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Written by March 20 2020 0

Medellin-based multinational electric power giant EPM announced March 20 that it won the auction bidding for the “CaribeMar” assets formerly belonging to the financially troubled, state-owned “Electricaribe” power utility around the Caribbean coast of Colombia.

As a result, EPM “will be the new operator of the electric power service in Bolívar, Cesar, Córdoba and Sucre” departments, according to the company, 100% owned by the city of Medellin.

The addition of CaribeMar means EPM will expand its electric power service to 1.5 million more customers in Colombia. As a result, EPM will have a total of 19 million power customers in Colombia, or 35% of the entire Colombian electric power distribution and retail markets, up from 23% currently.

The deal will become final “in the coming months, when the national government completes the [sale] of CaribeMar,” according to EPM.

The national government has already assumed pension liabilities for retired and retiring employees of the former Electricaribe utility.  But EPM and (separately) Costa Energy Consortium -- which won a separate bid for the “CaribeSol” division of Electricaribe -- now will have to assume other liabilities, along with existing Electricaribe assets.

According to Colombia’s “Superservicios” (Superintendence of Public Utility Services) agency, EPM is expected to invest COP$5 trillion (US$1.2 billion) over the next 10 years to restore and upgrade faltering infrastructure left by an essentially bankrupt Electricaribe.

“During Electricaribe's intervention we have secured the resources for the continuity of the service, as is our constitutional obligation through the Business Fund,” Superservicios Superintendent Natasha Avendaño García stated.

The new operators of the former Electricaribe “will assume the investment and loss reduction plans aimed at improving networks, stations and substations and infrastructure in general, as well as the technification of [supply and demand] measurement systems,” she added.

Meanwhile, EPM general manager Álvaro Guillermo Rendón López stated that EPM is “committed to growth with sustainability in the energy commercialization and distribution market.”

“After the awarding of CaribeMar this Friday [March 20], the national government must close the financial transaction for the purchase of 100% of the shares, establish the new company and prepare and deliver the assets and liabilities included,” according to EPM.

“Meanwhile, the energy service will continue to be provided as it is today by the national government. It is important to remember that Electricaribe is a company intervened by the Superintendency of Public Services and in possession for liquidation purposes,” the company added.

EPM officers and executives “accompanied by an investment bank and external advisers, carefully studied and analyzed the viability and opportunity of the [CaribeMar] operation, always thinking of the company’s sustainability, in a business that will include investments of around COP$4 trillion [US$970 million] in the next five years,” according to EPM.

Electricaribe effectively went into bankruptcy following years of failing to recoup its heavy operating expenses, leading to frequent service instabilities -- largely the result of a decades-long culture of massive power theft in coastal cities, mainly in low-income neighborhoods.

Cleverly, EPM in recent decades pioneered the development and installation of a novel pay-as-you-go metering system – praised by power experts around the world – which enables low-income customers to buy subsidized “power cards” at neighborhood stores, letting them only buy the power they actually need rather than wasting “free” power via illegal connections -- connections that inevitably would destroy the ability of EPM (or any utility) to recoup investments in adequate generation and distribution infrastructure.

Written by March 05 2020 0

Medellin-based multinational electric power transmission, highways concessions and telecom service provider ISA announced March 4 that its full-year 2019 net income rose 7.5% year-on-year, to COP$1.6 trillion (US$457 million).

Revenues rose 12.5% year-on-year, to COP$8.1 trillion (US$2.3 billion), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 9.8%, to COP$5.3 trillion (US$1.5 billion), according to the company. EBITDA margin came-in at 64.9%.

Return on equity came-in at 13.2% for 2019, the highest in ISA’s history.

As for fourth quarter (4Q) 2019, net income fell 24% year-on-year, to COP$440 billion (US$126 million), while revenues rose 5.6%, to COP$2.3 trillion (US$658 million).

EBITDA in 4Q 2019 came to COP$1.4 trillion (US$400 million) and EBITDA margin was 61.7%; according to ISA.

