Construcciones El Condor Posts Net Loss for 2Q 2019

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.