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Written by May 26 2021 0

Medellin-based utilities giant EPM announced last night (May 25) that its board of directors just voted to start the process of selling its minority stake in the “UNE-EPM” telecom-internet-cable TV company and the related “Inversiones Telco” company.

UNE-EPM is a partnership between EPM and Spain-based multinational telecom provider Millicom.

According to EPM, proceeds from the proposed sale would be reinvested in EPM’s other businesses, mainly in electric power, water, sewer, trash and natural-gas services.

Medellin Mayor Daniel Quintero now must present the proposed divestiture of its stake in UNE-EPM to the Medellin City Council for final sale authorization, according to EPM.

UNE-EPM posted net losses in 2020 and 2018, while its 2019 net profit came-in at just COP$519 million (US$128,000).

For first quarter (1Q) 2021, UNE-EPM posted a net loss of COP$87 billion (US$23 million), an improvement over the COP$189 billion (US$50.5 million) net loss in 1Q 2020

Written by May 15 2021 0

Medellin-based highway construction giant Construcciones El Condor on May 14 announced a COP$51 billion (US$13.8 million) consolidated net loss for first quarter (1Q) 2021 – but the loss could be reversed in a contract-dispute resolution proceeding.

“The loss is generated by the negative results reported by the Vías de las Américas Concession for a value of COP$56.1 billion [US$15 million], due to higher work execution costs invoiced by the EPC [engineering, procurement and construction contractor] derived from events that generated an economic imbalance in the contract,” according to El Condor.

“This imbalance has been presented to the ANI [Colombia’s national infrastructure agency] with the contractual tools for conflict resolution. To date there are two favorable awards totaling COP$59.4 billion [US$16.1 million] and an additional claim is being filed. The sum of these claims exceeds the consolidated loss that is presented,” the company added.

For 1Q 2021, income from ordinary activities totaled COP$154 billion (US$41.8 million), down 20% year-on-year, according to the company.

“The year 2021 is a year of start of projects, structuring and tendering of new contracts for both concession, public works and private EPC,” according to El Condor. “This implies that we will have lower-than-average returns on project closings and starts [during 2021], something totally normal within project cycles,” the company added.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were COP$10.3 billion (US$2.8 million), with an EBITDA margin of 6.99%, down from 14% in 1Q 2020.

The dip in EBITDA margin “is due to the transition that the company undergoes in 2021 upon completion of EPC contracts with 4G [fourth-generation highway] concessionaires and the beginning of the new construction contracts,along with the effects of the La Niña phenomenon declared by IDEAM, in which the increase in rainfall ranges from 10% to 60% of normal levels,” according to El Condor.

Among 1Q 2021 highlights:

--In January, El Cóndor booked COP$151 billion [US$41 million].via sale of a 21% stake in the Concesion La Pintada highway concession to West Valley JL Holdco Limited.

-- On March 30, Colombia’s national highway agency Invias awarded a COP$418 billion (US$113.4 million) contract to El Condor for construction of access roads to the “Toyo Tunnel” (also known as Guillermo Gaviria Echeverri Tunnel), part of the new “Mar 2” highway connecting Medellin westward to Caribbean ports in Antioquia.

--On March 31, Invias awarded a 50% stake in a COP$1.15 trillion (US$312 million) contract for construction of portions of the San Franciso-Mocoa highway project in Putumayo department – a project expected to last nearly 10 years.

As of March 2021, El Condor’s assets totaled COP$2.37 trillion (US$643 million), of which 48% are current assets and 52% are non-current assets. Liabilities totaled COP$1.34 trillion (US$363 million), of which 75% are current liabilities and 25% are non-current liabilities.

Consolidated financial indebtedness for 1Q 2021 closed at COP$836 billion (US$227 million), according to the company.

“As of March 2021, the backlog, understood as the balance of works contracted and to be executed, stood at COP$1.97 trillion [US$534 million],” according to El Condor.

“This calculation takes into account COP$144 billion [US$39 million] of the billing executed during the quarter and the addition to the backlog of the Invias award to execute the works of the Access Roads to the Toyo Tunnel and 50% of the value of the award contract of the Invias of modules 1 and 2 of the San Francisco-Mocoa Bypass Section 2 and 3,” according to the company.

Written by May 15 2021 0

Medellin-based multinational insurance, health-care and financial services giant Grupo Sura announced May 14 a COP$211 billion (US$57 million) net profit for first quarter (1Q) 2021, compared to a COP$76 billion (US$20.6 million) net loss in 1Q 2020.

