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Written by July 28 2020 0

Colombia-based cement/concrete giant Cemex LatAm Holdings announced July 27 that its second quarter (2Q) 2020 net income rose to US$11 million, up from a net loss of US$4 million in 2Q 2019.

The profit boost came despite a 36% drop in sales and a 32% decline in earnings before interest, taxes, depreciation and amortization (EBITDA), according to the company.

“However, the operating flow margin was higher by 1.4 percentage points due to a proactive cost containment plan in all of our businesses and geographies” during the Covid-19 crisis, according to the company.

While EBITDA income declined, EBITDA margin improved by 1.4 percentage points, to 19.7%, “mainly due to a proactive cost control plan,” according to Cemex.

While 2Q cement volumes fell 33% year-on-year, “volumes recovered significantly in June, doubling the volumes sold during April [2020],” according to the company.

“Quarterly consolidated cement prices improved by 4%, compared to the same period of the previous year, and they remained stable sequentially, in terms of local currency.

Cemex LatAm also generated US$25 million of free cash flow and reduced its net debt by US$28 million during the latest quarter.

Commenting on the results, company general director Jesús González added: “With the support of our health and safety culture, as well as our more than 50 biosafety protocols, we are executing our operations safely and effectively in a Covid-19 world.

“Despite the fact that our volumes were significantly impacted by the measures to contain the pandemic, we reacted quickly and made significant achievements in the second quarter,” he added.

In Colombia, EBITDA fell 32% year-on-year, to US$12 million. Net sales decreased 45% to US$67 million as measured in dollar terms, and down 36% in local Colombian peso terms.

However, “fourth generation” highway construction projects were restarted during the latest quarter. As a result, “we expect the industry’s demand for concrete to reach 1.2 million cubic meters during 2020, 50% higher compared to 2019,” according to Cemex.

“In Bogotá, projects already awarded should start soon, such as three hospitals, Transmilenio [mass transit system] extensions and a water treatment plant. ‘Regiotram’ metro and train projects should start consuming cement next year

“For 2021, the [national] government is proposing a 10% increase, compared to 2020, in the physical investment budget, including road infrastructure, water plants, housing, among others,” the company added.

In Colombia’s residential, industrial and commercial sectors, “demand for cement from the self-construction sector recovered significantly during June,” according to Cemex.

As for the residential housing sector, “we are encouraged by the government’s announcement of 200,000 subsidies for new low- and middle-income housing in the next two years.”

On the other hand, “recent trends, such as telecommuting, restricted travel, and increased online shopping, could reduce demand for offices, hotels, and retail spaces,” the company added.

As for Panama operations, net sales fell 86% year-on-year, to US$7 million, according to the company.

In Costa Rica, EBITDA fell 27% year-on-year, to US$7 million. Net sales fell 26%, to US$20 million.

In the rest-of-Cemex LatAm markets (including Nicaragua, El Salvador and Guatemala), EBITDA increased 29% in dollar terms or 31% in local currency terms, to US$20 million for 2Q 2020. “Quarterly net sales reached US$56 million, an increase of 1% in local currency terms or stable in dollar terms,” according to the company.

Written by July 28 2020 0

Medellin-based multinational supermarket giant Grupo Exito announced July 27 that its second quarter (2Q) 2020 consolidated net income hit COP$12.8 billion (US$3.5 million) -- a complete reversal from the COP$18 billion (US$4.9 million) net loss in 2Q 2019.

Sales also rose 7% year-on-year (excluding currency change effects), to COP$3.56 trillion (US$968 million), while recurring earnings before interest, taxes, depreciation and amortization (EBITDA) rose 10% year-on-year, to COP$299 billion (US$81 million).

The good results “reflect a positive variation in operational results in Colombia and Uruguay and a lower level of financial expenses,” according to Exito.

“Sales of direct and electronic commerce channels grew 191% in Colombia and 116% in Uruguay, responding appropriately to changes in customer consumption habits, due to Covid-19,” according to the company.

