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Written by May 27 2020 0

Medellin-based construction giant Constructora Conconcreto revealed in a May 26 filing with Colombia’s Superfinanciera oversight agency that its first quarter (1Q) 2020 net income fell 34% year-on-year, to COP$20 billion (US$5.3 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) also fell 16% year-on-year, to COP$44.7 billion (US$11.9 million), while gross income fell 12%, to COP$169.7 billion (US$45 million), according to the company.

While the Covid-19 crisis hurt all construction companies in Colombia because of temporary quarantines and project shut-downs in March, most of the decline in profits this year came from extraordinary gains in 1Q 2019 that were absent in 1Q 2020, according to Conconcreto.

The profit variation “mainly corresponds to the results of 2019 that were affected by around COP$28 billion (US$7.5 million) by the dividends and profits for sale of the CCFC concession,” a one-time event last year, the company explained.

On the other hand, Conconcreto saw 1Q 2020 profit improvements from several other projects and investments “as well as a greater contribution from [commercial real-estate development consortium] Pactia,” according to the company.

Among initiatives to confront the Covid-19 crisis, Conconcreto renegotiated terms on its credit lines and accelerated certain divestments that have been in the works since 2018, according to the company.

“Since the start of the [divestments] plan in 2018, COP$274 billion [US$73 million] in cash has been received,” according to Conconcreto.

On the other hand, “the company has chosen to keep and pay the salaries of employees during the emergency period,” according to Conconcreto.

Construction backlog at end-1Q 2020 totaled COP$1.8 trillion (US$480 million), “which corresponds to around two years of operation,” according to the company.

Infrastructure projects account for 87% of the backlog and 13% in housing/building projects, according to Conconcreto.

In housing, “as of March 31, 2020, there are eight projects under construction, concentrated in Bogotá, Medellín, Neiva and Barranquilla,” according to the company.

These projects include 74 government-subsidized housing units “expected to sell on average in approximately nine months, 455 middle-class units expected to sell on average in 23 months, and 67 upper-income units expected to sell. on average in a period of 21 months,” according to Conconcreto.

Written by May 26 2020 0

Chile-based Latam Airlines – second only to bankrupt Avianca in Colombian air transport dominance -- announced May 26 that it filed for Chapter 11 bankruptcy in U.S. federal court.

The Covid-19 crisis – banning most air traffic -- forced Latam to absorb impossible losses, the company noted.

For example: Colombia has banned all regular passenger air transport for more than two months, with international flights continuing to be banned through at least August 31 and national flights banned through at least June 30.

“We want our stakeholders to know that we will continue to operate as travel restrictions and demand permit, paying our employees, meeting benefit obligations, and paying critical suppliers as well as respecting ‘Latam Pass’ miles and flight reservations as we work through the Chapter 11 reorganization process,” according to the company.

“In addition, all tickets, vouchers, or any form of credit will continue to be respected. We will also maintain partnerships with existing agencies, abide by corporate loyalty programs and sell tickets through our service platform, and you will be able to continue to interact with our customer service operators as you did prior to this announcement.

“The U.S. Chapter 11 financial reorganization process provides a clear and guided opportunity to work with our creditors and other stakeholders to reduce our debt, address commercial challenges that we, like others in our industry, are facing as a group. Latam will emerge from this process a more efficient, resilient, and ultimately strengthened airline group that is better placed to serve Latin America,” the company added.

The bankruptcy applies to Latam Group and its affiliates in Chile, Peru, Colombia, Ecuador and the United States, according to the company. "Entities incorporated in Brazil, Argentina, and Paraguay are not [in bankruptcy], due to the nature of their debt structure and current financial status,” according to Latam.

“Whether included in the filing or not, all of our affiliates are able to operate as travel restrictions and customer demand permit. Our cargo operations have been operating above capacity through these challenging times, and that will not change as a result of our reorganization.

“Through the Chapter 11 protection process, we will pay vendors for all goods and services ordered or delivered after the filing date in the ordinary course and according to our existing terms.

“A key part of the reorganization of the business is the right sizing and shape of the fleet to reflect the current and anticipated market conditions. To support these objectives and protect the value of our group, we have made the difficult but necessary decision to terminate certain leases that no longer serve the best interest of our business from an operational or financial standpoint,” the company added.