The big change “was mainly the result of the devaluation of the markets in the region” last year, as the Covid-19 crisis began to hit, according to Sura.

Sura also credited improved 1Q 2021 results to “a recovery in income due to investments in Sura Asset Management, higher profits of associated companies and control of operating expenses.”

Total revenues in 1Q 2021 rose 13.7% year-on-year, to COP$5.6 trillion (US$1.5 billion), “reflecting a growth of 7.1% in written premiums and 9.3% in income by commissions. Additionally, investment income reached COP$296 billion [US$80 million], compared to the atypical losses in the first quarter of last year, generated by the fall of the capital markets globally.

“Likewise, the increase in income from the equity method stands out due to the higher profits of [Sura’s partial shareholdings in] Bancolombia and Grupo Nutresa and a recovery of Grupo Argos and Protección,” the company added.

Among the 1Q 20201 highlights:

-- The Suramericana insurance subsidiary in Colombia “has vaccinated more than 400,000 EPS Sura [health insurance network] subscribers against the Coronavirus at 91 vaccination centers, with a total capacity for applying around 25,000 doses per day, depending on the availability of these vaccines,” according to the company.

As a result, the Covid-19 fatality rate among Sura subscribers and policy-holders was less-than one-third that of the total Colombia population, according to the company.

While Suramericana obtained a 7.3% growth in written premiums, totaling US$1.3 billion, “retained claims rose by 14.5%, mainly in the Life and Health Care segments,” which resulted in a net loss of US$3 million for this subsidiary -- a consequence of Covid-19 claims.

-- Growths in written premiums and fee and commission income, a recovery in returns from the proprietary investments made by pension fund management firms (legal reserves), as well as an increase in the revenues received via the equity method from the stakes held by Grupo Sura, collectively boosted operating income to US$1.56 billion in 1Q 2021.

“We are seeing the benefits of a well-balanced portfolio that is driving the growth of our revenues and bottom line, as well as the headway made by Suramericana and Sura Asset Management in consolidating efficient operations,” added Sura chief financial officer Ricardo Jaramillo.

“Also worth noting is the controlled rise in expenses of just 6.3%, thanks to our ongoing focus on gaining greater efficiencies together with operating expenses that dropped 0.4% in spite of the increase in claims with Suramericana’s Life and Health Care Insurance segments,” he added.

-- Sura Asset Management recorded a growth of 7.5% in fee and commission income, mainly driven by its line of retirement savings (pensions), “Inversiones Sura” (savings for private individuals) and Sura Investment Management (asset management for institutional clients).

Corporate-wide assets-under-management meanwhile grew 16.6% year-on-year, to US$150 billion, the company added.

Written by May 14 2021 0

Toronto-based Gran Colombia Gold (GCC) – operator of Colombia’s biggest gold mine at Segovia, Antioquia – on May 13 announced US$21.2 million in adjusted net income for first quarter (1Q) 2021, up slightly from US$21.2 million in 1Q 2020.

The year-over-year improvement in adjusted net income came mainly from existing mine operations “together with a decrease in finance costs due to the reduction in the company’s debt over the last year,” according to GCC.

In February 2021, GCC finalized a partial spin-out of its Marmato mining assets in Colombia, leaving it with a 44.3% equity stake in “Aris Gold Corporation.”

The company also added a 27.3% equity interest in Denarius Silver Corp. to its portfolio in the first quarter of 2021, “giving it exposure to the Lomero-Poyatos polymetallic deposit located in Spain, in close proximity to the Matsa JV project, and to the Guia Antigua and Zancudo Projects in Colombia,” according to GCC.

GCC gold production at Segovia totaled 49,058 ounces in 1Q 2021, down from 50,346 ounces in 1Q 2020. “The company remains on track with its annual production guidance for 2021 of 200,000 to 220,000 ounces of gold,” according to GCC.

“The company’s ongoing drilling program at Segovia continues to provide encouraging results, reaffirming confidence in the high-grade nature of the Segovia gold deposits,” according to GCC.

Consolidated revenue amounted to US$101.9 million in 1Q 2021, up slightly from US$101 million in 1Q 2020, “reflecting an increase in the company’s realized gold price to an average of $1,812 per ounce sold from $1,570 in the first quarter last year, offset by lower gold sales volume this year, which included only one month of Marmato’s operating results prior to the loss of control of Aris in early February 2021,” according to GCC.

Total cash costs at Segovia averaged $825 per ounce in 1Q 2021, “a slight improvement from $830 per ounce in the fourth quarter of 2020 and up from $604 per ounce in the first quarter of 2020,” according to GCC.

