EPM 3Q 2019 Net Income Falls Year-on-Year, but Nine-Months 2019 Improves

Medellin-based multinational utilities giant EPM announced November 15 that its third quarter (3Q) 2019 consolidated net income fell 25% year-on-year, to COP$457 billion (US$134 million), down from COP$607 billion (US$177 million) in 3Q 2018.

The 3Q decline came despite a 9% year-on-year hike in gross revenues and a 13% boost in earnings before interest, taxes, depreciation and amortization (EBITDA), according to the company.

On the other hand, nine-months 2019 consolidated profits (January through September) rose 9%, to COP$181 billion (US$53 million), from COP$166 billion (US$48 million ) in nine-months 2018 — mainly thanks to greater demand for energy and higher power prices in Central American markets, along with higher energy sales in Colombia’s regulated power market, according to EPM.

Nine-months 2019 EBITDA also rose 15% year-on-year, while gross income rose 11% over the same nine months in 2018, according to the company.

EPM’s international affiliates generated 36% of corporate revenues, at COP$825 billion (US$241 million), up 20% year-on-year.

Its “Ensa” affiliate in Panama generated COP$361 billion (US$105 million) thanks to a boost in client numbers and higher prices. The “EEGSA” affiliate in Guatemala generated COP$272 billion (US$79 million), thanks to greater power sales, while the “Delsur” affiliate in El Salvador brought-in COP$147 billion (US$43 million) mainly due to greater residential and industrial demand along with higher power tariffs.

As for EPM’s Colombia affiliates, the energy division’s income rose 7% year-on-year, while the water, sewage-treatment and trash-collection utilities boosted income 116% year-on-year, mainly thanks to the start-up of the “Aguas Claras” sewage plant north of Medellin.

Hidroituango Outlook

Meanwhile, EPM revealed that as of September 30, 2019, the Hidroituango hydroelectric project had reached 74.4% completion.

“For commissioning, it is estimated that the first power generation unit could enter service from the last quarter of 2021. However, this date of commissioning is very dynamic, due to the changes that occur in the variable techniques and the evolution and efficiency of the measures implemented to meet the contingency,” according to the company.

As for the company’s Mapfre insurance policy covering lost power sales and physical damage at Hidroituango, “the policy establishes an insured limit of US$2.55 billion for coverage of material damage to infrastructure and equipment. It also has coverage to cover the delay-of-entry-into-operation (money no longer received for damages arising from the contingency) for US$628 million, amounts that establish the maximum responsibility of the insurer,” according to EPM.

“The amount that the insurer will recognize and its corresponding payment schedule will be the result of a rigorous analysis of the quantification of damages, the results of which will be linked to the conditions of the policy such as deductibles, limits, additional coverage, among others,” the company added.