 

Written by May 23 2020 0

Medellin-based multinational utilities giant EPM on May 22 posted a COP$276 billion (US$73 million) net loss for first quarter (1Q) 2020 --solely because its debt accounting is in U.S. dollars, rather than in sharply-depreciating Colombian pesos.

“Due to accounting standards and due to the depreciation of the Colombian peso, understanding the debt that the company has in dollars, this accounting loss is generated by re-expressing it to pesos in accounting in Colombia,” according to EPM, 100% owned by the city of Medellin.

“This accounting loss is the result of the historical depreciation of the Colombian peso, which reached 24.03% in March as a consequence of the unusual behavior of world oil prices.

“In this sense, EPM must comply with accounting standards that imply that the depreciation of the Colombian peso leads to an increase in the debt balance in pesos due to the restatement of debt balances in dollars, even when the value owed in dollars does not change. The restatement negatively affects profits and generates high volatility,” the company added.

While depreciation hurts its accounting balance, “borrowing in dollars allows the business group to access the necessary funds to enable investments in infrastructure and growth, which are essential in generating employment,” the company explained.

Despite the accounting loss, EPM nevertheless maintained an investment-grade rating, actually “the highest credit rating among Colombian companies,” it noted.

During 1Q 2020, revenues rose 11% year-on-year, to COP$4.7 trillion (US$1.2 billion), while operating earnings rose 1%, to COP$1.2 trillion (US$318 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 5% year-on-year, to COP$1.5 trillion (US$397 million), with an EBITDA margin of 32%.

“The pandemic caused by the Coronavirus did not impact these figures, since its appearance in the country occurred at the end of the quarter,” according to EPM.

Despite the accounting loss, “these results reflect the health and financial strength of the organization” thanks in part to portfolio diversification, added EPM General Manager Álvaro Guillermo Rendón López.

“Of the COP$4.7 trillion [US$1.2 billion] in revenue as of March 31, 2020, EPM parent company contributed 49%, foreign subsidiaries 34% and national energy and water subsidiaries 17%,” he added.

Meanwhile, profit transfers to the municipality of Medellín in 2020 -- which will reach COP$1.5 trillion (US$397 million) or about COP$29 billion (US$7.7 million) weekly – “generate a decrease in equity as of March. The resources for transfers, which allow for greater social investment in the Antioquia capital, are guaranteed given EPM’s liquidity situation,” the company added.

At the end of 1Q 2020, EPM Group’s assets totaled COP$57.2 trillion (US$15 billion), up 4%, while liabilities totaled COP$34.5 trillion (US$9 billion), up of 12%. Equity now stands at COP$22.7 trillion (US$6 billion), down 6%, according to the company.

Written by May 17 2020 0

Medellin-based Grupo Orbis – owner of “Pintuco” paints, “Andercol” packaging products, “O-Tek” water treatments and “Mundial” hardware products – revealed in a May 15 filing with Colombia’s Superfinanciera oversight agency that it posted a COP$2.28 billion (US$582,000) net loss for first quarter (1Q) 2020.

That was a 32% improvement over the COP$3.34 billion (US$853,000) net loss in 1Q 2019, according to the company.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 7% year-on-year, to a positive COP$21.9 billion (US$5.6 million), according to the company.

“The first quarter of 2020 began with a positive dynamic for the Orbis Group,” according to the company, citing reduction of financial debt and smaller losses.

“Although the Group’s operations and sales were significantly affected in the last fifteen days of March by virtue of the measures adopted by governments to contain the impact of Covid-19, including preventive isolation and total closings. or partial closings of the production plants, as a Group we were focused on designing a strategy focused on the protection of life, health and well-being of all our stakeholders, optimization of existing capacities, profitability of recently made investments and the decrease in financial debt.

“To date, the impact and consequences that may be generated by the pandemic are uncertain and will largely depend on the extent and evolution of the contingency in the coming months.

“However, thanks to the level of diversification of the economic sectors in which the Group has a presence, the variety of goods and services offered, of which some participate in the chain of those declared ‘essential,’ we sit on strong foundations to combat uncertainty and continue to respond in a timely and effective manner to the emerging risks derived from the current situation.”

