Business 653
Sura 1Q 2023 Net Income Jumps 94% Year-on-Year
Tuesday, 16 May 2023 08:00 Written by Roberto Peckham
Medellin-based multinational insurance, health care and asset management giant Grupo Sura announced May 15 that its first quarter (1Q) 2023 consolidated net income rose 94% year-on-year, hitting a quarterly record of COP$834 billion (US$185 million).
Gross revenues likewise rose 39% year-on-year, to COP$9.6 trillion (US$2.1 billion), according to the company.
Citing the historic results, Sura explained that “at the end of 1Q [2023] the following accounting effects should be taken into account: SURA Asset Management incorporated new subsidiaries including [pension-fund manager] Protección, AFP Crecer and the new insurance company Asulado,” while depreciation of the Colombian peso against other currencies also affected results.
Meanwhile, “total costs and expense increased by 33% for the latest quarter, with operating earnings amounting to COP$1.4 trillion [US$311 million], for an increase of 80% compared to the same period last year,” the company added.
Grupo SURA's portfolio of subsidiaries and part-ownership in other companies showed the following results:
Suramericana: “This subsidiary recorded an all-time high net income totaling COP$318 billion [US$70.7 million] due to double-digit growth of the revenues obtained by all three insurance segments: Life (20%), Property and Casualty (29%) and Health Care (24%). This was coupled with a stable claims rate and a year-on-year increase in investment income of 122%.”
SURA Asset Management: “This subsidiary obtained a controlling net income of COP$206 billion [US$45.8 million] as a result of higher fee and commission income and the recovery seen with its legal reserves, together with a 35% growth in operating revenues, after adjusting for the effects of having consolidated Protección, AFP Crecer and Asulado as subsidiaries, in addition to the depreciation of the Colombian peso.”.
Investments in Bancolombia, Grupo Argos and Grupo Nutresa: Grupo SURA's income “also reflects the contributions made by [stock holdings in] associated companies that form part of its portfolio. Revenues via the equity method totaled COP$575 billion [US$128 million], for an increase of 6% compared to the first quarter of 2022. This reflects Bancolombia's positive return on equity (ROE), the double-digit increase in all of Grupo Nutresa's business lines and higher earnings on the part of Grupo Argos,” the company added.
Medellin-based textiles and plastics-recycling giant Enka announced May 12 that its first quarter (1Q) 2023 net income dropped 66% year-on-year, to COP$4.59 billion (US$1.01 million), versus COP$13.8 billion (US$3.05 million) in 1Q 2022.
Revenues likewise slipped to COP$146 billion (US$32.3 million), versus COP$156 billion (US$34.5 million) in 1Q 2022.
Earnings before interest, taxes, depreciation and amortization dropped by nearly half, to COP$9.1 billion (US$2.01 million) versus COP$17 billion (US$3.7 million) in 1Q 2022.
Declines in profits and sales came largely from “residual effects of the supply situation continuing from 2022 due to the conflict in Ukraine,” according to Enka.
On the other hand, “the approval processes for products from the new Eko-Pet [waste-plastics recycling] plant are advancing positively both in Colombia and abroad, which will boost the results in the coming months when recurring sales of this product begin,” the company added.
During 1Q 2023, Enka saw “signs of a slowdown in demand in some of our strategic markets and a greater competitive presence in Asia, after normalizing sanitary restrictions and logistics costs,” according to the company.
“This situation presents a major challenge for the company, since it has generated a reduction in international prices and makes it difficult to transfer to the sale price of inventory cost overruns caused by the war between Ukraine and Russia and inflationary increase in costs and expenses,” the company added.
Operating income dipped 6.3% year-on-year, to COP$146 billion (US$32.3 million), “as a consequence of a lower sales volume (-5%) and lower international prices,” according to Enka.
“Net profit also presents a decrease compared to 2022, as a consequence of the lower operating result and the increase in financial costs, mitigated by a positive result due to exchange difference from the revaluation of the Colombian peso against the U.S. dollar,” the company added.
“In the first quarter of 2023, exports reached US$14.6 million, similar to the levels of the previous year. However, the mix of destinations presents some changes due to the lower demand of some destinations, especially North America, which was offset by sales to Europe, Peru and Chile.”
