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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.


Medellin-based multinational Grupo Orbis – producer of “Pintuco” paints, “Otek” water-handling systems and numerous chemical products – on November 14 posted a COP$10 billion (US$2.9 million) net profit, a big reversal from the COP$8 billion (US$2.3 million) net loss in 3Q 2018.

Gross revenues rose 6.3% year-on-year, to COP$1.08 trillion (US$315 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 125%, to COP$87.7 billion (US$25.6 million).

These positive results are mainly due to a 9% jump in paint sales and a 71% jump in paints-division EBITDA -- spurred by architectural-sector demand along with general repainting demand in Colombia, according to the company.

Meanwhile, the Orbis chemicals division is benefitting from efficiencies resulting from the recent transfer of production to its Cartagena, Colombia facilities.

The company also credited better financial results from its affiliates in Brazil, Argentina and Central America.

Meanwhile, corporate financial obligations -- net of cash and short-term investments -- declined year-on-year, to 2.9-times, versus 4.2-times, the company added.


Sura 3Q 2019 Net Income Jumps 35% Year-on-Year

Friday, 15 November 2019 10:27 Written by

Medellin-based multinational insurance and investment specialist Grupo Sura on November 14 posted a 35% year-on-year jump in third quarter (3Q) 2019 net income, to COP$1.5 trillion (US$438 million).

The biggest contributor to net income (COP$682 billion/US$199 million) in the latest quarter came from the Sura Asset Management (AM) division, which manages a growing basket of profitable pension funds in Central and South America.

Second-biggest net-income contributor was the Suramericana insurance division, at COP$300 billion (US$87.7 million), according to the company.

Corporate-wide operating revenues rose 14.8% year-on-year, to COP$16.2 trillion (US$4.7 billion), while operating expenses hit COP$13.8 trillion (US$4.03 billion), up 13%.

“This produced operating earnings amounting to COP$2.4 trillion (US$701 million), for a growth of 26.3%, thanks to our ongoing efforts to gain greater efficiencies, optimize the profitability of our operations and the positive returns on the investment portfolios,” according to Sura.

“Likewise, fee and commission income continued to show a resilient level of growth (+9.9% in COP or +2.4% in local currencies) due to lower fee and commission rates in certain operations,” the company added.

Meanwhile, the Suramericana insurance division’s written premiums hit COP$9.5 trillion (US$2.78 billion), up 15.1%, while revenues from services rendered came to COP$2.8 trillion (US$818 million), up 23.7% year-on-year.

While Suramericana’s 3Q 2019 net income dipped 24% year-on-year, this fall “does not reflect the positive of its main operations due to the non-comparable impacts that affected the company’s performance,” according to Sura.

“These mainly included the macroeconomic and political situation in Argentina, the current situation of [lagging cost recovery] in the public health sector in Colombia and the VAT [value-added tax] expense incurred with life insurance commissions, also in Colombia.

“The current growth in the number of users of our healthcare services, which also benefits the other healthcare provider companies such as ‘IPS’ and ‘Dinamica,’ accounted for the growth posted in both healthcare revenues and the cost of services rendered.

“The retained claims ratio increased from 54.1% to 54.8%, which was mainly due to the increase in car and mandatory road insurance [SOAT] in the non-life [insurance] segment,” the company added..

As for Sura’s life-insurance segment (including Seguros de Vida Colombia, Asesuisa Vida in El Salvador, Seguros de Vida SURA Chile and Seguros Sura Vida in México), “the merger between the life insurance and workers’ compensation subsidiaries in Colombia took place during the first quarter of this year, with the former now posting the results of their combined operations,” the company noted.

“The life insurance segment shows a growth of 39.3% in written premiums thanks in part to the acquisition of Seguros de Vida SURA S.A. in Mexico in 4Q 2018, which contributed a total of COP$22 billion (US$6.4 million) to the consolidated production figure for this past quarter.

“If we were to exclude the contribution from this recent acquisition, the group life solution would have recorded a growth of 11.2% mainly due to the positive dynamics seen with the affinity channel in Colombia and El Salvador.

“The workers’ compensation solution also showed a growth of 16.2%, with this uptrend in revenues generated by a greater number of affiliates.

“The pension insurance solution also provided a significant amount of growth thanks to new business obtained in El Salvador for the 2019 policy.

“Furthermore, this past quarter marked one year since the capital optimization strategy was first deployed with the healthcare insurance solution in Colombia. This consisted of matching premiums as posted on the income statement with the actual collections of such, for which the corresponding adjustments were made to both reserves and capital requirements to levels consistent with the company’s collection patterns, which in turn had a positive effect on the working capital invested in this solution.

“This new initiative, upon completing its first year of having been introduced, generated a 167.5% increase in written premiums, which in turn implied higher reserves to be set up which leveled off the growth in earned premiums to 27.3%,” according to Sura.


