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Written by April 30 2020 0

 

Colombia-based Cemex LatAm Holdings (CLH) on April 30 posted a corporate-wide US$30 million net loss for first quarter (1Q) 2020 -- down from a 1Q 2019 net profit of US$16 million as the Coronavirus crisis slashed demand for cement and concrete.

In Colombia, cement demand looked relatively strong in January and February -- but then plummeted by 30% during March 2020 because of the national Coronavirus quarantine, which killed demand for all types of construction materials, the company noted.

While sales in the first two out of three months in Colombia were positive, net 1Q 2020 sales nevertheless fell 8% year-on-year in Colombia peso (COP) terms “due to lower volumes,” according to CLH.

For 1Q 2020, Colombian earnings before interest, taxes, depreciation and amortization (EBITDA) margin dipped slightly during 1Q 2020 as a “positive effect of higher prices was offset by lower volumes and higher distribution costs,” according to CLH.

On the other hand, the Colombian national government has since lifted quarantines on construction and infrastructure projects in Colombia. So, rest-of-2020 is looking much better.

For example: “fourth-generation” (4G) highway projects in Colombia are now being restarted, so “total demand for cement and concrete is expected to reach 1.2 million cubic meters during 2020, up more than 50% compared to 2019,” according to CLH.

Even so, regional highway projects “could be delayed as mayors and governors are redirecting previously budgeted resources for infrastructure to combat the Covid-19 crisis,” CLH noted.

As for concrete/cement trends in Colombia’s housing sector, “demand in the self-construction sector, despite being generally resilient in crisis, could be affected by an expected increase in unemployment and lower remittances” from Colombians working overseas, CLH noted.

On the other hand, “low-income housing should be restarted with the support of guaranteed government subsidies and lower interest rates, but new projects may be delayed."

As for launch of new industrial and commercial projects in Colombia, “lower oil prices could impact business confidence and delay” such projects, according to CLH.

CLH -- which besides Colombia also operates in Panama, Costa Rica, Nicaragua, Guatemala and El Salvador – saw corporate-wide 1Q 2020 sales fall 11% year-on-year, to US$214 million. Corporate-wide EBITDA fell 12%, to US$46 million, according to the company. 

In 1Q 2020, “consolidated prices in local currency terms for gray domestic cement and aggregates increased 3% and 11%, respectively, while prices for concrete decreased 1%” year-on-year, according to CLH.

Commenting on the over-all results, CLH director Jesús González said: “We started 2020 with a favorable dynamic of demand in Colombia, Nicaragua, Guatemala and El Salvador, and a better trend in Costa Rica. These positive developments began to be affected in March, when the Covid-19 pandemic spread and governments began implementing restrictions.

“We are responding to the Covid-19 crisis by focusing on three priorities: first, we strengthen health and safety, complementing our existing standards by developing and implementing special protocols and guidelines designed to protect our employees, customers and communities; second, we are supporting our clients and taking advantage of our ‘Cemex Go’ [trading platform] to carry out a digital experience; and third, we are taking steps to strengthen our cash position. We are suspending or reducing capital expenses, operating expenses, production levels and inventory,” he added.

Written by April 26 2020 0

Medellin-based electric power giant EPM announced April 25 that the US$5 billion, 2.4-gigawatt “Hidroituango” hydroelectric power project in Antioquia – one of the world’s biggest -- continues to make progress following a destructive bypass tunnel collapse two years ago.

That collapse and subsequent damage to the machine room and related facilities caused a three-year delay in startup at the project -- meaning hundreds of millions of dollars of lost power sales along with infrastructure damages.

Insurance payments to date have helped EPM recoup physical damages, but final payments covering lost power sales have yet to be calculated or approved.

Following the tunnel collapse, EPM pushed-back the initial startup forecast to end-2021, rather than end-2018. However, it’s unknown whether strict, new health protocols to avoid Coronavirus infections among workers potentially might cause more delays.

Meanwhile, EPM released a new video showing some of the recent construction and recovery work at the project (see: https://bit.ly/2zvywOg). But this video doesn’t show or explain how workers are dealing with new, further restrictions arising from Coronavirus prevention protocols.

Commenting on the upcoming anniversary of the diversion tunnel collapse (April 28, 2018), EPM general manager Álvaro Guillermo Rendón López stated: “In these two years [following that incident] our company hasn’t spared efforts or resources to reduce the risks of the populations located downstream of the project and to carry out one of the most important infrastructure works in the country.”

