Wednesday, March 29, 2023

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Medellin-based Valores Industriales – an investment group dealing mainly in real-estate, forestry products and industrial/commercial operators including Medellin-based salt/chemicals giant Brinsa SA – announced March 31 that full-year 2021 profits jumped to COP$59 billion (US$15.7 million), up from COP$14.7 billion (US$3.9 million) in 2020.

The big jump in profits came from Valores Industriales sale of its entire 73-million shareholding in Medellin-based paper-products multinational Grupo Familia. Those shares were acquired by Sweden-based global paper giant Essity Group, which last year bought virtually all of Grupo Familia’s outstanding stock.

Valores Industriales subsequently reinvested those profits by boosting its shareholdings in Brinsa SA, with a 539-million-shares-buy that has brought Valores Industriales (and an affiliate) a net 31.37% stake in Brinsa.

Valores Industriales was born in 1997 via a spin-off from Productos Familia. But since then, the company has concentrated mainly on forestry and real-estate investments.

In 2021 alone, Valores Industriales investigated more than 30 potential investment deals in sectors including automotive chemicals, processed foods, brick production, dermatological products, commercial buildings, construction, eight potential forestry sites, proposed cannabis- and cacao-cultivation projects, small-scale hydroelectric projects and solar-power projects, according to the company.

Toronto-based GCM Mining (formerly known as Gran Colombia Gold, with principal operations in Antioquia) announced March 31 that its full-year 2021 net income rose to US$180 million, up from a US$27 million net loss in 2020.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for 2021 slipped year-on-year, to US$171.6 million, from US$187.8 million in 2020. Revenues likewise dipped to US$382 million, from US$391 million in 2020.

Cash costs in 2021 rose to US$824 per ounce, from US$768 per ounce in 2020.

Total gold production also declined in 2021 to 208,817 ounces, from 220,194 ounces in 2020. However, gold prices in 2021 rose to an average US$1,794, from US$1,751 in 2020, boosting net income.

On November 29, 2021, Gran Colombia Gold changed its name to GCM Mining Corp. “to reflect its strategy to grow through diversification, expanding its operations and investments to other countries and broadening its products to include other metals beyond just gold and silver,” according to the company.

Still, the majority of GCM’s production remains in Colombia -- principally at its giant Segovia, Antioquia, underground mining operations.

In June 2021, GCM “acquired all of the shares of Gold X Mining Corp that it did not already own and then closed a US$300 million offering in August 2021 of 6.875% senior unsecured notes due 2026 to fund the development of the Toroparu Project [in Guyana], to prepay the remaining US$18 million balance of its gold notes in September and for general corporate purposes,” the company explained.

“The updated MRE [mineral resource estimate] for Toroparu includes 8.4 million ounces of Measured & Indicated gold resources at 1.42 grams per ton, and 396 million pounds of Measured & Indicated copper resource at 0.1%, in 185 million tonnes of rock,” the company added.

Elsewhere in 2021, GMC “added a 27% equity interest in Denarius Metals Corp. to its portfolio, giving it exposure to the Lomero-Poyatos polymetallic deposit in Spain in the Iberian Pyrite Belt and to the Guia Antigua and Zancudo Projects in Colombia,” the company noted.

Socialist-populist Colombian presidential candidate and former M-19 guerrilla Gustavo Petro last week released a 54-page campaign platform and governance program that points to:

 Confiscation of the private pensions of 18 million people here and forcing them into a grossly underfunded government system;
 Confiscation of Colombia’s flawed-but-improving private health system, replacing it with a politically-hacked, underfunded state-run system that Colombia had already suffered-under prior to a 1993 reform law;
 Confiscation and redistribution to his political pals whatever private farm lands that he-alone determines to be “unproductive;”
 “Unemployment elimination” not by incentivizing more jobs-creating investment, promoting better, 21st-century education and ensuring reasonable labor rules, but instead by promising to give political-hack government jobs to anyone lazy or brainless enough to want one, as in socialist Venezuela; and
 Accelerating the abolition of the Colombian government’s number-one source of income: its multi-billion-dollar-profits-producing oil-and-gas industry.

While leading Colombian economists now sarcastically term the Petro political program as “delirious,” it could just-as-well remind people of The Beatles’ sardonic 1968 pop hit, “Back in the USSR.”

