (US$18 million), representing 31% of the company’s revenues in the period.

About 85% of these synthetic products go to the Colombian local market, with the remaining 15% exported mainly to Brazil.

“EKOPet” product (8,335 tonnes output) “remains stable and [production] continues to operate at maximum capacity, allocating 100% of the production to serve the local market,” according to Enka.

“EKOFibras” fibers (4,948 tonnes) volume fell 18% year-on-year “ mainly due to the decree of minimum import thresholds that favored 1Q 2018 and due to an increase in inventories in preparation for the start of the modernization project of this production line, which is expected to start operations in third-quarter 2019,” according to Enka.

“EKOPoliolefinas” polyolefins (250 tonnes) sales rose 70% in 2Q 2019 versus 1Q thanks to growing acceptance of this product in various markets.

“Some of the uses of our recycled resin are for baskets, packaging material and household products, among others. We have identified a great commitment of some brands to incorporate recycled material into their products as part of their sustainability strategies, which confirms the positive perspectives of this project,” according to Enka.

"Our goal is to develop the market for recycled polyolefins, in the same way as was done in PET. To achieve this, we have established alliances with world leaders in the industry, seeking to develop new products aimed at high value-added applications," the company added.

Textile and Industrial Businesses

Textile sales grew 2% year-on-year, reaching COP$137 billion (US$40 million), of which 39% came from the national market, while 61% corresponds to exports.

Industrial threads (5,981 tonnes) sales dipped 11%, “mainly due to a lower demand for canvas for tires in the Brazilian market. However, higher sales to the North American market, in products with greater added value, have allowed this effect to be mitigated,” according to Enka.

Textile filaments (5,219 tonnes) volume declined 5% “mainly due to the decree of minimum import thresholds that favored the sales of polyester filaments in 1Q 2018 and lower sales to Argentina.”

Business Outlook: More Recycling

“In order to continue strengthening the circular [plastics recycling] economy in Colombia, last May [2019], in coordination with Bavaria, The Coca-Cola Company, Coca-Cola FEMSA, PepsiCo, and Postobón, the ‘Movimiento RE’ [recycling] program was launched in Barranquilla, Cartagena and Santa Marta, which seeks to promote and strengthen the recycling of PET in Colombia, with the aim of increasing the PET collection rate in this region by 30%,” according to Enka.

“Our [recycled] fibers plant modernization project is already in its final stage and is expected to be operational in 2019-Q3. We are convinced that with this project the value proposition of our ‘green’ businesses will be further strengthened, offering the market a broader portfolio with products of higher specifications.

“Once in operation, the homologation processes of the current products will begin and then the new developments will begin. In addition, with this project the foundations are laid for future growth of this business, because with additional investments in some processes, the current production capacity could be doubled,” the company added.


Medellin-based multinational banking giant Bancolombia announced August 5 that its second quarter (2Q) 2019 net income rose 58% year-on-year, to COP$936 billion (US$273 million).

Net interest income totaled COP$2.9 trillion (US$845 million) in 2Q 2019, up 13.5% from 2Q 2018, due to “higher volume in the loan portfolio, as well as a slight increase in the loan´s interest margin,” according to Bancolombia.

Also during 2Q 2019, its investments, interest rate derivatives and its repos portfolio generated COP$182 billion (US$53 million), up by 35.4% from first quarter (1Q) 2019, according to the company.

“The investment portfolio had a good performance due to a reduction in the Colombian government securities rates, therefore the investment margin presented an expansion during the quarter,” according to the company.

Gross loans grew 9% year-on-year, indicating a “moderate trend in the credit demand in Colombia,” while Colombian peso-denominated loans grew 8.5% year-on-year, according to the company.

Loan provision charges for the quarter were COP$816 billion (US$238 million), down 15.8% year-on-year, and the loan coverage ratio for 90-day past due loans was 165.9%, according to Bancolombia.

Net fees rose 10.6% year-on-year, to COP$755 billion (US$220 million). “The annual growth was mainly driven by an increase in fees related to credit and debit cards, banking services, trust services and bancassurance,” according to the company.

As of June 30, 2019, Bancolombia’s assets totaled COP$230.9 trillion (US$67 billion), up 12.9% year-on-year, while liabilities totaled COP$203.7 trillion (US$59 billion), up 12.8% compared to 2Q 2018.

Gross loans increased by 1.9% in 2Q 2019 versus 1Q 2019. Bancolombia’s subsidiary operations -- Banco Agricola in El Salvador, Banistmo in Panama and BAM in Guatemala -- represented 26% of total gross loans, according to the company.

Deposits by customers totaled COP$145.6 trillion (US$42 billion), or 71.5% of liabilities, up 11.7% over the last 12 months. The net loans-to-deposits ratio was 115.3% at the end of 2Q 2019, versus 114.1% at the end of 1Q 2019.

Bancolombia’s capital adequacy ratio was 12.94% in 2Q 2019, 394 basis points above the minimum 9% required by the Colombian regulator, while the basic capital ratio (Tier 1) to risk-weighted assets was 9.90%, 540 basis points above the regulatory minimum of 4.5%, according to the company.


ISA 2Q 2019 Net Income Jumps 89% Year-on-Year

Tuesday, 06 August 2019 13:22 Written by

Medellin-based multinational electric-power transmission builder/operator and highway concessions giant ISA announced August 6 that its second quarter (2Q) net income soared 89% year-on-year, to COP$439 billion (US$128 million).

“This variation was due to higher revenues from the entry into operation of new projects, the incorporation of the 50% of IESUL [a Brazilian power-transmission subsidiary], construction efficiencies and the adjustment of the tariff cycle in Brazil [as well as] lower expenses for foreign exchange differences,” according to ISA.

Operating revenues for 2Q 2019 rose 37.5%, to COP$2.1 trillion (US$612 million), “mainly due to the entry into operation of several energy transmission projects and to higher construction-related revenues.

Construction revenues for latest quarter reached COP$380 billion (US$11 million), 117% higher than in 2Q 2018.

Meanwhile, 2Q 2019 earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 50.6% year-on-year, to COP$1.4 trillion (US$408 million).

During 2Q 2019 in its Chile operations, the ISA Interchile subsidiary put into operation the final section of the Cardones-Polpaico Line, “the most important transmission project in Chile of the last 50 years, contributing revenues of US$31.7 million per year,” according to ISA.

Meanwhile in Brazil, “beginning in September 2018, ISA CTEEP [another transmission subsidiary] and its companies started to recognize, on a monthly basis, the inflationary adjustment for revenues for the June 2018-May 2019 tariff cycle and subsequent tariff cycles,” boosting 2Q 209 income by COP$49 billion (US$14 million), according to ISA.

Currency Hedging Benefits

“ISA’s natural hedging strategy, through which each company incurs debt in the same currency as revenues, reduces the volatility of its results and therefore the impact on consolidated net income,” according to the company.

“For 2Q 2019, the variation was 5.2% (COP$12 billion/US$3.5 million) of net income . . . which is evidence of the effectiveness of the strategy,” according to ISA.


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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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