“In Colombia, the performance of ‘Éxito Wow’ [large-format stores] and ‘Carulla FreshMarket’ stood out, with food sales growing in double digits,” the company added.

Colombia operations registered 2Q 2020 sales of more than CO$2.7 trillion (US$734 million), up 4.7% year-on-year, taking a 77% share of the group’s total sales.

In Uruguay, sales grew 13.3% in local currency, “driven by the results of the Devoto and Disco brands, and a solid increase in sales of 116% from e-commerce and direct channels,” according to Exito.

In Argentina, sales grew 23% in local currency. At the end of the quarter, Exito implemented a sales model whereby customers could order goods in advance and then pick them up later, “capitalizing on the experiences of the other business units of the Group” that are adapting to restrictions on customer movements during the Covid-19 crisis.

Throughout its operations, “e-commerce and direct channels have responded to the great need of customers for the health emergency and accounted for 14.7% of the company's total sales during the second quarter of 2020, compared to 5.2% in the first quarter of the year,” according to Exito.

The company recorded a 263% increase in sales from e-commerce channels (exito.com and carulla.com) and more than 40 million internet site visits. In addition, home deliveries jumped by 127% with 2.6 million orders in the latest quarter.

“Adoption of mobile applications -- with more than 3 million downloads and more than 87,000 orders in this period -- rose 480% over the second quarter of 2019,” according to Exito.

“Expansion and strengthening of the purchase-and-collection service in 450 stores in Colombia, with more than 59,000 orders, meant growth of 194.7% compared to the second quarter of the previous year.

“Launch of the virtual platform of the ‘Viva’ shopping centers, with purchase and pick-up service, represented 7.8% of total tenant sales in the second quarter of the year.

“These positive results in the retail business are a consequence of the company’s ability to adapt and transform in the midst of the health emergency . . . [which] managed to offset the performance of other complementary businesses such as Viajes Éxito and real estate that faced challenging situations during the quarter” because of the Covid-19 lockdowns.

Meanwhile, on the Colombian charity front, Grupo Éxito donated 700,000 Covid-19 face masks to 42 municipalities and to the national government, worth COP$1.4 billion (US$380,000).

As for Exito’s continuing programs providing child nutrition to the poor, “especially in the midst of the pandemic, Fundación Éxito has delivered more than 146,000 food packages to Colombian children and families since the beginning of the emergency,” the company added.

Written by July 08 2020 0

Medellin-based PharmaCielo Colombia and its Toronto-based parent company announced July 8 that it won Colombian government authorization to cultivate 10 tonnes of marijuana with high content of tetrahydrocannabinol (THC, the psychoactive component of pot) and export of medicinal extracts.

The authorization “enables PharmaCielo to produce and deliver psychoactive extracts as part of the three-year extracts agreement the company announced in January [2020], intended for the German market,” according to the company.

“The government’s approval for PharmaCielo to grow, extract and export high-THC medicinal products is a significant milestone that significantly expands our product portfolio and complements our medicinal offerings of CBD oil and isolate,” added company CEO David Attard.

Henning von Koss, president of parent company PharmaCielo Ltd., added that “the truly successful medicinal use of cannabis depends to a great extent on managing its psychoactive and non-psychoactive properties. As we broaden our portfolio through 2020, we will be working concurrently with our customer base and the medicinal community to identify the appropriate formulations and concentrations of cannabinoids and terpenes to meet a variety of market-specific medicinal regulatory needs, and which are sourced from our proprietary strains that provide unique profiles.”

To date, PharmaCielo has developed and registered “30 proprietary strains in the national cultivar, including unique high-THC strains, enabling future production of a variety of psychoactive dominant extracts for medicinal purposes,” according to the company.

So far, PharmaCielo has developed 139 hectares of cultivation capacity in Colombia -- part of which is located in Rionegro, Antioquia, east of Medellin.

According to the company, its strategy is “focused on becoming a large-scale value-added supplier to large consumer packaged goods companies, pharmaceutical/wellness companies and other limited partnerships.

