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Written by May 15 2020 0

Stung by the Coronavirus crisis, Medellin-based electric power, cement and airport/highways concessionaire Grupo Argos announced May 14 that its first quarter (1Q) 2020 net income plunged to COP$26 billion (US$6.6 million), down from COP$953 billion (US$243 million) in 1Q 2019.

Consolidated revenues for 1Q 2020 dipped 3% year-on-year, to COP$3.6 trillion (US$919 million).

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) closed at COP$819 billion (US$209 million), down from COP$953 billion (US$243 million) in 1Q 2019.

“The strategic businesses -- Cementos Argos, Celsia, Odinsa and the real estate business -- made positive contributions to both revenue and EBITDA, confirming the benefits and strength of the infrastructure portfolio diversification strategy,” according to Grupo Argos.

The company closed 1Q 2020 with consolidated reserves and credit lines totaling COP$1.2 trillion (US$306 million), “providing it with the financial flexibility and liquidity required for this moment in time,” according to Grupo Argos.

In addition to its reserves and credit lines, Grupo Argos also touted a COP$520 billion (US$133 million) cost-reduction plan and postponement of COP$870 billion (US$222 million) in investments.

“These efforts, which will continue expanding, initially represent close to COP$2.5 trillion [US$638 million] in essential resources that provide the company with greater maneuvering space at this time,” according to the company.

Meanwhile, “in the areas of philanthropy and corporate citizenship, Grupo Argos has contributed over COP$16.5 billion [US$4.2 million] to strengthen the healthcare system and support the country’s most vulnerable families,” according to the company.

“Grupo Argos has defined the health and well-being of its collaborators and families as its top priority, together with protecting the employment of close to 14,000 people. Along these lines, it has implemented a strategy that includes ongoing medical, social, physical and emotional assistance for all its employees, including those that are working from home.

“Simultaneously, the organization has set aside over COP$3.5 billion [US$898,000] for supporting vulnerable populations that depend on informal work with food assistance that is reaching over 110,000 families with assistance and support from other allies,” the company added.

Written by May 14 2020 0

Medellin-based highway construction giant Construcciones El Condor revealed in a May 13 filing with Colombia’s Superfinanciera oversight agency that its first quarter (1Q) 2020 net income dropped 76.7% year-on-year, to COP$7.3 billion (US$1.86 million) because of the Coronavirus-crisis shutdowns.

Revenues likewise fell by 19.7% year-on-year, to COP$186 billion (US$47.5 million) -- almost entirely caused by the “interruption in the execution of works due to the Covid-19 pandemic as of March 17 of this year,” according to El Condor.

Operating costs were COP$164 billion (US$41.8 million), 88% of revenue from ordinary activities, while administrative expenses accounted for 3.43% of revenue. Operating margin was 9.21% of revenues.

Earnings before interest, taxes, depreciation and amortization (EBITDA) came-in at COP$26 billion (US$6.6 million), while EBITDA margin fell to 14.14%, compared to 21.7% in 1Q 2019.

Total assets for 1Q 2020 finished at COP$2.2 trillion (US$560 million), of which 47% are current assets and 53% are non-current assets.

Cash and cash equivalents closed at COP$56.5 billion (US$14 million), up 80% compared to the end of December 2019. “This allows the company to have sufficient liquidity to face the interruption in the execution of works caused by the Covid-19 pandemic,” according to El Condor.

Liabilities closed at COP$1.16 trillion (US$295 million). 52% of which are current and 48% are non-current. “This demonstrates the company's strategy to continue maintaining the average duration of debt in the long term,” according to El Condor.

Construction backlog -- the balance of works contracted and to-be-executed -- totaled COP$931 billion (US$237 million) at the end of 1Q 2020.

“This calculation takes into account COP$186 billion (US$47 million) of the invoicing executed during the [latest] quarter, discounting dividends and income not associated with said services,” according to El Condor.

Written by May 13 2020 0

Medellin-based multinational electric-power transmission, highways concessions and telecom-services operator ISA announced May 12 that its first quarter (1Q) 2020 net income rose 7.2% year-on-year, to COP$378 billion (US$97 million).

The profitability improvement “was mainly due to higher revenues from the initiation of new project operations in Peru, Colombia, and Chile; higher revenues from the December [power-transmission tariff] inflation adjustment in Brazil; and positive macroeconomic variables effects in Colombia,” according to ISA.

