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EPM Headquarters in Medellin EPM Headquarters in Medellin Source: EPM

EPM 3Q 2020 Net Income More-Than-Doubles Year-on-Year

Published in Companies Written by  October 30 2020 font size decrease font size increase font size 0
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Medellin-based multinational utilities giant EPM announced October 29 that its third quarter (3Q) 2020 net income hit COP$1.3 trillion (US$337 million), up sharply from COP$457 billion (US$134 million) in 3Q 2019.

As for the first nine months of this year (January through September), EPM Group revenues are up 6%, to COP$14.1 trillion (US$3.65 billion), “thanks to the responsible management of finances and the diversification of the portfolio of services in six countries, which includes water supply; wastewater management; generation, distribution and transmission of energy; natural gas supply and solid waste management,” the company noted.

Nine-months 2020 operating income dipped 7% year-on-year, to COP$3.2 trillion (US$829 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) fell 4%, to COP$4.3 trillion (US$1.1 billion). EBTDA margin came-in at 31%.

“Of the COP$14.1 trillion [US$3.65 billion] of income achieved by the Group for the January-September period, EPM’s parent company contributed 51%, foreign affiliates 33% and national energy and water affiliates 16%,” according to EPM.

For full-year 2020,  EPM Group now estimates corporate profits between COP$2 trillion (US$518 million) to COP$2.4 trillion (US$622 million).

These estimates consider factors including “the coronavirus pandemic with its effect on the demand for public services and the payment of bills, the evolution of energy prices in the medium and long term, macroeconomics and the behavior of the exchange rate, as well as the incorporation of the new [Caribbean electric power] subsidiary Afinia to financial statements,” according to the company.

Covid-19 Impacts

Because of Colombian government decrees aiming to help families and businesses financially hurt by the Covid-19 shutdowns, EPM has had to absorb significant revenue cutbacks, the company noted.

Through the first nine months of 2020, EPM suffered revenue losses totaling almost COP$500 billion (US$130 million), “mainly due to lower revenues of COP$369 billion [US$95 million] and higher costs and expenses of COP$124 billion [US$32 million],” according to the company.

“The increases are in accounts-receivable (COP$269 billion/US$70 million); lower collections (COP$360 billion/US$93 million); discounts on timely payment (COP$19 billion/US$5 million) and freezes on financing installments (COP$31 billion/S$8 million),” according to EPM.

EPM finances also have been hurt by an exceptionally long drought season (through August this year) with resulting low hydrology in Colombia, impacting hydroelectric output.

“Another factor that weighed on results for the period was the lower demand for water, energy and natural gas associated with [reduced] economic activity, as a result of Covid-19,” according to EPM.

“In addition was the effect of a higher net accounting expense, excluding cash, due to an exchange difference of COP$748 billion (US$194 million), mainly caused by the restatement of debt in the U.S. dollars associated with the accumulated 18.36% devaluation of the Colombian peso.”

However, EPM has recouped COP$603 billion (US$156 million) of earlier exchange-rate losses recorded in March, “given the revaluation of the Colombian peso as of the second quarter of this year,” according to the company.

“Additionally, EPM has carried out actions in development of its foreign exchange risk hedging strategy that has allowed it to significantly improve its risk profile against currency volatility,” the company added.

Of the COP$1.49 trillion (US$389 million) budgeted for 2020  for profit transfers to the city of Medellin (its sole shareholder), EPM has already made payments of COP$1.3 trillion (US$337 million), the company added.

For the upcoming 2021 year, EPM estimates profit payments to the city of Medellín to be in the range of COP$1.1 trillion (US$285 million) to COP$1.3 trillion (US$337 million).

 At the end of September 2020, EPM reported total assets of COP$62.8 trillion (US$16.3 billion), up 14%, while liabilities rose 23%, to COP$37.9 trillion (US$9.8 billion). The debt/EBITDA ratio closed the third quarter at 4.41, compared to 3.80 in 2019.

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