Assets at year-end 2019 were COP$48.8 trillion (US$13.9 billion), up 8.5%, while liabilities rose 6.4%, to COP$27.6 trillion (US$7.9 billion). Meanwhile, investments during 2019 topped COP$2.6 trillion (US$744 million).

The net debt/EBITDA ratio and the EBITDA/financial interest indicators closed at 2.45 times and 5.96 times, respectively, “complying with the appropriate levels to maintain the current credit rating,” according to ISA.

Among 2019 operating highlights:
• ISA brought nine power-transmissions projects into operation in Colombia, Chile, Brazil, and Peru. “These projects will generate annual revenues of US$57.4 million,” according to ISA.

• In 4Q 2019, ISA CTEEP -- ISA’s affiliate in Brazil -- won three projects in a public auction held by the National Energy Agency of Brazil (ANEEL). “These energy transmission projects represent revenues close to US$20 million per year,” according to the company.
for the ISA’s Group.

• In October 2019, ISA signed a contract to buy 100% of the Cartagena-Barranquilla Coastal Concession, the company’s first highway concession asset in Colombia. “Through this transaction, the organization takes an important step towards its strategy of becoming as an important player in the Colombian road business,” according to ISA.

• Construction revenues for 2019 totaled COP$1.4 trillion (US$400 million), up 45.4% “This change was explained by an increase in construction dynamics of road concessions and energy transmission (COP$310 billion [US$88 million]), and higher gains from the capex optimization and schedules in advance in ISA CTEEP and its companies, for a total of COP$140 billion [US$40 million],” according to the company.

• The highway concessions business unit grew by 7.2% (COP$73 billion/US$20.8 million) “due to an increase in higher maintenance services (COP$30 billion/US$8.5 million) and the implementation of the ‘Free-Flow’ system in Ruta Del Maipo [Chile], plus the increase in management services (COP$37 billion/US$10.5 million),” according to ISA.

• In the telecommunications business unit, revenues rose 11.5% (COP$37 billion/US$10.6 million) “mainly due to the increase in the customer base for connectivity services in Colombia, Chile, and Peru,” according to ISA.

Written by March 04 2020 0

Medellin-based multinational gold mining giant Mineros SA on March 4 reported a 27% year-on-year profits drop for full-year 2019 -- due to an accounting calculation for costs of its Argentinian mining acquisition, which it got at a relatively favorable price in 2018.

Full-year 2019 net income came-in at COP$123 billion (US$35.6 million), with the dip “explained by the accounting effect we had in 2018 on the purchase of the Argentine operation in advantageous terms,” according to Mineros.

Despite the one-off accounting effect on profits, gold-equivalent production in 2019 actually rose 41% year-on-year, to 296,443 ounces, with Nicaragua contributing 43.2% of production, Argentina 32.8% and Colombia 23.9%, according to the company.

Gross revenues soared 67.7% year-on-year, to COP$1.35 trillion (US$391 million), “helped by the new operation in Argentina and a higher gold price and [COP-to-U.S. dollar] exchange rate,” according to Mineros.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 55% year-on-year, to COP$411 billion (US$119 million), with EBITDA margin at 30.5%.

Investments in 2019 totaled COP$188 billion (US$54 million), “mainly for maintenance, exploration, mine development, projects and the implementation of [advanced practices] in Nicaragua and Argentina,” the company added.

“We closed a satisfactory 2019, reflecting the results of our growth and diversification strategy,” said Mineros SA president Andrés Restrepo. “We see 2020 with optimism, hoping to maintain production levels, accompanied by a high gold price that allows us to continue working on the plans we have drawn up,” he added.

Written by March 02 2020 0

Medellin-based highway, tunnel and buildings-construction giant Constructora Conconcreto on March 2 reported an 11% decline year-on-in full-year 2019 profits, to COP$64.8 billion (US$18 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) also dipped 13%, to COP$170 billion (US$48 million), while gross revenues fell 12%, to COP$945 billion (US$268 million), according to the company.

