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Written by April 29 2021 0

Colombia-based Cemex LatAm Holdings reported a US$3.8 million net profit for first quarter (1Q) 2021, up sharply from a US$30.4 million net loss in 1Q 2020.

“Consolidated net sales during the first quarter of 2021 increased 7% on a like-for-like basis adjusted for currency fluctuations, compared to the first quarter of 2020,” according to the company. “Net sales improved in all countries except Panama.”

Cost of sales as a percentage of net sales increased 1.6pp during the quarter, from 59.4% in 1Q20 to 61.0% in 1Q21. The increase was mainly due to higher maintenance costs and higher variable costs in Nicaragua.

Operating expenses as a percentage of net sales decreased 2.7 percentage points during the latest quarter, from 28.3% in 1Q 2020 to 25.6% in 1Q 2021, “driven by our cost savings program,” according to Cemex LatAm.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for 1Q 2021 rose 12% in like-for-like terms, compared to 1Q 2020. EBITDA margin during 1Q 2021 also increased 0.8 percentage points versus 1Q 2020.

“The EBITDA margin expansion was mainly driven by higher volumes and lower selling, general and administrative expenses, despite higher maintenance expenses of US$5.7 million during 1Q 2021,” according to the company.

Net debt declined by US$35 million during 1Q 2021, to US$619 million. Free cash flow reached US$26 million in 1Q 2021 versus US$2 million in 1Q 2020.

“The improvement was mainly driven by a positive working capital effect and higher EBITDA,” according to Cemex. “Our average working capital days were negative during 19 days in 1Q 2021 versus seven negative days during 1Q 2020. Our financial expense decreased by US$2.4 million, or 18%, compared to the same period last year.

Net debt to EBITDA ratio improved to 3.4-times in March 2021, from 3.7-x in December 2020.

As for the rest-of-2021 outlook, “we are giving a strategic CAPEX estimate of US$40 million,” of which “US$35 million is related to the general development of our Maceo [Antioquia] cement plant project in Colombia,” according to Cemex.

Colombia Results

In Colombia, the cement/concrete industry “is experiencing robust growth, with the self-construction and infrastructure sectors as the main drivers of demand,” according to Cemex.

“Our cement volumes in Colombia grew 4% [during 1Q 2021], less than the industry in the quarter, mainly due to our pricing strategy and competitive dynamics.

“Our cement prices during the quarter improved by 4%, compared to the same period last year, and by 1% sequentially, in local currency terms.

“Despite the imposition of new [Covid-19 quarantine] containment measures in April, we believe the outlook remains favorable, supported by record home sales, the execution of existing 4G [fourth-generation] highway projects and the roll-out of new infrastructure programs,” the company added.

Central America Results

In Panama, 1Q 2021 cement volumes decreased 11% compared to the same period last year and improved 19% sequentially. “The industry's cement volumes remained weak during the first two months of the year, but showed signs of recovery in March,” according to the company.

In Costa Rica, “our cement volumes during the first quarter increased 7% due to better activity in the infrastructure and self-construction sectors. Our quarterly cement prices improved 2% compared to the same period last year, and 1% sequentially.

In Guatemala, El Salvador Nicaragua, “our cement volumes during the quarter improved by 16%, reaching the highest levels since 2016. Cement volumes increased in these three countries,” according to Cemex.

“In Guatemala, our cement volumes were driven by strong activity in the self-construction sector, a segment where we have a greater relative presence, as well as a gradual recovery in the formal sector. Our cement prices improved 1% compared to the same period last year and sequentially, in local currency terms.

“In Nicaragua, our cement volumes improved by 17% driven by the self-build sector, as well as government sponsored projects. Cement consumption during the quarter was also supported by the increase in remittances. Looking ahead, socio-political risks in the country could increase due to the presidential elections scheduled for November this year,” the company added.

Written by April 28 2021 0

Medellin-based multinational electric power and utilties giant EPM announced April 27 that its first quarter (1Q) 2021 net income jumped 31% year-on-year, to COP$856 billion (US$230 million).

Revenues rose 18% year-on-year, to COP$5.6 trillion (US$1.5 billion), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 12%, to COP$1.7 trillion (US$457 million).

The company will hand-over COP$1.4 trillion (US$377 million) to the city of Medellin (its sole shareholder) this year thanks to continuing profits, according to EPM. To date, Medellin has already received COP$300 billion (US$81 million) of the 2021 projected profits, the company added.

EPM attributed its positive results to “a better result of commercial operations,” mainly because of “an increase in power generation, given the high water inputs and the reserves in the reservoirs” for its mainly hydroelectric power operations.

So far this year, EPM infrastructure investments total COP$511 billion (US$137 million), of which COP$257 billion (US$69 million) corresponds to the 2.4-gigawatt, US$5 billion "Hidroituango" hydroelectric project in Antioquia, according to the company.