Medellin-based multinational supermarket giant Grupo Exito on November 14 posted a COP$11 billion (US$3.2 million) net income for third quarter (3Q) 2019 – not comparable to 3Q 2018 since its former Brazilian operations are now officially listed as a “discontinued operation.”

Following a September 12 decision by most Exito stockholders and its board, Grupo Exito sold its stock holdings in the “Grupo Pão de Açúcar” Brazil operation to its France-based Grupo Casino holding company.

Exito’s corporate-wide gross income in 3Q 2019 rose 7.5% year-on-year, to COP$3.6 trillion (US$1.05 billion), while recurring earnings before interest, taxes, depreciation and amortization (EBITDA) rose 11% year-on-year, to COP$275 billion (US$80 million), according to the company.

Colombia operations saw their best sales in three years, posting 5.1% year-on-year growth, while recurring EBITDA margin grew 12.8% in 3Q 2019 and 4% in the first nine months 2019.
As a result, Colombia generated a net profit of COP$11 billion (US$3.2 million) for Grupo Exito.

“The results in Colombia show the positive impact of the implementation of innovative strategies, both in the ‘Exito Wow’ and ‘Carulla Fresh Market’ [store formats] and the maturation of the ‘Surtimayorista’ format. In addition to e-commerce and home sales, these accounted for 76% of total sales growth in the quarter,” according to the company.

In its Uruguay division, Grupo Exito bragged that this operation “continues to be the most profitable of the organization with an EBITDA margin of 8.4% and growth of 17%.”

In Uruguay, sales grew 4.1% year-on-year, “mainly due to the fresh-market format that already represents 34.5% of total sales,” according to Exito.

As for Argentina, “in the middle of a very challenging macroeconomic context, the company’s figures show a good commercial performance with sales growth of 36.7% in local currency,” according to Exito.

The company’s real estate business in Argentina “continued to leverage the results with more than 170,000 square meters of leasable commercial area and 93.4% occupancy.”

Grupo Éxito ended 3Q 2019 with 651 food outlets: 535 in Colombia, 91 in Uruguay and 25 in Argentina, with a consolidated sales area of more than 1 million square meters.

“The result of Grupo Éxito is very positive in sales growth and consolidation of its operating profit,” said Carlos Mario Giraldo Moreno, President of Grupo Éxito. “In the midst of very competitive markets, this profitable growth responds fundamentally to innovation in formats, digital transformation, complementary businesses such as real estate, credit, insurance and travel.

“In Colombia, the 'Éxito Wow, 'Carulla FreshMarket' value formats, and the cash-and-carry format brand, 'Surtimayorista,' continue to grow in double digits, and the electronic and direct commerce channels already represent 4.4% of the total sales of the company in this country, ” added Giraldo.


Mineros SA 3Q 2019 Net Income Triples Year-on-Year

Thursday, 14 November 2019 11:12 Written by

Medellin-based multinational gold mining giant Mineros SA on November 13 reported a 227% year-on-year boost in third quarter (3Q) 2019 net income, hitting COP$64.7 billion (US$18.7 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) likewise jumped 122%, to COP$127 billion (US$37 million), while EBITDA margin also rose to 35.8%, from 31% in 3Q 2018.

Gold production also jumped by 44% year-on-year – mainly because of additional output via the December 2018 acquisition of Argentinian assets (Gualcamayo).

In its financial report, Mineros noted that at the end of 3Q 2019, “the [global] price of gold had a positive behavior” at US$1,485 per ounce, up 5.41% over 2Q 2019 and up 15.8% over end-2018.

Meanwhile, Colombian peso depreciation against the U.S. dollar hit nearly COP$3,500/US$1 during 3Q 2019, Mineros noted. However, “for the remainder of the year, we expect interest rate reductions by the U.S. Federal Reserve and [investor] appetite for risk in emerging countries will strengthen the Colombian peso.”

Corporate-wide production in 3Q 2019 hit 73,078 ounces of gold-equivalent, of which Colombia accounted for 15,213 ounces, Nicaragua at 33,843 ounces and Argentina at 24,021 ounces.

Colombian output will rise again as long-pending environmental permits finally were approved at end-August, with production levels beginning to show a rebound in September, the company noted.

For the rest of 2019, Mineros projects a 20,000-ounce boost in production, likely delivering a full-year range of 300,000 to 320,000 ounces of gold-equivalent.

As explained in a separate November 12 presentation here at the annual Colombia Gold Symposium by Eduardo Flores, Mineros SA business development vice-president, Mineros continues to enjoy its best EBITDA results in relatively low-cost, low-environmental-impact alluvial mining in Colombia.

Over the next five years, Mineros aims to expand production in its four operating countries (Chile debuting last), boosting prospects for an envisioned US$1-billion market cap by 2025. Such a jump from “junior” to “intermediate” size will help attract more capital and hence better liquidity, Flores added.

Five projects in the pipeline eventually would enable another 10 million ounces of gold-equivalent production, he said. Resources and reserves likewise would hit around 18 million ounces by 2025, he estimated.


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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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