In its “green” business lines (from recycling waste plastics), “accumulated revenues were COP$48 billion [US$ million], a decrease of 2.3% compared to the year above, mainly due to lower international prices that offset the higher 4% sales volume.”
Green products now account for 33% of sales, including “Eko-Pet,” “Eko-Fibras” and “Eko-Polyolefins” products.
As for its conventional textiles lines – accounting for 66% of all sales -- “revenues for the quarter were COP$97 billion [US$21.4 million], 8% lower than the year above, mainly due to the slowdown in demand in all businesses and due to lower international prices,” of which exports amounted to US$13.5 million.
As for its rest-of-2023 outlook, Enka expects to see “low economic growth worldwide, which will make competition more intense, especially in markets with an Asian presence,” according to the company.
Nevertheless, “we are convinced that the strategy defined by Enka over the years -- where the sustainability and added value are decisive -- will allow us to continue growing and strengthening our competitive position in strategic markets,” the company added.
Construcciones El Condor Posts COP$31 Billion Net Loss in 1Q 2023
Monday, 15 May 2023 09:18 Written by Roberto Peckham
Medellin-based highway construction giant Construcciones El Condor on May 12 posted a COP$31.6 billion (US$6.8 million) net loss for first quarter (1Q) 2023, more than triple the COP$9.2 billion (US$2.03 million) net loss in 1Q 2022.
However, revenues from ordinary activities rose 36% year-on-year, totaling COP$219 billion (US$48.3 million), versus COP$151 billion (US$33.3 million) in 1Q 2022.
The revenue boost “reflects the upward curve in the execution of the following works: EPC [engineering, procurement and construction] with the Rio Magdalena Highway Concessions, public works at the El Toyo [Antioquia highway tunnel) project and the Putumayo highway project with Invias [Colombia’s national highway agency],” according to El Condor.
Operating costs during 1Q 2023 rose 67% year-on-year, to COP$223 billion (US$49 million), resulting in a net-negative gross margin, at -1.51% for the latest quarter.
“This result in 1Q 2023 is mainly due to deficits in highway construction consortia that are in the [financial] closing stage, including Consorcio Farallones and Consorcio Aburra Norte, along with execution of the final stage of some projects such as the EPC Ruta al Mar and the EPC Pacifico 3 and for the pre-operational stage of the EPC Ruta al Sur,” the company added.
Earnings before interest, taxes, depreciation and amortization (EBITDA) likewise declined year-on-year, to COP$12.6 billion (US$2.78 million) down from COP$33 billion (US$7.3 million) in 1Q 2022
“Interest expense increased by 147.39% compared to the same period in 2022, all due to increases in interest rates,” the company noted.
Net quarterly losses “will continue to occur for several periods while the concessions begin to generate accounting profit, a behavior that obeys the normal cycle of the concessions due to their project-finance nature,” the company added.
Meanwhile, El Condor’s assets at the end of 1Q 2023 totaled COP$2.42 trillion (US$534 million), while liabilities closed at COP$1.46 trillion (US$322 million), of which current liabilities were 86% and non-current at 14%.
“The company's indebtedness decreased with respect to the end of the first quarter of 2022, by 3.11%, due to payment of debt,” according to El Condor.
Construction backlog – defined as works under-contract and to-be-constructed -- now stands at COP$2.78 trillion (US$614 million), the company added.
Bancolombia 1Q 2023 Net Income Down Slightly Year-on-Year
Thursday, 11 May 2023 10:57 Written by Roberto Peckham
Medellin-based international banking giant Bancolombia announced May 10 that its first quarter (1Q) 2023 net income dipped almost 1% year-on-year, to COP$1.7 trillion (US$369 million).
“Annualized return on equity (ROE) at the consolidated level was 17.7% for the latest quarter and 19.0% for the last twelve months,” according to the company.
“Gross loans amount to COP$267 trillion [US$58 billion], decreasing 1.0% compared to the last quarter of 2022. It is important to highlight the 3.4% appreciation of the Colombian Peso against the U.S. dollar that impacted the loan balance.
“The operation in Colombia and Banistmo in Panama were the main contributors for the credit portfolio contraction on a consolidated basis,” the company added.
Total provision charges on past-due loans for 1Q 2023 were COP$2.046 trillion (US$444 million), up 17.5% when compared to 4Q 2022, “led by credit deterioration mainly in the consumer portfolio,” according to Bancolombia.