Its “phase one” processing and extraction center here can produce 24 metric tonnes/year of refined cannabis oil at a cultivation cost of Cdn$0.04 cents [US$0.03] per gram, thanks to a “natural and consistent 12-hour light cycle and temperate climate” as well as a “highly educated and skilled agricultural workforce” with “generations of experience working in the cut-flower industry,” a major employer in the “Oriente” region east of Medellin.

“Phase two” production facilities would enable extraction capacity to expand to 80-to-100 metric tonnes/year of refined cannabis oil, according to the company.

In its latest financial report, PharmaCielo posted a Cdn$6.8 million (US$5 million) net loss for first quarter (1Q) 2020, an improvement over the Cdn$7.7 million (US$5.7 million) net loss in 1Q 2019. The improvement came from a Cdn$494,000 (US$366,000) boost in gross revenues from sale of cannabis-derived products in early 2020, according to the company.

Written by July 03 2020 0

Medellin Mayor Daniel Quintero and EPM General Manager Alvaro Rendon revealed in a July 2 filing with Colombia’s Superfinanciera oversight agency an eye-popping proposal that would dramatically expand EPM’s product-and-service offerings nationwide and internationally.

Already Colombia’s biggest single energy producer and Medellin’s single-biggest financial contributor, EPM and the city of Medellin now jointly propose that EPM enter into a mind-boggling array of businesses, according to “Proyecto de Acuerdo Numero 19 de 2020,” presented to the Medellin City Council and published by Superfinanciera.

According to the Superfinanciera filing, potential new EPM business lines include:

1. Participation in highway and subway infrastructure development. “EPM will seek to enter the infrastructure market for the construction of public service networks, highways and underground metro lines . . . taking advantage of an opportunity to participate in a market that will grow exponentially in coming years,” according to the document.
2. Commercialization of biosolids from wastewater treatment, including fertilizers.
3. Data marketing -- tapping its vast information-collection activities from all sorts of customers.
4. Production and/or sale of solar panels, wind turbines, geothermal power systems, energy storage devices, and customer energy-to-grid schemes (as from local solar- or wind-power generation).
5. Construction consulting on sewage-treatment plants; sanitary landfills, waste transfer stations and utility service networks.
6. Supply, installation and maintenance of home appliances; energy-saving lighting systems; water-saving kits; and energy-management systems.
7. Business-to-business and business-to-customer services such as installing, cleaning, repair and maintaining appliances; used equipment disposal; and advice on use of new technologies.
8. Tourist services at its numerous forest reserves and water reservoirs, including environmental education services.
9. Treatment and renovation of specialty oils used in electric-power equipment and transformers.
10. Maximization and monetization of EPM-owned lands that are no longer used for EPM operations. Intelligent repurposing of such lands not only could prevent illegal squatting and subsequent ill-use, but also generate new income for EPM.
11. Development of new lines of business via strategic alliances, investments in other companies, and creation of new companies -- in initiatives such as land management, construction of energy projects and water projects.
12. Use drones to deliver customer bills or other mail, as well as to monitor the status of electricity infrastructure.
13. Offer new products and services to third parties for any type of energy.
14. Offer different qualities of water for various uses.
15. Offer all types of combustible gases, different biofuels, electric recharge stations and home recharge installations for electric vehicles.
16. Expand offerings of information and communication technologies.
17. Offer shared services to companies, such as billing, hiring and payroll.
18. Offer technical services for upgrade of lands for irrigation, drainage and inundation protection.
19. Develop financing and insurance-related services for various projects.
20. Produce, commercialize, install, rent and/or operate solar panels or other types of distributed generation.
21. Market self-generation products and energy-storage systems.
22. Develop and supply energy-production systems for rural zones not connected to power grids.
23. Bring consultation services for energy efficiency (Energy Service Companies).
24. Offer advice and installations for district heating and cooling, as well as public-lighting services.

According to the Superfinanciera filing, entry into any of these new lines of business or partnerships mustn’t violate any existing debt/bond obligations that EPM has with Colombian or international financiers.

The filing warns that if EPM were to fail to comply with any of these provisions, then its debt contracts could go into “cross default,” which could harm all its other debt contracts and potentially trigger mandatory prepayment of debts that currently total some COP$13 trillion (US$3.56 billion).