Grupo EPM’s total assets during 1Q 2021 grew 1% year-on-year, to COP$64.7 trillion (US$17.4 billion), while liabilities rose 5%, to COP$$38.4 trillion (US$10.2 billion), resulting in COP$26.3 trillion (US$7.07 billion) in net equity, down 3%.

Financial indebtedness stands at 42%, while the debt/EBITDA ratio closed at 4.4 as of March 31, 2021, up from 3.80 at end-March 2020, according to the company.

Written by April 23 2021 0

Sweden-based multinational personal-hygiene-products giant Essity announced last night (April 22) that it just paid US$1.54 billion to boost its shareholding in Medellin-based counterpart Grupo Familia to “at least 94%,” up from 50% previously.

According to company CEO Magnus Groth, “Essity has been a [partial] owner in Familia since 1985.With this acquisition we are building a stronger platform in Latin America to increase growth, profitability and efficiency as well as accelerate digital transformation.”

Grupo Familia has commercial operations in 13 Latin American and Caribbean countries and exports from Colombia to seven nations, selling personal-hygiene and paper products under the “Nosotras,” “Pequeñín” and “Familia” brands. The company just reported 2020 net income of COP$317 billion (US$87 million), up from COP$247 billion (US$68 million) in 2019.

Essity meanwhile has commercial operations in 150 countries, selling personal-hygiene and paper products under the “Tena” and “Tork” brands.

Essity’s net sales in 2020 amounted to SEK122 billion (US$14.5 billion), while full-year 2020 net profits came in at SEK11.7 billion (US$1.4 billion), up from SEK10.2 billion (US$1.2 billion) in 2019, according to the company.

“Essity's decision to acquire the majority shareholding of Productos Familia S.A. will help accelerate Grupo Familia's long-term growth strategy, ensuring its access to more markets in the region,” according to Familia.

“We are happy with this announcement and to start this new chapter in the success story of Grupo Familia,” added company president Andrés Felipe Gómez. “We know that by working more closely with Essity we can leverage innovation, build stronger and more sustainable brands, accelerate digital transformation and foster a culture more agile and enterprising,” he concluded.

Written by April 21 2021 0

EPM’s problem-plagued, US$5 billion “Hidroituango” hydroelectric project is facing yet another threat from a new assets-embargo order brought by Colombia’s Comptroller-General against one or possibly all of the Hidroituango construction contractors.

In an April 21 press conference, EPM general manager Jorge Andrés Carrillo Cardoso cautioned that the full, immediate impact of the Comptroller’s surprise embargoes – aiming to grab COP$4 trillion (US$1.1 billion) from the Hidroituango contractors -- has yet to be analyzed completely, via continuing discussions with the involved contractors.

The contractors meanwhile retain rights to appeal the Comptroller embargoes -- possibly enabling continuation of their Hidroituango project work, while some future appeals process proceeds.

While EPM continues to hold the required financing for the project, the Comptroller embargoes potentially could savage the finances of the contracting companies, causing them to stop work – resulting in enormously costly delays that could have consequences for EPM’s finances, even though EPM has a “contingency plan” for replacing contractors.

One such rumored "contingency plan" is to hand the Hidroituango project to China Three Gorges company, a Chinese state-owned construction contractor. In furtherance of this aim, the Chinese government last year published a fawning report in the state-owned People's Daily newspaper on Medellin Mayor Daniel Quintero, sparking rumors that Quintero is cultivating a strategic "friendship" for his future political career.

However, EPM isn't yet saying what the future plan is for Hidroituango if the current contractors are ruined by the Comptroller. “The information we have at this time is still very preliminary and is being analyzed by each of the parties and related companies,” EPM GM Carrillo stated at the press conference.

Just prior to the press conference, EPM issued a bulletin stating that “it has been reported that Integral SA and possibly the other EPM contractors in the Hidroituango project had their accounts seized by the Comptroller General of the Republic within the framework of the fiscal responsibility process” -- a process first unveiled by the Comptroller last December (see Medellin Herald 12/03/2020, “Colombia’s Comptroller-General Blames Hidroituango Contractors, Former Officials, Politicians for US$1.18-Billion in Losses at Hidroituango Project”).

“EPM is not a party to such processes and has not received notification, nor have its accounts been seized. In accordance with the foregoing, EPM at this time is not in the capacity to report if such measures have any effect for the company or for the project,” the EPM bulletin concluded.

EPM’s Carrillo added at the press conference that once the company completes its analysis of the immediate impact of latest Comptroller actions, it will issue a public statement explaining its plans for completing the Hidroituango project.