Since then, EPM successfully drained and cleaned-out the main cave complex, removed damaged equipment (including the overhead crane) and recoated the interior walls with concrete.

“At this time, cave repair work is focused on filling and repairing a large hole created by erosion between catchments number 1 and 2. This hole is now filled and completion of sealing is in final review stage,” according to EPM.

Meanwhile, repair of the machine room cave complex is "65% complete. Daily monitoring of the structure shows 100% stability,” according to EPM.

The dam itself was completed last year, including an impermeable bentonite screen rising from 380 meters to 418 meters above sea level. The entire dam has been raised to its full height of 435 meters above sea level “as required by the project design,” according to EPM.

“With these works, the reservoir [behind the dam] can operate safely even in the face of maximum water levels projected over 10,000 years,” according to EPM.

“The current state of the dam allows control of the maximum possible risk – that is, the passage of 22,500 meters per second of water through the dam works, or the maximum foreseen flow that the Cauca River could bring.”

In November 2019, a new road built atop the dam was opened for traffic to and from the municipality of Ituango in northern Antioquia.

As for diversion tunnel works, two gates of the auxiliary diversion tunnel were repaired and reinstalled, meaning this tunnel is now “capable of withstanding the pressure of the reservoir [behind the dam] at its maximum filling level,” according to EPM.

“Recovery efforts are focused today on construction of a 23-meters-long concrete plug, which allows the gallery to be sealed. In the right diversion tunnel, where the collapse originated, a pre-stopper plug was built to enable safe advancement of construction of the final plug.

“The intermediate discharge tunnel is reinforced in its structure to increase its hydraulic capacity. From this tunnel, work is carried out on the right diversion tunnel. On another construction site, fillings and repairs are carried out in the gap between catchments 1 and 2,” according to EPM.

Social Recovery Programs

Meanwhile, 1,990 families from the township of Puerto Valdivia – temporarily evacuated following the tunnel collapse -- have since returned to their homes.

“EPM continues to provide financial support to the 265 family groups that have not yet returned to their homes. The delivery of these supports amounts to about COP$31 billion [US$7.7 million],” according to EPM.

The company also has signed compensation deals for several dozen homes damaged by temporary flooding caused by the tunnel collapse, and paid for repairs at schools and other buildings.

EPM also has inked financial compensation deals with 280 merchants affected by temporary loss of sales, while claims from another 1,200 merchants await adjudication.

In addition, “to strengthen the economy in the affected populations, EPM implemented social contracting, through Asocomunal, for recovery projects and works, for a value close to COP$680 million [US$168,000]," the company added.

Written by April 25 2020 0

While most Colombia-based companies are getting clobbered by the Coronavirus crisis, companies making and selling groceries and prepared foods through stores to date are doing relatively well.

Example: Medellin-based multinational foods giant Grupo Nutresa on April 24 reported a COP$190 billion (US$47 million) consolidated net profit for first quarter (1Q) 2020, up 9.1% year-on-year.

Consolidated sales rose 18.4%, to COP$2.7 trillion (US$668 million), according to the company.

“Excluding the acquisitions of Atlantic Food Service in Colombia, and of Cameron’s Coffee in the United States, the group’s organic sales growth was 13%,” according to Nutresa.

“In Colombia, sales had a solid performance at COP$1.6 trillion (US$395 million), 61.2% of the group’s total sales, with a growth of 15.5% compared to the same period in 2019.

“Organic growth was equally outstanding, with an increase of 11.6%. About 85% of the growth dynamic in Colombia was driven by higher volumes.”

International sales expressed in Colombian pesos rose 23%, to COP$1 trillion (US$247 million).
“International organic growth, in U.S. dollars, was up 2%, and in COP, up 15.3%,” the company added.

Positive sales growth came from “a portfolio of foods for daily consumption at home, which have had adequate availability in traditional channels such as neighborhood stores, supermarkets, and supermarkets, as well as in alternative channels of the group,” according to Nutresa.

Operating profit rose 11.5%, to COP$256.6 billion (US$63 million), while earnings before interest, taxes, depreciation and amortization rose 17.5%, to COP$376 billion (US$93 million). with EBITDA margin at 14.1%.