Operating revenues rose 14%, to COP$2.1 trillion (US$538 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 7.5%, to COP$1.3 trillion (US$333 million).

“These results reflect a rigorous and efficient administration, operation and maintenance (AOM) [system] for costs and expenses,” according to ISA. “Net margin closed at 18.3% and return-on-equity reached 13.1%, as evidence of the company's financial efficiency and focus on profitability.”

Corporate-wide assets rose 5.2%, to COP$51.3 trillion (US$13.1 billion), while liabilities rose 11.6%, to COP$30.9 trillion (US$7.9 billion), “explained by COP$2 trillion [US$512 million] of debt in Peru and Chile due to the devaluation of the COP with respect to the dollar and to the Chilean peso,” according to ISA.

Net debt-to-EBITDA and EBITDA-to-financial-expenses ratios closed at 3.01x and 6.14x, “complying with the levels needed in order to maintain the current credit rating,” according to ISA.

Investments in 1Q 2020 totaled COP$986 billion (US$252 million), mainly on construction projects.

Among highlights from 1Q 2020:

1. ISA Perú inked a deal to acquire 100% of the shares of Orazul Energy Perú S.A. and Orazul Energy (UK) Holdings. “The latter is owner of ETENORTE and ETESELVA, which operate six transmission lines, totaling 746 kilometers, with an approximate annual revenues of US$13 million,” according to ISA.

2. In Colombia, ISA won a bid for the design, construction, operation, and maintenance of the La Loma-Sogamoso 500-kV transmission line and related works. “This project will reinforce service to the northern part of the country, facilitating the connection of unconventional renewable energy sources. It represents annual revenues of US$9.4 million,” the company added.

3. Corporate-wide construction revenues totaled COP$315 billion (US$80 million), up 41.9% year-on-year. “This change was explained by greater construction works in the road concessions business unit and by improvements, reinforcements, and new energy transmission projects,” according to ISA.

4. Corporate-wide power-transmission revenues rose 14%, to COP$175 billion (US$45 million). This improvement came from “entry-into-operation of projects in Colombia, Chile, and Peru between 2019 and 2020 (COP$34 billion/US$8.7 million)” along with “higher revenues in ISA CTEEP [Brazil power transmission] and its companies as a result of the net inflation adjustments [to transmission tariffs] and higher returns from accounts receivable coming from the increase in construction activity (COP$11 billion/US$2.8 million),” according to ISA.

5. Corporate-wide road concessions revenues dipped 8.7% year-on-year, to COP$22 billion (US$5.6 million) “as a result of the revaluation of the Colombian peso versus the Chilean peso and lower financial returns from concessions, given the decrease in the accounts receivables due to the concession time elapsed.”

6. Corporate-wide telecommunications revenues rose 9.2%, to COP$7.6 billion (US$1.9 million) “mainly due to the increase in the sale of capacities in Colombia, Peru, and Chile,” according to ISA.

 

Written by May 12 2020 0

Medellin-based supermarket giant Grupo Éxito announced May 12 that its first-quarter (1Q) 2020 operating income jumped 12% year-on-year to COP$4.05 trillion (US$1.04 billion), not including peso/dollar exchange rate effects.

Recurring earnings before interest, taxes, depreciation and amortization (EBITDA) rose 4% year-on-year, to COP$262.8 billion (US$67.7 million) with an EBITDA margin of 6.5%.

Net profits also rose to COP$22 billion (US$5.67 million), up from a COP$13.6 billion (US$3.5 million) net loss in 1Q 2019 – but not comparable because of the sale of Brazil operations last year.

“Since the beginning of the Covid-19 health emergency, Grupo Éxito has made investments and activities framed in three areas: care and protection of employees and clients, preservation of employment and the promotion of solidarity to build [Colombia] together, as a way of strengthen the sustainability of the company in the medium and long term,” according to Éxito.

“We have also promoted sales on virtual channels and home deliveries with great dynamism -- trends that are reinforced in the [quarantined] market," the company added.

Colombia sales rose 10.4% year-on-year, to COP$3 trillion (US$773 million), while “sales excluding the Covid-19 effect grew by 6.3%,” according to the company.