It also could call- to-mind the hysterically ironic 1972 Democratic political campaign of one-time U.S. Vice-Presidential candidate and silver-spoon blue-blood Sargent Shriver, who famously paraded into several of Detroit’s ubiquitous blue-collar bars, yelling, “beer for everyone, Courvoisier for me.”

Or Poland’s famous labor-union leader and future democratic President Lech Wałęsa, who not only led the fight to free Poland from Soviet slavery but issued probably the all-time-greatest quip about Petro-style socialism: “It’s a system where the workers pretend to work, and the State pretends to pay them.”

Petro – currently a Colombian Senator, a former Bogota Mayor, and a man who apparently has never worked in any regular job in his life – lives in luxury in Bogota, sends his kids to private schools overseas, and this month flatly refused (like his political pals in socialist Venezuela) to condemn former KGB man and Russian president-for-life Vladimir Putin, who hides his billion-dollar collections of yachts and mansions all over Russia and Europe in cahoots with oligarch pals, while thousands of working-class, cannon-fodder Russian soldiers die in a grotesque “patriotic” invasion that’s killing and wounding thousands of Ukrainian innocents, leveling their cities and sending more-than-4-million fleeing to exile.

Ironically, this is the same Petro who not only claims that Colombia doesn’t have a democracy, but who also attacked freely elected former Colombian President and current Liberal Party leader Cesar Gaviria as supporting “fascism” – all because Gaviria publicly repudiated the “neoliberal” insult hurled against him by Petro’s running-mate, Francia Marquez.

Which begs the question: Who’s calling the pot black?

Colombia’s Health Ministry revealed today (March 25) that nationwide vaccinations against Covid-19 have now totaled 80.2 million, with 34.6 million people now fully vaccinated.

Meanwhile, intensive care unit (ICU) occupation caused by Covid-19 cases has plummeted, enabling many more Colombians to have rapid access for other medical cases.

Of Colombia’s total 10,789 ICU beds available, only 201 of those beds today are occupied by people with Covid-19, according to Health Ministry vice-minister Germán Escobar Morales.

Meanwhile, Colombia continues to expand its Covid-19 vaccination campaign to various groups still lacking a second shot, as well as vaccinations for younger age groups.

Current vaccination rates are hovering around 300,000 doses daily, he said.

“The general panorama shows a positive trend in epidemiological terms and in hospital occupation, and in terms of vaccination, coverage is growing at a moderate pace, but we still face challenges in closing gaps” among younger age groups and anyone still lacking a second shot, Escobar added.

Medellin-based electric power giant Isagen announced March 24 that its full-year 2021 net income rose 5% year-on-year, to COP$523 billion (US$138 million).

Gross revenues rose 8% year-on-year, to COP$3.48 trillion (US$917 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 25% year-on-year, to COP$$2.27 trillion (US$598 million), according to the company.

During fourth quarter (4Q) 2021, accumulated electric power demand via Colombia’s national grid (Sistema Interconectada Nacional, SIN) hit 19,209 gigawatt-hours (GWh), 6% higher than in 4Q 2020, while full-year 2021 power demand hit 74,117 GWh, the company noted.

“In the fourth quarter 2021, the average market price was COP$181 [US$0.0477] per kilowatt-hour (/kWh), with no significant changes compared to the same period of the previous year. The average price for the 2021 year has been $180[US$0.0.47]/kWh,” Isagen added

Isagen’s mainly hydroelectric power output during 4Q 2021 was 4,559 GWh, 14% higher than in 4Q 2020, according to the company.

“The higher generation is due to better water contributions during 4Q 2021, compared to the same period of the previous year. Accumulated generation in 2021 reached 16,395 GWh, 32% higher than in 2020,” the company added.


Medellin-based industrial/consumer plastics-ware producer Industrias Estra announced March 24 a net loss of COP$1.96 billion (US$516,000) for full-year 2021, worse than the COP$1.4 billion (US$369,000) net loss in 2020.

Gross revenues however actually rose year-on-year, to COP$86 billion (US$22.7 million), from COP$70 billion (US$18 million) in 2020, according to the company.

Earnings before interest, taxes, depreciation and amortization (EBITDA) fell to COP$7.98 billion (US$2.1 million), from COP$8.5 billion (US$2.24 million) in 2020.

“For the plastics sector in Colombia, it has been a complex time with significant increases in plastic resins, along with risk situations in the supply of certain materials, products and equipment,” according to the company, which cited global price hikes for raw materials and for shipping containers, compounded by logistics problems arising from Colombia’s violent national strike in April 2021.