“This result was the result of a management oriented towards the rationalization of spending, with the aim of having an increasingly efficient and flexible structure,” according to Nutresa.

Financial expense rose 6.1% “derived from the greater indebtedness for the acquisition of Cameron’s Coffee in 2019 and new loans for working capital taken during the period,” according to the company.

Written by April 23 2020 0

AngloGold Ashanti Colombia announced April 23 that its proposed “Quebradona” copper-gold mine project near Jerico, Antioquia soon will get a second information-gathering visit from Colombia’s Agencia Nacional de Licencias Ambientales (ANLA, the environmental permitting agency).

Commenting on the news, company president Felipe Marquez added that the upcoming site visit “is very positive because it will enable [ANLA] to get more information for a licensing decision that will enjoy absolute transparency, technical rigor and opportune citizen participation.”

“The second visit will be made once the national government lifts the restrictions that were established before the health emergency that the country is experiencing due to the spread of Covid-19,” according to AngloGold Ashanti.

On a parallel front, AngloGold announced that as of April 21, the company restarted some preliminary works at the site – following new Colombia Health Ministry biosafety protocols to protect workers and people near the site from contracting Coronavirus.

“Quebradona resumes some of its activities in the field with the purpose of reactivating the work and advancing the activities that are essential for the continuity of the project,” according to AngloGold.

“The restart of priority activities is carried out within the framework of a strict biosecurity protocol that seeks to protect the health and life of its collaborators, contractors, suppliers and inhabitants of its area of influence.

“There are some tasks and activities that, by their nature, require to be carried out on site and which are not a source of risk for community contagion, since they do not crowd large numbers of people around one site, they do not take place in closed spaces and they do not imply interaction with people who come from the outside.

“In line with the regulations of the Ministries of Health and Social Protection, Labor and Mines and Energy, which established the conditions under which the mining sector can operate and complying with the recommendations of the Jericho Ministry of Health, AngloGold Ashanti designed complete and detailed operating protocols aimed at minimizing the risk of spreading the Covid-19.

“The protocols include provisions related to the control and rapid detection of possible cases, mandatory hygiene measures for people, sanitation processes for facilities, measures for the transport of personnel, recommendations for extra-occupational care, guidelines for health personnel, among others.”

Written by April 08 2020 0

Medellin-based Grupo Exito announced April 7 that it’s accelerating mass production of special masks to protect against Coronavirus infections – and plans to sell the masks at its Exito, Carulla, Surtimax, SuperInter and Surtimayorista stores throughout Colombia.

“Today more than 3,000 people are dedicated to making face masks in the workshops where the clothes of Grupo Éxito's own brands are usually made,” according to the company.

“Around 50 manufacturing workshops of Grupo Éxito's own brands, located in Antioquia, Valle del Cauca, Caldas and Tolima, are now spaces dedicated to the manufacture of fabric face masks, commonly known as face masks.”

The urgent need for mass production is not only to protect supermarket and pharmacy workers, public utility workers and many others exempt from the current quarantine, but also to protect the general public, the company noted.

“The national government has established the mandatory use of face masks in public transport systems, areas of massive influx of people, people with respiratory symptoms and high-risk groups,” according to Exito.

“Likewise, the making of these cloth masks represents an important boost in a [textile-clothing] sector hit by the effects of Covid-19, to preserve the employment of more than 3,000 collaborators linked to the project."

So far, 20 million face masks have been progressively manufactured since March 18.

“Weekly more than 2 million units are produced by 3,000 people in Cali, Manizales, Ibagué, Medellín, Sabaneta, Envigado, Itagüí, Bello, Santa Rosa de Osos and Don Matías, who as a result of this activity keep their jobs,” according to the company.

“With actions like this we promote work in about 50 textile companies, which brings relief in the face of the economic challenges that the sector and its workers are going through,” added Exito president Carlos Mario Giraldo.

Meanwhile, in an April 6 filing with Colombia’s corporate oversight agency Superfinanciera, Medellin-based textile giant Coltejer revealed that it has just restarted a production line -- dedicated to production of protective clothing and cleaning supplies for confronting the Coronavirus crisis.

Among other local companies already involved in mass production of special textiles to protect people against Coronavirus is clothing giant Everfit, as noted in a report in daily newspaper El Colombiano.

Page 10 of 31

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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