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Written by September 01 2021 0

Medellin-based multinational electric power giant EPM announced August 31 that insurer Mapfre’s just-issued US$100 million payment for physical damages at the estimated US$5 billion Hidroituango hydroelectric project now brings total damage payments from Mapfre to US$450 million.

EPM recently boosted the estimated cost of the Hidroituango project to COP$18.3 trillion (US$4.877 billion), since a 2018 diversion-tunnel collapse resulted in about a US$2 billion cost overrun -- once including both physical damages and even-greater losses from nearly four years of lost power sales.

With restoration work now well underway, EPM foresees the first two power generation units at Hidroituango coming on-line in the second half of 2022, while the six remaining units would come on-line between 2023 and 2025, eventually enabling a maximum 2.4-gigawatts of power capacity.

The Mapfre policy covers up-to US$2.56 billion for physical damages and up-to US$628 million for lost power sales.

US$1.29 Billion Debt Request Ahead of UNE-Tigo Divestment Plan

On a related front, EPM revealed August 31 in a filing with Colombia’s Superfinanciera oversight agency that it is seeking authorization to contract another US$890 million in external debt, plus another US$400 million in Colombian Treasury loans equivalent to COP$1.5 trillion. As a result, EPM’s debt load potentially could grow by US$1.29 billion.

Meanwhile, to help pay for the cost overruns at Hidroituango and simultaneously reduce the need for more debt funding, Medellin’s City Council plans to begin hearings next month on EPM’s request to sell its 50% share of the UNE-Tigo telecom/internet/cable-TV joint venture that it shares with Spain-based Millicom.

Written by August 18 2021 0

Medellin-based textile giant Coltejer announced August 17 a COP$14 billion (US$3.6 million) net loss for second quarter (2Q) 2021, down from a COP$724 million (US$187,000) net profit in 2Q 2020.

Gross income likewise plummeted to COP$5 billion (US$1.3 million), from COP$16.3 billion (US$4.2 million) in 2Q 2020 as a result of Coltejer’s shut-down of its money-losing non-woven-fibers production (see Medellin Herald July 16, 2021).

As for first half (1H) 2021, Coltejer posted a COP$40 billion (US$10.3 million) net loss, a slight improvement over the COP$49.8 billion (US$12.9 million) net loss for 1H 2020.

Aside from the usual boilerplate financial information in the latest report, Coltejer made special reference to the ongoing Covid-19 crisis that in prior quarters has bled most industries.

“The outbreak of the Covid-19 pandemic and the measures adopted by the Colombian government to mitigate the spread of the pandemic have significantly impacted the economy,” according to Coltejer.

“Based on the liquidity position of the company as of the authorization date of these financial statements, and the inability to fulfill the commitments acquired with suppliers and employees, the company’s management determined to temporarily suspend the operations of the business of non-woven fibers, which implies for the company a monthly decrease of 49% of current income and a monthly increase in its net loss. With respect to the personnel linked to this line of business, they were granted collective vacations.

“On the other hand, [the company is] seeking liquidity resources for the realization and implementation of technical and market studies through the sale of fixed assets, inventories and leasing of buildings, the implementation of training processes for personnel related to the new technical and market requirements, elaboration of the analysis of the required administrative structure, as well as the definition of job profiles and the analysis of the infrastructure and products required for the market and the analysis of required raw materials and inputs, to avoid shortages.

“In light of these developments, management continues to have a reasonable expectation of having adequate resources to continue in operation for at least the next 12 months and that the ‘going-concern’ accounting base is still adequate, concluding that the company has continuity in the future and that the strategies described above support the possible results that are broken down from this contingency in a controlled way,” Coltejer added.

Written by August 15 2021 0

Medellin-based multinational gold mining giant Mineros SA announced August 10 that its second quarter (2Q) 2021 consolidated net profit rose to US$10.4 million, up from US$8.7 million in 2Q 2020.

Revenues likewise rose, to US$128.4 million, up from US$126.3 million in 2Q 2020. But earnings before interest, taxes, depreciation and amortization (EBITDA) dipped to US$41.8 million, from US$53.4 million in 2Q 2020.

“During the second quarter of 2021, the world price of gold was US$1,770 per ounce, an increase of 3.7% compared to the end of first quarter 2021 and 5% higher than the end of the second quarter of 2020,” according to Mineros.