“According to the projections and analyzes made by Acoplásticos, the situation of prices and international markets is expected to normalize, although we cannot expect a drastic drop in prices in the short term,” the company added.

Meanwhile, “operating income through product innovation due to updating and modernizing the commercial portfolio reached a growth of 54% between 2021 and 2020, reaching a sales figure of COP$21.6 billion [US$5.7 million], equivalent to a 24.7% share of total income,” according to Estra.

“We are coming-out from 2021, a more difficult year than 2020, but we continue aiming at business growth via the pathways defined in our 2022-2026 strategic plan: new products, new steps in the value chain, new geographies, new customers, new channels and new businesses,” the company added.

Medellin-based telecom/internet/cable-TV giant UNE-EPM – a joint venture between Medellin utility EPM and Spain-based telecom multinational Millicom – announced a COP$572 billion (US$150.5 million) net loss for full-year 2021, more than twice the COP$212 billion (US$55.8 million) net loss in 2020.

While red-ink continues to bleed the company (popularly known as “Tigo"), gross revenues nevertheless grew in 2021, to COP$5.1 trillion (US$1.3 billion), compared to COP$4.8 trillion (US$1.26 billion) in 2020, according to the company.

The latest losses come on the heels of an EPM board decision last year aiming to jump-start the process of selling its stake in the venture. But that process has stalled in the Medellin City Council.

UNE-EPM has now posted net losses in 2021, 2020 and 2018, while its 2019 net profit came-in at just COP$519 million (US$128,000).

Despite the relatively poor results in recent years, Wall Street bond rater S&P (BRC Ratings) last year nevertheless had issued a report indicating a brighter future for the unit.

In an October 4, 2021 filing with Colombia’s Superfinanciera oversight agency, UNE-EPM disclosed that the S&P/BRC ratings report cited a strong “AAA” bond rating for Tigo.

“For the next few years, we project profitability margins close to 32.5% and leverage indicators -- measured as net debt to EBITDA -- around 2-times, which we consider consistent with the rating,” according to BRC’s report.

“Despite an environment of greater competition and high investment commitments, the generation of the company's own resources will continue to provide favorable levels of liquidity for the continuity of its operation, which reflects a ratio of sources-over-uses above 1.2-x for the next two years.

“In the next two years, we estimate that the home segment will mitigate the reductions in the mobile business and the small and medium-sized business market, so we project revenue growth of close to 4% in the next two years,” that report concluded.

Medellin-based pension-funds manager Protección announced that its full-year 2021 net income dipped to COP$276 billion (US$72.6 million), down from COP$291 billion (US$76.5 million) in 2020.

Gross income nevertheless actually rose year-on-year, to COP$1.15 trillion (US$302 million) in 2021 versus COP$1.1 trillion (US$289 million) in 2020.

Commenting on the dip in profitability, Protección president Juan David Correa cited “higher disability rates as a result of Covid-19 and the change in the [Colombian] minimum wage due to an increase higher-than-inflation, which generated greater impacts on the [pension payment] provisions.

“For Protección, we insist on the urgency of solving this structural problem by the competent authorities, and we will continue as we have done so far, proposing alternative solutions,” he added.

Protección is one of the three biggest pension fund managers in Colombia, with COP$128 trillion (US$33.6 billion) in assets-under-management for its 8 million customers, the company noted.

However, all pension-fund managers in Colombia now face the possibility of potentially disastrous confiscation of private pensions as currently proposed by left-wing Colombian presidential Candidate Gustavo Petro.

As a result, “2022 will be a transcendent year,” Correa said. “As a country we will go through an electoral period during the first half of the year, which will mark the social, economic and reform agenda for the coming years.

“It is essential that the next government advance a pension reform that promotes principles of equity, sustainability and coverage, as well as the search for mechanisms that allow the complementarity of pension models with those of insurance and that guarantee the sustainability of the system,” he added.

On another front, Correa revealed in a March 23 interview with Colombian business newspaper La Republica that Protección this year realized a one-time COP$1.1 trillion (US$289 million) gain for selling to Cali-based Gilinski Group all of its shareholdings in multinational foods giant Nutresa and multinational insurance/health-care giant Sura,both of which are based in Medellin.

Medellin-based multinational utilities giant Grupo EPM announced March 23 that its full-year 2021 net income dipped to COP$3.3 trillion (US$872 million), down from COP$3.7 trillion (US$978 million) for full-year 2020.