As of this moment (1 pm Tuesday, April 21), the only publicly available document from the Comptroller specifies the seizure of certain bank accounts and real-estate properties held by Hidroituango construction consultant Integral SA.

However, this same document also states that “responsible companies” involved in the Comptroller's COP$4 trillion demand include all the Hidroituango consortia members including Camargo Correa, Conconcreto, Coninsa Ramon H, Ferrovial Agroman Chile, Sainc Ingenieros Constructores, Ingetec, Sedic, and third-party project insurors including Mapfe, Seguros Generales Suramericana, Axa Colpatria and SBS Seguros Colombia.

“Affected parties” named in the demand include the Hidroituango S.A. corporate entity, EPM, the Antioquia government’s Instituto para el Desarrollo de Antioquia (IDEA), EPM subsidiary Central Hidroeléctrica de Caldas (CHEC), Colombia’s national energy finance agency FEN as well as the Colombian national government.

Also named in the complaint as "responsible parties" are a host of former Medellin and Antioquian mayors and governors as well as former EPM and Hidroituango project officials, according to the Comptroller document.

Late Wednesday, April 21, the Hidroituango construction consortium issued a press bulletin stating the following: "The CCC Ituango Consortium and the companies that make it up have not received any communication by the Office of the Comptroller General of the Republic nor from our financial providers, on the imposition of embargoes on their accounts.

"During the  fiscal responsibility process we have provided all the information necessary to clarify the allegations raised by the Comptroller and demonstrate that in the execution of civil works under our charge, we have always acted in good faith, diligently and in accordance with the good practices of the engineering, complying with the designs and instructions provided by EPM."

 

Written by April 01 2021 0

Medellin-based real-estate developer and timber producer Valores Industriales announced March 31 that its full-year 2020 net income soared to COP$14.7 billion (US$4 million), up from a COP$102 billion (US$27.8 million) net loss in 2019.

Revenues also rose, to COP$26.5 billion (US$7.2 million), from COP$18 billion (US$4.9 million) in 2019.

Valores Industriales (VI) -- a spin-off from Medellin-based multinational paper-products giant Grupo Familia – has two principal subsidiaries: “Reforestadora y Manufacturera Los Retiros,” a producer of timber and lumber mainly in the Medellin-metro “Oriente” area around the municipality of El Retiro, Antioquia, and the “Valores Inmobiliarios Cinco” developer of gated-community housing and parcel-lots mainly in the El Retiro area.

“Valores Inmobiliarios Cinco” had two significant project developments in 2020, including:

1. “Montealiso:” In fourth quarter of 2020, “the breakeven point was reached in the sale of lots and in December 2020 the parceling license was obtained for the execution of the Montealiso project, thus achieving the approval of business conditions for Alianza Trust for the start of the work that took place towards the end of December 2020,” according to VI.

2. “Montecerezo:” During 2020, the development of the second stage of the Fizebad Reserva gated-community (in rural El Retiro) included further designs and studies for the execution of the project.

“At the end of 2020, the pre-sales trust was established for the start of the commercialization of the project. During the year 2021, the license of Montecerezo is to be presented to the municipality of El Retiro for review and approval,” according to the company. “Although Covid-19 during the year 2020 decreased sales in the first semester, the second semester recovered positively, reaching a point of equilibrium and allowing the works to begin.”

Timber-Lumber Projects

Meanwhile, during 2020 VI completed the assembly and initial start-up of its “Aserrío” (timber sawmill) project in rural El Retiro. Lumber sales from this project “were very close to reaching the budget for the year despite the pandemic, in which [the sawmill] only stopped for 15 days until the Covid-19 biosafety protocol was completed, when safety equipment was acquired and staff were trained in care and protocols to follow,” according to the company.

Meanwhile, VI’s related “Finca los Bosques” forestry project continued to move forward, including “establishment and maintenance of plantations and the development of road infrastructure on the property,” according to the company.

Cortezza Commercial Building Update

On another front, VI’s “Cortezza” commercial office building on the Las Palmas highway just east of Medellin saw its leased space grow to 14,877 square meters during 2020, via VI’s participation in the “Azulgrana” joint venture.

Despite progress in leasing at Cortezza, the Covid-19 pandemic “generated a paralysis in the placement of new [leased] areas and the pandemic caused considerable unemployment in the building on the occasion of biosecurity measures, social distancing and work-at-home for all those positions that [lessee] companies could make. However, it was possible to make agreements with all tenants who have long-term contracts, thus enabling a [financial] balance-point for the business without considerable cost overruns for the project and its future viability,” according to VI.

As for VI’s separate investments in Colombian salt producer Brinsa S.A., VI boosted its share stake in Brinsa to 19.35% during 2020, up from 12.47% previously.

Page 9 of 37

About Medellin Herald

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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