“Despite the positive news of economic recovery worldwide, the price of gold remained at strong levels due to economic stimuli packages, low central bank interest rates and high inflation in the United States.

“At the beginning of the third quarter 2021, the gold price continues to be strong, while the main concerns focus on the behavior of the Delta variant [of Covid-19] and the monetary policy of large economies,” the company added.

For all of 2Q 2021, Mineros produced 67,403 ounces of gold, of which 19,738 ounces were from alluvial production in Colombia; 32,381 ounces from underground mining at Hemco-Nicaragua; and 15,284 ounces from open-pit mining at Gualcamayo-Argentina.

As for its core alluvial mining operations in Antioquia, Colombia, “on June 23, the Colombian environmental authority [ANLA] replied to an appeal filed by the company in April. A good part of previous [negative] decisions were reconsidered. In that sense, once the impact was analyzed, even when not all the requested areas [for alluvial mining] were granted, the company will be able to continue with its alluvial operation.

“In September and October, a new request for environmental permits will be submitted, seeking to give continuity to the alluvial operation in the mid and long term,” according to Mineros.

On another front, “on July 30, in Colombia, we launched the ‘Llanuras Aluviales’ project, a new alluvial production unit that uses lighter technology, with easier transportation and allows for process optimization,” according to Mineros.

“Llanuras will give access to smaller areas with lower average ore grades. With an investment of around US$18 million, Llanuras will generate new development and employment opportunities in the area, promoting technology and business innovation in the Bajo Cauca region [in Antioquia],” the company added..

Total gold production for 2Q 2021 “was 4% lower than in the second quarter of 2020, explained by a drop in production in Gualcamayo (Argentina), given the natural depletion of a sector of the open pit mine and the sale of Operadora Minera in Colombia in June of last year,” according to Mineros.

Total cash costs rose 24% and the all-in sustaining cost rose 41% “mainly explained by higher production costs in Argentina and by the cost of purchases of artisanal material in Nicaragua, in addition to the development of the open pit mine in Argentina which requires the movement of a large amount of sterile material,” according to Mineros.


Written by August 15 2021 0

Medellin-based textile and recycled plastics specialist Enka de Colombia announced August 13 that its first half (1H) 2021 net profits jumped to COP$29 billion (US$7.5 million), a reversal from a COP$4.4 billion (US$1.1 million) net loss in 1H 2020.

Earnings before interest, taxes, depreciation and amortization (EBITDA) came-in at an all-time historic high -- COP$37 billion/US$9.6 million -- “favored by the situation of high international [textile] prices, the devaluation of the Colombian peso and the recovery in sales of textiles, industrial fibers and our ‘EKO’ recycled fibers,” according to Enka.

Construction of Enka’s new PET (polyethylene terephthalate) “Bottle-to-Bottle” recycling plant, “which will double our installed capacity, is progressing smoothly with investments of COP$21.2 billion [US$5.5 million] and it is expected to start operations by the end of 2022,” according to the company.

“The national strike during the month of May mainly affected local sales in some regions of the country and generated disruptions in the supply chain.

“Proper management of this situation avoided the interruption in the supply of essential raw materials and guaranteed the continuous operation of the plant to meet the sales commitments of our local and foreign customers. However, an economic impact due to unemployment cost overruns of close to COP$2 billion [US$520,000] is calculated, the vast majority of which will be seen reflected in the third quarter of this year,” the company added.

Operating income for 1H 2021 ended at COP$241 billion (US$62.7 million), up 50% year-on-year, “mainly due to the recovery of sales after the closings due to Covid-19, higher international prices and the reactivation of sales of virgin PET as a local supply alternative for customers,” according to Enka.

“The company continues with a solid financial position, ending the quarter with cash available in excess of COP$68 billion (US$17.7 million), a negative net debt ratio of -0.3-times EBITDA, even after investing in construction of the new Bottle-to-Bottle PET recycling plant, with costs amounting to COP$21 billion (US$5.4 million).

“Total assets increased by COP$55.5 billion (US$14.4 million) compared to the previous year, reaching COP$667 billion (US$174 million), mainly due to an increase in working capital derived from the increase in sales and investments in fixed assets for projects.

“On the other hand, total liabilities increased by COP$32 billion (US$8.3 million), ending at COP$230.6 billion (US$60 million), mainly in the supplier category to finance higher inventory levels,” the company added.