Conconcreto blamed the dip in profits in part on lower revenues, as well as delays in approvals for housing and commercial construction projects, plus a COP$21 billion (US$5.9 million) fine imposed by Colombia’s Superintendencia de Industria y Comercio (SIC) for alleged anti-competitive practices relating to bids on a Bogotá-Girardot highway construction project.

On the positive side, Conconcreto cited its completion of concrete lining of the giant “Tunel de la Linea” project in 2019, which soon will ease crucial freight movements between Bogota and the Pacific port of Buenaventura.

Project backlogs registered in 2020 eventually would generate revenues worth some $2.8 trillion (US$795 million), up from COP$1.5 trillion (US$426 million) registered in 2019.

Another proposed project that could deliver more income for Conconcreto is the proposed “double calzada oriente” (DCO) project east of Medellin between the Las Palmas highway and the Tablazo sector near the Jose Maria Cordoba (JMC) international airport, according to the company.

The DCO project is up for bidding with a March 25, 2020 deadline, according to the company.

Written by February 28 2020 0

Medellin-based highway construction giant Construcciones El Condor on February 27 reported a 37% decline in full-year 2019 profits, to COP$73 billion (US$20.6 million) – principally due to a COP$74 billion (US$20.8 million) temporary write-down of its participation in the “Vías de las Américas” highway project.

Full-year 2019 revenues from ordinary activities totaled COP$875 billion (US$247 million), including operating revenues of COP$720 billion (US$203 million), or 82.33% of revenues from ordinary activities. Administrative expenses reached 3.75%, according to El Condor.

Operating margin at the end of 2019 was 25% of revenues, including a non-recurring event -- the October 2019 sale of its partial stake in the “Concesión Túnel Aburrá Oriente,” the new highway tunnel that connects Medellin to the JMC International airport at Rionegro.

Earnings before interest, taxes, depreciation and amortization (EBITDA) hit COP$202 billion (US$57 million) with an EBITDA margin of 23% -- including its sale of the stake in the Túnel Aburrá Oriente. Excluding that sale, EBITDA was COP$162 billion (US$45.8 million) equivalent to an EBITDA margin of 18.5%, according to the company.

Total assets at year-end 2019 were COP$2.24 trillion (US$633 million), of which 47% are current assets and 53% non-current assets, according to the company.

Liabilities decreased 10% compared to 2018 and closed at COP$1.16 trillion (US$328 million). Of that total, 54% of liabilities are current -- down 79% year-on-year.

“Financial debt ended 2019 at COP$713 billion (US$201 million) represented by COP$539 billion (US$152 million) of bank loans and bonds, and COP$173 billion (US$49 million) of leasing,” according to the company

As for fourth quarter (4Q) 2019 results, revenues rose 3.5% year-on-year, to COP$237 billion (US$67 million), while operating costs were COP$180 billion (US$51 million), or 75.9% of revenues, “contributing greatly to the improvement of the accumulated results,” according to El Condor.

Operating profit for 4Q 2019 was COP$89 billion (US$25 million), including the sale of the Tunel del Oriente. Excluding that sale, operating profit was COP$48 billion (US$13.5 million), up 100% over 4Q 2018 operating profit.

Net income for 4Q 2019 was COP$78 billion (US$22 million), according to the company.

Consolidated net worth as of December 2019 was COP$1.08 trillion (US$305 million), while the working capital indicator -- calculated by subtracting current liabilities from current assets -- was COP$462 billion (US$130.6 million).

Meanwhile, the company’s construction backlog -- the balance between works-contracted and works to-be-executed -- was COP$1.03 trillion (US$291 million).

“This calculation takes into account COP$237 billion (US$67 million) of the turnover executed during the [latest] quarter for construction services, discounting dividends and income not associated with said services,” according to El Condor.

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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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