“The year-over-year increase in Segovia’s total cash cost per ounce reflects an increase in contractor and artisanal mining payment rates (which had not changed since 2017) implemented in the third quarter of 2020 in response to the current gold market conditions; higher spot gold prices which increased production taxes on a per ounce basis, and; additional costs to maintain the necessary Covid-19 protocols required to protect the health and safety of Segovia’s workers and the local communities,” according to GCC.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) dipped to $46.3 million for 1Q 2021, compared with $50.4 million in 1Q 2020.

“The company’s balance sheet remained solid with total cash of $73.6 million at the end of the first quarter of 2021. After the quarterly amortizing payments in 2021 and the early optional redemption completed on May 10, 2021, the aggregate principal amount of Gold Notes currently outstanding is $19.75 million. The company also completed a partial redemption in April 2021 of 10% of its Convertible Debentures bringing the amount outstanding down to Cdn$18 million [US$14.8 million],” GCC added.


Written by May 14 2021 0

Medellin-based textile and plastics-recycling giant Enka Colombia reported May 13 a COP$$12.6 billion (US$3.4 million) net profit for first quarter (1Q) 2021, a big reversal from the COP$3 billion (US$814,000) net loss in 1Q 2020.

“The results of the first quarter of 2021 present the best result of recent periods, as a consequence of the good demand behavior in strategic businesses and the benefits of a higher exchange rate, whose effects had been limited in previous quarters by exchange hedges taken prior to the Covid-19 crisis,” according to Enka.

“So far this year, EBITDA [earnings before interest, taxes, depreciation and amortization] amounts to COP$17 billion [US$4.6 million], exceeding the 1Q 2020 result by about 50%,” the company added.

EBITDA margin during 1Q 2021 rose to “a historically high level, ending at 15% of sales, while the previous year it stood at 11%,” according to Enka.

“This behavior is explained by several factors:

“1. The impact of the stoppage of operations of a large part of Enka's production during the last week of March 2020;
“2. The benefits of a higher TRM [Colombian peso-exchange rate] on the company's income, a high percentage of which is indexed to the U.S. dollar.
“3. The strong increase in international prices, as a consequence of the rapid recovery of world demand and its pressure on the supply of transport services, which was a carryover to sale prices,” the company added.

Operating income grew 10.7% year-on-year, to COP$113.6 billion (US$30.8 million), “as a result of the increase in international prices and higher sales volume, mainly due to the reactivation of virgin PET [waste plastic] sales.”

“At the end of 2020 a raw material supply agreement was reached with Alpek to reactivate the sales of virgin PET, seeking to offer a local supply alternative to customers,” the company added.

Export Markets

Exports in 1Q 2021 came-in-at US$12.5 million, representing 43% of total sales.

“Market diversification continues to be essential to mitigate the effects of Covid-19 on some regions, highlighting the increase in the United States, Canada and Mexico (NAFTA), which increased their participation to 23% (2020: 17%) and offset the lower sales to Brazil, a market strongly affected by the pandemic,” according to Enka.

‘Green’ Businesses

Income in this segment rose 3% year-on-year, to COP$34 billion (US$9.2 million), accounting for 33% of sales, while exports of “green” products amounted to US$1 million, or 11% of business revenues.

Waste-plastic-bottle uptake “grew 24% versus 4Q 2020 due to the pricing and recovery strategy and gradual development of the PET market, which covered the current demand of the ‘EKO-PET’ plant (4,510 tonnes), ensuring operation of the plant at 100% in the period,” according to Enka.

As for the “EKO-Fibras” market (2,740 tonnes), this dipped 422 tonnes “mainly in Brazil and Argentina due to the effects of Covid19.”

As for the “EKO-Polyolefins” market (373 tonnes), demand fell 193 tonnes “due to lower inventories and reduction in bottle collection by Covid-19 in 2020, partially offset by better margins,” according to the company.

Textile and Industrial Businesses

Excluding a temporary dip in virgin PET production, revenues rose 2% year-on-year, to COP$70 billion (US$19 million), “due to higher international prices that offset the lower volume (-2%),” according to Enka. “Exports reach US$11.5 million, representing 92% of the company's exports.”

Industrial threads tonnage sales (3,319 tonnes) grew 8% year-on-year “due to strategy in ‘Lona,’ which grew by 29%, against technical thread sales where the most profitable markets are prioritized,” according to Enka.

The textile filaments division (2,018 tonnes) saw a 20% decline in sales volume “due to the pandemic that affected demand both in the local market and in exports. Although sales have been recovering its dynamics have not yet reached the levels prior to Covid-19,” according to Enka.

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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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