In addition, failure to comply with existing debt covenants -- potentially arising from participation and investment in new lines of business -- could lead to prepayment penalties, loss of credibility with creditors, higher future interest-rate payments and stiffer future debt provisions, the filing warns.

None of the faculties conferred to EPM and the Mayor of Medellin through the proposed accord “can be interpreted or extended to decisions related to the sale of company activities, privatizations, mergers, spin-offs or operations different than modification of [EPM’s main public-utility] social object, nor for administrative restructurings that would suppose an elimination of administrative authority or loss of employees,” according to the filing.

“In development of these [new business-line] faculties, the Mayor can exclude activities that are incompatible or inconvenient to the commitments that EPM has subscribed with its financial creditors,” the document adds.

While the “Acuerdo Numero 19” document would indeed enable dramatic expansion of EPM business activities into new areas, the document also warns that corporate failure-to-evolve with changing markets could be disastrous.

“With the emergence of new technologies, the evolution of new tendencies in domestic public services, the pressures of markets and the greater demands of interest groups, public service companies [such as EPM] are obliged to widen their fields of action, or else lose their place and put at risk their sustainability,” according to the document.

Risks include “loss of competitiveness against other agents that are authorized to offer new products and services” as well as “possible obsolescence due to the lack of new products and services” and “possible deterioration in the value of the company and as a consequence, possible declines in profit transfers to the city of Medellin,” the document concludes.

Written by June 25 2020 0

The U.S. Agency for International Development (USAID), Semana Sustainability magazine and project-development consultant Jaime Arteaga & Asociados jointly announced June 25 results of a prestigious nationwide competition to determine Colombia’s top social-investment leaders.

Medellin-based companies took nine of the top-25 spots in the “Indice de Inversion Social Privada 2020” (Private Social Investment Index) competition, including electric-power transmission giant ISA; cement-production giant Argos; power producer Celsia; insurance giant Grupo Sura; banking giant Bancolombia; foods manufacturer Grupo Nutresa; gold-mining powerhouse Mineros SA; motorcycle assembler Incolmotos Yamaha; and higher-education leader EAFIT University.

Bancolombia noted that its 12th-place ranking among the top 25 was best among all financial institutions in Colombia -- and an advancement of 11 places over its 2019 ranking.

Actions promoting “sustainability and corporate responsibility” as measured by indices such as the Global Reporting Initiative were among the keys to the 2020 ranking, according to Bancolombia.

“In gender equality and inclusion, 56% of employees linked to our organization are women; 58% of our management team is female; and since March 2020 the first woman has joined the Bancolombia board of directors: Sylvia Escovar, President of [fuels-retailing giant] Terpel and the business-woman leader with the best reputation in Colombia, according to Merco,” according to Bancolombia.

The company added that its Bancolombia Foundation organization benefited more than 45,000 people with “projects of social, environmental or cultural interest,” while its participation in initiatives such as the Carbon Disclosure Project, Climate Action 100+, Global Investors for Sustainable Development (GISD) and the Dow Jones Sustainability Index also boosted its ranking.

USAID, AmCham, KPMG Contributors

For this year’s competition, USAID got additional advice from the Colombian American Chamber of Commerce (AmCham),  the Council of American Companies (CEA) as well as global corporate-practices consultant KPMG.

In total, 102 companies participated in this year’s competition, including 26 U.S.-based companies, according to USAID.

In Colombia, those 102 companies collectively made social investments last year totaling more than COP$1.3 trillion (US$348 million), “equivalent to the entire budget of Bogotá’s social-integration sector,” according to USAID.

“Every day there are a greater number of companies interested in allocating resources for the development of social projects that benefit a significant number of communities,”  the agency added.

Among U.S. companies participating in this year's competition: coal-mining giant Drummond; bottled-beverages behemoth PepsiCo; paper manufacturer Kimberly-Clark; pharmaceuticals giant Pfizer; and satellite-TV pioneer DirecTV.

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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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