Through June 2021, exports accounted for 44% of sales, including strong growth in sales to the NAFTA countries (United States, Mexico and Canada), which now account for 23% of all sales, “offsetting other markets such as Brazil that have had a slower rate of recovery,” according to Enka.

‘Green’ Businesses Grow

Accumulated revenues for Enka’s “Eko” line of recycled products grew 21% year-on-year, to COP$68.5 billion (US$17.8 million), accounting for 31% of total sales, “mainly due to the recovery of sales of ‘EKO-Fibers.’ Exports represent 11% of the income of this line of business,” according to the company.

“EKO-PET” sales were 8,608 tons, with plant operation at full capacity. “Prices have increased in 2021 due to temporary supply restrictions for virgin PET due to the international freight situation and the cold wave in Texas (USA) at the beginning of 2021,” according to Enka.

“EKO-Fibers” (5,160 tons) volume grew 25% (+1,022 tons), “mainly due to the recovery of local and Brazilian demand, affected in 2020 by Covid-19,” according to the company.

“EKO-Polyolefins” (815 tons) sales dipped by 22% “due to high inventories in 2020 generated at the start-up of the plant. This year sales are adjusted to the availability of by-products (caps and labels) from current recycling processes,” according to Enka.

“Eko-Red” bottle uptake “continues to recover after the impact of Covid-19. Unfortunately, the collection of bottles was affected by the national strike, which strongly affected recycling volumes in the south of the country and generated difficulties and logistical cost overruns in much of the national territory,” the company added.

Textile and Industrial Threads Businesses

Excluding the production of virgin PET, the operating income of these textile-business lines ended at COP$152 billion (US$39.5 million), “47% higher than the previous year, due to higher sales volume and higher international prices,” according to Enka.

Industrial Yarns (6,595 tons) volume increased 32% (+1,615 tons), “highlighting the growth in canvas (+1,106 tons, up 47%) due to the strategy of strengthening Enka's position as the strategic supplier for the main tire companies in the region.”

Technical Threads sales grew 19% (+510 tons), “mainly in the USA and Colombia, offsetting lower demand in Brazil and substituting for lower-profit, non-strategic businesses.”

Textile Filaments (4,038 tons) sales grew 22% (+737 tons) “as a result of the recovery of demand affected by Covid-19 and difficulties in importing Asian products, benefiting mainly the sales of Nylon Filaments. Continuous Polyester Filaments showed a slow recovery,” the company added.

Written by August 15 2021 0

Medellin-based highway construction giant Construcciones El Condor on August 13 reported a first half (1H) 2021 net loss of COP$7.67 billion (US$2 million) -- mainly a temporary accounting impact from presumed losses arising from its partial stake in the "Vías de las Américas" highway concession project, which is in bankruptcy.

“This is a non-recurring effect recognized at the end of March 2021, only as an accounting phenomenon, and does not generate an impact on cash and therefore it does not affect the financial situation of the company,” according to El Condor.

“Excluding this accounting effect, net profit [for 1H 2021] would be COP$4.69 billion [US$1.2 million],” according to the company.

As of June 2021, income from ordinary activities totaled COP$258 billion (US$67 million), down 25.6% compared to the same period in 2020.

“This result is associated with the completion period of the projects that were executed during previous years with significant billings [and] the suspension of some projects pending environmental and property decisions, as well as the Magdalena 2 project, which is in the beginning stage,” according to El Condor.

“Additionally, the National Strike that began at the end of April also affected the pace of the works for reasons of physical security of our collaborators in some areas and shortage of the main supplies in the projects,” the company added.

“During 2021, the company is finalizing the profitable execution of fourth-generation ‘4G’ superhighway contracts, and begins the execution of new contracts, among which the EPC [engineering, procurement and construction] contract of the Magdalena 2 Consortium and public works contracts awarded by [Colombia’s highway agency] Invias in March 2021.”

Operating margin through June 2021 was 2%, while earnings before interest, taxes, depreciation and amortization (EBITDA) hit COP$22.5 billion (US$5.8 million), equivalent to an EBITDA margin of 8.72%, down from 14.9% in 2020, according to El Condor.

As of June 2021, the company’s construction backlog -- defined as the balance of works contracted and to be executed -- stood at COP$1.869 trillion (US$486 million).

An additional COP$1.05 trillion (US$273 million) in “projected backlog” is expected from the upcoming Santana-Mocoa-Neiva highway construction project. As a result, total backlog would rise to COP$2.9 trillion (US$755 million), according to the company.

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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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