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Written by May 06 2020 0

Medellin-based electric power giant Celsia announced May 4 that first quarter (1Q) 2020 net income rose 38% year-on-year, to COP$86.7 billion (US$21.8 million).

Consolidated revenues for the quarter rose 1% versus fourth-quarter 2020, to COP$928 billion (US$234 million). Colombia revenues represented 84% of the total, with Central America operations accounting for the remaining 16%.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) dipped a slight 0.2% year-on-year, to COP$330 billion (US$83 million). Colombia contributed COP$290 billion (US$73 million) while Central America contributed COP$40 billion (US$10 million).

Consolidated debt at the end of the latest quarter came to COP$4.3 trillion (US$1.08 billion) with a leverage indicator of 3.2 times net debt to EBITDA, according to Celsia.

“This quarter the organization disbursed credits of COP$200 billion (US$50 million), of which COP$160 billion (US$40 million) was disbursement to maintain financial flexibility during Covid-19 crisis and COP$40 billion (US$10 million) to continue with the development of the 20-megawatt San Andrés de Cuerquia, Antioquia [hydroelectric plant] and the Comayagua solar farm in Honduras,” according to the company.

Covid-19 Response for 2020

As for the remainder of this year, “Celsia redirects priorities for 2020 and concentrates its efforts on supporting our clients in Valle and Tolima [departments], supporting SME [small and medium-size enterprise] suppliers and protecting direct and contractor employment” during the Covid-19 crisis, according to the company.

“As part of the initiative, this month around COP$44 billion [US$11 million] was paid in advance to more than 350 suppliers in Colombia, including individuals, small and medium-sized companies and critical suppliers.

“With these resources we hope that our suppliers have sufficient liquidity to maintain their operations and to defend the jobs that they themselves generate.

“Likewise, for the next three months, these same suppliers will receive their invoice [payments] on faster terms than those initially agreed in the contracts.”

Meanwhile, Celsia “reconnected all clients who had service problems for various circumstances [and] suspended disconnections while the required [Coronavirus quarantine] isolation lasts.

“We had an operational plan to attend to the essential circuits that serve hospitals, health centers, prisons, nursing homes, aqueducts, among others.

“Likewise, our commercial offices were temporarily closed and we strengthened the digital channels for customer service and support, designing payment facility schemes and implementing payment deferral plans that have been established jointly and with the support and leadership of the national government.

“Faced with the provisions established by the national government related to energy billing in the regulated market of users from strata 1 to 4 [low-to-medium income customers], we have carried out the following actions:

“1. Due to the voluntary implementation by the company of the mechanism called tariff option, in that market the energy tariff in Tolima has increased 1.2% between January and April. The energy rate is frozen for the next four months.

“2. In Valle del Cauca, the rate for our users has increased 6.1% so far this year, due to energy costs in the wholesale market. However, since March there have been no new increases in the rate.

“3. The company is applying payment reliefs for invoices to regulated customers in strata 1 to 4 established by the national government. These reliefs are in addition to the subsidies received by strata 1, 2 and 3 of 60%, 50% and 15%, respectively.

“For strata 1 and 2, the unsubsidized value of the energy service from the bills for April and May, up to subsistence consumption, will be deferred for up to 36 months at a rate of 0%. If the client makes payment of the total invoice for April and May in a timely manner, then the client receive a 10% discount. These resources will be disbursed to the company by Findeter and have a guarantee of payment from the nation.

“The additional value against subsistence consumption for these two strata may also be deferred at the same term, but with a preferential interest rate.

“For strata 3 and 4, the cost of the energy service may be financed in 24 months at an interest rate equivalent to inflation. These resources will also be disbursed by Findeter in a rate structure compensated with the assistance of the Ministry of Finance.

“For clients of strata 5, 6, businesses and industries, the company has established options to define payment agreements that provide support during quarantine,” Celsia added.


Written by May 06 2020 0

The Coronavirus crisis continues to slam companies as Medellin-based cement/concrete multinational Cementos Argos reported May 6 that its first quarter (1Q) 2020 net income dropped 73% year-on-year, to COP$18 billion (US$4.6million).

Corporate-wide cement sales dropped 6% year-on-year, while ready-mixed concrete sales declined 16% as a result of the crisis.

Earnings before interest, taxes, depreciation and amortization (EBITDA) also dipped 5.3%, to COP$343 billion (US$86 million), according to the company.

In Colombia, cement sales fell 14% year-on-year, while ready-mix concrete declined 19.5% and aggregates sales slumped by 60%. As a result, Colombia gross revenues for 1Q 2020 fell 6.1% year-on-year, according to the company.

Reacting to the downturn, Cementos Argos announced a “Project Reset” plan aiming to save "between US$75 million and US$90 million in 2020” in order to “address the impact of Covid-19 on the Argos operation.”

“Additional savings arise from a reduction in capex of US$40 million for the current year,” the company added.

“With the company's strong cash position, the savings initiatives within ‘Reset,’ the support of our stakeholders and the passionate commitment of our more than 7,000 employees, we firmly believe that Argos is fully prepared to face the current conditions of the market,” said Juan Esteban Calle, CEO of Cementos Argos.

Cement and concrete sales-volume declines “were affected by the value recovery strategy successfully implemented in Colombia” as well as “adverse weather conditions in the U.S. region” along with “quarantines and market damages due to the Covid-19 outbreak in Colombia, in the Caribbean and Central America,” according to the company.

Colombia Results, Outlook

In Colombia, “Argos estimates that the impact of Covid-19 on its EBITDA derived from the [Covid-19] containment measures was around COP$35 billion [US$8.8 million]. In order to face this difficult situation, and to prepare the company for gradual recovery that the markets will experience in the coming months, Argos has launched ‘Reset,’” according to the company.