Orbis does business in 15 Latin American countries, while its popular “Pintuco” paint manufacturing and supply network operates in 11 countries: Colombia, Ecuador, Venezuela, Curaçao, Aruba, Costa Rica, Panama, Honduras, El Salvador, Guatemala and Nicaragua.

Written by May 16 2020 0

Toronto-based Gran Colombia Gold -- Antioquia's biggest gold miner -- announced May 15 that its first quarter (1Q) 2020 adjusted net income soared to US$21.2 million, up from US$7.9 million in 1Q 2019.

The company – whose principal mining operations are in Segovia, Antioquia – credited the profits improvement to “revenue growth resulting from higher gold prices in 2020 and the increased volume of gold sales” in the latest quarter.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) likewise rose to US$50.4 million, from US$35 million in 1Q 2019.

Commenting on the results, GCC executive chairman Serafino Iacono said:“Our first quarter results continued to show strength -- and that was when gold was more than $100 an ounce lower than where we are now [in mid-May 2020].

“The balance sheet also got stronger as we built up our consolidated cash position to about US$100 million and by the end of April, we had reduced our gold notes [debt] by 40% since the beginning of the year.”

GCC’s gold production in the first quarter of 2020 dipped to 56,247 ounces (from 60,601 in 1Q 2019) because of restricted movements of workers here during the Covid-19 crisis.

“The company’s mines have continued to operate during the national quarantine implemented in Colombia in late March,” according to GCC.

“However, restrictions on movement of people between communities has limited the availability of workers at the mines. Although April’s gold production totaled 12,602 ounces -- about 65% of the average monthly volume over the last 12 months -- the situation has improved and the Segovia [Antioquia] operations have been operating at about 95% of normal since mid-April,” the company added.

In other highlights, GCC announced that it has completed spin-out of its Marmato mining assets in Colombia through a reverse takeover transaction. As a result, GCC has a 74.4% interest in the resulting issuer, named “Caldas Gold Corp.”

Meanwhile, GCC recently signed a letter of intent with Renergetica Colombia to acquire am 11.2-megawatt solar-power project in Tolima, Colombia.

On yet another front, GCC announced May 25 the cancelllation of a proposed merger with Guyana Goldfields and Gold X, mainly to expand gold-mining operations in Guyana, South America. 

USAID ‘Legal Gold’ Project Sees Antioquia Rebound

On a related front, the Medellin-based “Legal Gold” project of the U.S. Agency for International Development (USAID) announced May 15 that gold miners in Antioquia are gradually returning to work following new Health Ministry protocols to avoid Coronavirus infections.

“The mandatory preventive isolation measure decreed by the national government on March 25, 2020, and which lasts until May 25, decreased the operations of the mining industry, despite the fact that this sector was included within the 34 exceptions of the Decree 457,” USAID noted.

“Large-scale mining companies tightened security measures and significantly reduced their operations. however, they gradually resumed them with biosecurity measures.

“A different scenario faced small-scale mining, especially the mining production units (UPM) of Bajo Cauca, North and Northeast Antioquia, and those of the department of Chocó, which had suspended activities due to the shortage of the supply chain, the fall of the local gold price, lack of buyers, mobility restrictions and fear of contagion by Coronavirus.”

These smaller-scale mining operations “began to resume activities gradually, motivated by the lack of income, the conditions offered by the territory and the isolation in which they find themselves, which [isolation] paradoxically becomes a point in favor of a possible active presence of the virus,” according to the agency.

“The commercialization of gold began to revive, despite the difficulties of moving within the municipalities -- especially in the UPMs that have contracts with international trading companies.

“In the case of the UPM of Antioquia (North, Northeast and Bajo Cauca) the picture is similar. Gold sales are made through the international trading company, located in Medellín, which is receiving the metal in this city but with a brief decrease in the price per gram -- between COP$10,000 and COP$12,000 [US$2.56 to US$3.07] --due to the unavailability of commercial flights, which has generated an extra cost for its mobilization.

“This situation has motivated some miners to sell their product to local gold purchases, where they are paid by the gram at a lower price,” USAID added.

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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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