“The result in Colombia was mainly leveraged by the positive results of the innovative formats and the omnichannel strategy that together contributed more than 50% to sales growth in the first quarter of the year, isolating the impact of Covid-19.

“Electronic commerce channels and direct home delivery in Colombia had an important performance and represented 5.2% of the company’s total sales, compared to 4.5% at the end of 2019, growing by 44.6%.

“Commercial efforts focused on expanding logistics and technological capacity to meet the growth of virtual channels and home deliveries, which increased the number of shipments by 36%,” the company added.

“Innovative formats such as ‘Éxito Wow,’ whose sales grew by 14.6% in the first quarter -- more than twice what the rest of the brand’s stores grew -- already represent 17.8% of total sales. Carulla ‘FreshMarket’ saw an increase of 24.7%, 11 percentage points above the rest of the stores, and represented 26.7% of the brand’s sales.

“Finally, sales at the ‘Surtimayorista’ cash- and-carry format stores grew by 13.3% and represent 4% of Grupo Éxito’s totals in Colombia,” according to the company.

Coronavirus Initiatives

During 1Q 2020, Exito installed thousands of acrylic shields in supermarkets and at its wholesale warehouses to avoid cross-infections between customers, checkout clerks, truck drivers, home-delivery transporters and others.

The company also installed “deep disinfection with manual spray equipment in 524 warehouses,” provided 1,300 thermometers at all stores for taking temperatures of employees, provided basic hygiene kits for employees including gloves, face masks, acrylic glasses and safe hydration, and installed antibacterial gel dispensers and disinfection processes for all supermarket carts and baskets.

The company also implemented a new “buy and collect” service at 366 wholesale warehouses “so that customers can make virtual or telephone market orders and receive merchandise at no [extra] cost,” with goods loaded directly into their vehicles.

The company also made advance payments totaling nearly COP$60 billion (US$15 million) to help some 867 small and medium-size vendors deal with liquidity issues during this crisis.

Besides producing more than 20 million cloth face masks in 50 of its private-label workshops, the company also relocated some 270 of its nearly 40,000 employees from “areas of the company that have restrictions to operate” to other stores.

In addition, Exito subsidized more than 600,000 bags of 12 basic food items – sold at cost -- to poorer customers, while donating another COP$5.3 billion (US$1.37 million) of free foods for the Fundación Éxito early-childhood protection program.

Uruguay, Argentina Results

In Uruguay, Éxito saw a 12.8% growth in sales in local currency, “driven by better performance in the summer season, the omnichannel strategy and the ‘fresh market’ model, which represented 43.5% of total sales,” according to Éxito.

In Argentina, sales rose 48.7% in local currency terms while EBITDA soared to COP$4.9 billion (US$1.26 million), up from COP$1.5 billion (US$387,000) in 1Q 2019.

Written by May 11 2020 0

Medellin-based banking giant Bancolombia announced May 11 that 634 of its 684 branches nationwide are now open -- all with Covid-19-avoidance biosafety protocols, with many locations operating from 9:00 am at 4:00 pm daily, but closed Saturdays.

“The curfew decrees and other measures adopted in municipalities and localities of the country will be respected,” according to Bancolombia.

“We will continue with the policy of not allowing more than 50 people to enter a branch at one time” and “the use of face masks is mandatory,” according to the company, Colombia’s biggest bank.

“In all the branches that will be opened, we have installed acrylic shields in the cashier and advisory areas in order to create physical distance between employees and customers.

“We will deliver customer service [queuing] cards up to 15 minutes before the closure of each branch in order to be able to comply with biosafety standards and protocols. We reinforce all hygiene measures and cleaning cycles inside the offices.

“From this date [May 11] we will activate 80% of our commercial team, which has all the protection measures already mentioned. The remaining 20% of the human team of branches will continue in preventive isolation, including people at high risk, such as adults over 60, pregnant women and lactating mothers,” the company added.

“Bogotá will open from 9:00 a.m. to 4:00 p.m. continuously, and a pilot program with these same hours is already operating in Medellín at 23 of the 90 offices in the metropolitan area, in order to test the volume of traffic of employees and customers at times of greater concentration and mobility.”

However, Bancolombia has eliminated Saturday and extended-hours services -- at least for now, the company added.

 

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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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