“Basic solvency stood at 9.75% and the total consolidated solvency ratio was 12.01% for 1Q 2023, complying with the minimum regulatory requirements,” the company added.
As for its digital banking strategy, “Bancolombia maintains an encouraging growth trend. As of March 2023, the bank has 7.8 million active digital customers in the retail APP (over a period of three months), as well as 22.2 million accounts in its financial inclusion platforms (6.6 million users in ‘Bancolombia a la Mano’ and 15.6 million in ‘Nequi’),” according to the company.
As of March 31, 2023, Bancolombia's consolidated assets totaled COP$349 trillion (US$75.7 billion), down1.0% versus 4Q 20 but up 19.9% compared to 1Q 2022.
“The variation in total assets during the last year is largely explained by loan book growth,” according to the company
“During the latest quarter, the peso appreciated 3.4% against the U.S. dollar and depreciated 23.7% in the last 12 months. The average exchange rate was 11.8% higher in 1Q 2023 versus 4Q 2022, and 21.6% higher in the last 12 months,” the company added.
“In 1Q 2023, gross loans declined 1.0% compared to 4Q 2022 (increasing 0.3% when excluding the foreign-exchange effect) and rose 20.1% compared to 1Q 2022. During the last 12 months peso-denominated loans grew 14.0% and the dollar-denominated loans (expressed in U.S. dollars) grew 7.0%.
“At the end of 1Q 2023, Banco Agricola operations in El Salvador, Banistmo in Panama and BAM in Guatemala represented 28.7% of total gross loans. Gross loans denominated in currencies other than COP -- generated by operations in Central America, the international operation of Bancolombia Panamá, Puerto Rico and the U.S. dollar-denominated loans in Colombia -- accounted for 36.7% of the portfolio, and decreased 0.9% in the quarter (when expressed in COP).
“Total reserves (provisions in the balance sheet) for loan losses increased 6.7% during the quarter and totaled COP$16.513 trillion [US$3.58 billion] or 6.2% of the gross loans at the end of the quarter.
“During 1Q 2023, for the first time since 2020, the credit portfolio experienced a quarterly contraction. Such decrease is partially explained by the Colombian peso appreciation that impacted the balance on foreign subsidiaries.
“The largest decrease took place in the commercial portfolio both in absolute value and in percentage change (-1.2%).
“In consumer lending, the loan reduction was led by Bancolombia S.A. in line with the strong pick-up in interest rates and the lower credit demand, which was reflected in the decline of personal loans and credit card balances,” the company added.
Grupo Argos 1Q 2023 Profits Soar 81% Year-on-Year
Thursday, 11 May 2023 09:44 Written by Roberto Peckham
Medellin-based Grupo Argos – parent of subsidiaries Cementos Argos (cement/concrete), electric power producer Celsia and highways/airports concessionaire Odinsa – announced May 10 that its first quarter (1Q) net income jumped 81% year-on-year, to COP$570 billion (US$124 million).
Earnings before interest, taxes, depreciation and amortization (EBITDA) likewise rose 28%, to COP$1.6 trillion (US$349 million) and revenues rose 25%, to COP$5.7 trillion (US$1.24 billion).
Highlighting the 1Q 2023 results, Grupo Argos noted that Cementos Argos achieved 39% EBITDA growth Colombia, 2% in Central America 2% and 77% in the U.S.
“For its part, Celsia continued to consolidate its solar and power transmission and distribution platforms, which translated into a 13% growth in consolidated EBITDA,” the company noted.
“Odinsa registered a growth of passengers in its airport concessions, reaching 18%, while in roads it registered a growth in traffic of 3%,” the company added.
“During the quarter, Fitch Ratings confirmed Opain's BB+ rating and improved its outlook to stable given the recovery in traffic that the El Dorado Airport [Bogota] has been showing.”
Meanwhile, Grupo Argos' urban-development business “recorded extraordinary results with a cash flow that was almost 500% higher than the same period of the previous year. This business has guaranteed income of COP$400 billion [US$87 million] in the next five years,” according to the company.
“Since 2019, the urban development business not only has provided Grupo Argos with income in its separate states of close to COP$1 trillion [US$218 million], but also has positively transformed the growth of Barranquilla and Barú with the best planning standards and the development of urban infrastructure and first class hotels,” the company added.