Despite the profits dip, 2021 revenues grew 28% year-on-year, to COP$25.3 trillion (US$6.7 billion), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 29%, to COP$7.4 trillion (US$1.95 billion).

EBITDA margin for 2021 came-in at 30%, according to the company, which is 100% owned by the city of Medellin.

Infrastructure investment in 2021 totaled COP$$4.2 trillion (US$1.1 billion), of which 79% went into energy projects and the remaining 21% in the water businesses.

The giant “Hidroituango” hydroelectric project in Antioquia accounted for COP$1.5 trillion (US$396 million) of investments last year.

While operating income improved, some of that gain was “offset by the growth in income tax” including the new “social investment law” enacted during 2021, according to the company.

EPM gave the city of Medellín COP$1.4 trillion (US$370 million) of its 2021 profits, “contributing to the reactivation of the local economy and providing new opportunities for citizens,” according to the company.

At year-end 2021, Grupo EPM’s total assets grew 6% year-on-year, to COP$67.8 trillion (US$17.9 billion), while liabilities also rose 6%, to COP$39 trillion (US$10.3 billion), according to EPM.

Financial indebtedness stood at 40%, while the long-term debt-to-EBITDA ratio closed at 3.36, compared to 4.37 for 2020, the company added.

Medellin-based real-estate developer Valores Simesa – 66% of which is owned by Bancolombia’s investment-banking division -- announced March 16 that its full-year 2021 net loss came-in at COP$4.56 billion (US$1.2 million), an improvement over the COP$12.47 billion (US$3.26 million) net loss in 2020.

Valores Simesa –created via a spin-off from the long-defunct “Siderúrgica de Medellín” steel mill here nearly 22 years ago – mainly invests in real estate, subdivisions and commercial/industrial projects, including the “Ciudad del Rio” residential/commercial development in Medellin, the same site of the former steel mill.

“After a difficult year 2020 for both Valores Simesa and the economy in general, 2021 brought us a more favorable outlook, a good performance of the real estate sector and a slightly more optimistic environment, with the hope that the economic and social crisis unleashed by Covid-19 has begun to come to an end,” according to the company’s announcement.

“After several months of negotiations and after defining by the shareholders’ meeting how to resolve conflicts of interest, in January 2021 we were able to sign the new agreement for the sale of lots ‘B2’ and ‘B4’ in Ciudad Del Río, allowing to guarantee the continuity of the project.

“Similarly, talks were resumed for the sale of lots ‘B5’ and ‘B6,’ with the corresponding signing of contracts in October, and progress was made with interested parties in lot ‘A16,’ for the development of what could be the first rental housing project in the city.

“At the end of 2021, the company had a loss of COP$4.56 billion [US$1.2 million] explained by a lower commercial appraisal of lots B1, B3 and B5 in Ciudad Del Río, due to the fact that the demand for real estate projects for commerce and services had not yet picked up.

“Negotiations are currently being carried out with the municipality of Medellín, seeking to enable, in the short term, the possibility of building housing on the lots located on the edge of the ‘partial plan,’ based on the transformation that the sector has undergone since the issuance of the decree,” the company added.

Net assets at year-end 2021 dipped by COP$13 billion (US$3.4 million), to COP$253 billion (US$66 million), “mainly explained by the lower value of the appraisals of the aforementioned lots and the payment of the repurchase of shares,” according to the company.

Liabilities totaled COP$15.9 billion (US$4.15 million), “where the most significant items continue to be the deferred tax liability at COP$9.8 billion [US$2.56 million] and dividends payable, at COP$2.5 billion [US$653,000],” according to the company.

With the Covid-19 crisis seemingly moving into recovery, “this trend is expected to continue throughout 2022,” helping to boost demand for residential and commercial real estate, according to the company.

“As for construction, a sector that directly impacts Valores Simesa, this sector presented a historical recovery that was leveraged by the 200,000 subsidies from the national government” during 2021, according to the company.

“As of December 2021, the unemployment rate in Colombia was 13.7%, showing a reduction of 2.2 percentage points in relation to the same month in 2020, with just over 1.2 million jobs missing to reach employment levels of 2019.

“In 2022, the economy is expected to continue its path towards recovery, framed by the political uncertainty brought about by the legislative and presidential elections, as well as the eventual emergence of new variants of Covid-19 that may impact different economic sectors.

“A good year is also expected for the sale of new homes and the resurgence of demand for offices to the extent that the health crisis caused by the pandemic is left behind,” the company added.

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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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