EPM 2015 Earnings Rise 14% Year-on-Year; Revenues Up 18%
Medellin-based public utility EPM – now a multinational operating 48 different companies in seven Central American and South American countries – on April 5 presented its full-year 2015 results, showing a 14% hike year-on-year in profits and an 18% jump in revenues.
The city of Medellin – the sole owner of EPM — netted COP $991 billion (US$323 million) in ordinary and extraordinary transfers in 2015, according to EPM.
Full-year 2015 profits were COP$1.48 trillion (US$481 million), almost identical to the COP1.49 trillion (US$484 million) in 2014 “without taking into account the profit recorded by the [sale of telecom subsidiary] UNE to Millicom in 2014,” according to UNE.
Principal domestic operations contributed 48% to earnings, while international subsidiaries contributed 35%. Colombian national energy subsidiaries generated 15% of earnings, while the remaining 2% came from water operations, according to UNE.
The latest financial results employed International Financial Reporting Standards (IFRS), which “leverage implementation of the growth strategy of the organization, facilitating [EPM’s] access to international capital markets and bringing competitiveness and transparency,” according to the company.
EPM said its 2015 results were “very positive, in a year marked by factors external to the company as high devaluation of the [Colombian] peso against the dollar in December 2015 involved an expenditure of COP$295.7 billion [US$96 million] , the negative effect of the Tax Reform in Colombia which resulted in an additional tax expense of COP$78.9 billion [US$25.6 million], and low hydrology caused by El Niño, with the consequent reduction in reservoir levels and lower hydropower generation, which affected results by about COP$321 billion [US$104 million],” according to the company.
“EPM faced this situation with its currency-hedging strategy, which involves the use of hedging with derivatives, management of excess cash in dollars and the conversion of loans in dollars to pesos.
“As a result, in December 2015 we avoided a greater negative effect on the income statement, despite the devaluation of the peso against the dollar of 31.64%, the highest in the last 25 years. In order to optimize the cost of debt, we prepaid credit with the International Finance Corporation of the World Bank totaling COP$657.8 billion [US$214 million], including principal and interest,” according to the company.
Meanwhile, credit markets continue to maintain EPM’s investment grade, with Moody’s affirming EPS’s “Baa3” rating for the seventh consecutive year and a “positive” outlook for a second year. “In turn, Fitch Ratings affirmed the credit ratings of EPM: International ‘BBB +’ and national ‘AAA,’” according to EPM.
Social Projects Grow
Meanwhile, EPM’s numerous social projects — mainly favoring low-income families and individuals — continued to grow in 2015. Among the projects:
1. Subsidized power and gas connections: This program enables connection of power and gas service to 82,145 low-income households via low-interest, long-term loans. Another 9.759 homes got water connections while 10,027 more homes got sewer connections.
2. ‘Antioquia Illuminated’ program: EPM’s rural electrification initiative connected another 5,778 homes in rural areas of Antioquia last year.
3. ‘Gas Without Borders’ program: EPM’s natural gas network has now extended to 94 localities outside the Aburrá Valley (Medellin and its northern/southern neighbors).
4. Water Prepayment: EPM in 2015 launched a prepaid water service – the first ever in Colombia — benefitting 7,351 families and 33,080 people.
5. Energy Prepayment: In 2015, EPM added another 19,987 households to its novel prepaid energy system, which now covers 195,483 households.
6. Natural gas and electricity for vehicles: EPM added another three refueling stations for natural gas vehicles with its network now totalling 16 stations in the Valley of Aburrá and in Urabá. “In addition, the [alternative-fuel] initiative led to implementation of an electric mobility ecosystem, with the entry into operation of the first two ecostations for public charging electric vehicles in the Valley of Aburrá and Eastern Antioquia,” according to EPM.
7. Education programs: The EPM Foundation, in partnership with the Mayor of Medellin and Antioquia governor, supported the training of 9,295 students in different programs of technical, technological and vocational education last year.
8. Home ownership program: EPM helped 425 families realize the dream of home ownership last year. The relatively low-cost houses were built with wood from forest plantations that EPM manages to protect its hydropower reservoirs.