“Cement and concrete shipments decreased 13.9% and 19.5% respectively, in yearly terms. These results were affected by the value recovery strategy carried out successfully during the first quarter of the year, as well as by the decreed quarantine by the Colombian government as of March 25, reducing our working days by 8% during the quarter.

“During the quarter, clinker and cement imports decreased by 35.3% and 56.1% respectively compared to 1Q 2019, which, together with the growth of the market during January and February allowed us to continue improving prices in the segment of cement, ending with an increase of around 13.5% compared to 1Q 2019.

“The [quarantine] closure measure for infrastructure sector was lifted on April 13, and for the residential and commercial sectors on April 27, which allowed us to begin the restart of our operations.

“As of the date of this report, the [Colombia highway infrastructure] business shows a positive trend with a recovery in volumes of around 50%. The industrial business, as expected, will experience a slower recovery given the strict protocols that must be followed to reopen construction sites.

“In general, shipments made during April have doubled our initial market expectations, significantly improving our scenarios in the region.

“Additionally, the devaluation of the Colombian peso generated an increase in the [import] parity price, adding more space for our strategy of value recovery amid gradual market recovery.

“Regarding the outlook for this year, we recognize the early steps taken by the government to successfully contain the contagion curve and, in that sense, we expect a prompt revival of the economy, recognizing the challenge that this represents in a scenario of low oil prices and currency devaluation.”

USA Outlook

Beyond Colombia, “we remain positive about the medium-term outlook in the USA region, but we recognize the possibility that there may be short-term market effects due to the impact on the economy due to the Covid-19 outbreak,” according to Cementos Argos.

“We have experienced a slowdown in the residential segment and we expect this trend to continue given the deterioration in monthly statistics on housing starts, housing permits and unemployment. In the commercial segment, similar damages could arise as evidenced in the deterioration of the ‘Architectural Billing Index.’

“In infrastructure, we foresee short-term impacts derived from the liquidity shortage both at the [U.S.] state level as in the whole country, but we expect a rebound in the medium term supported by government initiatives to promote this sector. Public spending in March presented a 7.9% increase, in line with our expectations.”

Central America/Caribbean Outlook

Revenues and EBITDA in 1Q 2020 for the Caribbean and Central America decreased by 16.9% and 33.5%, respectively, according to Argos.

“General results in the Caribbean and Central America region continued to decrease partly due to the market slowdown caused by the Coronavirus, but mainly due to the prices in Honduras that continue to be lower than the 2019 average price and the challenging environment of the construction sector in Panama,” according to the company.

“In that sense, cement volumes and ready-mix concrete volumes decreased 4.1% and 34.1% compared to the same period in 2019.

“The Panamanian government has demonstrated its willingness to boost the local economy and protect national production by imposing a 30% tariff on cement imports into the country. We hope that this measure will be evaluated and implemented by other countries in the region, given the current market conditions and its impact on local economies.

“In Honduras, we inaugurated solid-fuel storage in the north of the country and supplied 11.6% of the energy consumed by the Piedras Azules plant in 1Q 2020 with a solar-power farm operated by Celsia, with the aim of reducing our costs. With this solar farm, we also reduced CO2 emissions from our energy supply by around 1,500 tonnes during 1Q 2020, in line with our commitment to sustainability,” the company added.

Written by May 01 2020 0

Medellin-based textile giant Fabricato revealed in a May 1 filing with Colombia’s Superfinanciera oversight agency that its first quarter (1Q) 2020 net loss totaled COP$8.97 billion (US$2.26 million) -- a 33% improvement over the COP$13.3 billion (US$3.35 million) net loss in 1Q 2019.

Earnings before interest, taxes, depreciation and amortization (EBITDA) soared by 200%, to a positive COP$1.5 billion (US$378,000), up from a negative COP$1.5 billion (US$378,000) in 1Q 2019.

Gross revenues declined 3.7% year-on-year thanks to the Coronavirus quarantine that started in March 2020, the company noted.

While January and February 2020 sales were positive, the bottom fell out in March “due to the Covid-19 pandemic,” according to Fabricato.

“For Fabricato, accumulated in the months of January and February 2020, revenues were 15% higher than in the same period of the previous year.

“When the month of March is included, the comparison is distorted because it was a 20-day month, in which we estimate that we stopped billing COP$16 billion (US$4 million).

“The closure of retail outlets, the stoppage of production of the entire production chain, social distancing, little knowledge about the disease, uncertainty about the development of a vaccine and the degree of intervention of governments in their respective economies are just some of the unanswered issues. And the main aggravating factor: uncertainty about how long it will be.

“At the end of this first quarter of 2020, an opportunity is perceived for Fabricato, which is the increase in demand for textiles with special finishes such as anti-fluid and anti-bacterial used in the health sector.

“Another issue that will surely become relevant in this process of emerging from the crisis is the strength of the business chain, of strategic relationships with suppliers and customers. In the case of Fabricato, having large companies as suppliers, holding state-of-the-art technology in both fibers and chemicals, will allow us to react with the speed necessary to meet this new demand that arises from the health sector.

“On the side of our clients, as they are also solid and structured companies, we think that most of them will be able to adjust to the new market conditions with the speed necessary to overcome this contingency.

“For this same reason, Fabricato has approximately 70% of its portfolio insured, which will certainly serve as a guarantee for future loans -- necessary to finance part of the [supply/demand] mismatch that will occur due to the lower level of sales, especially in the months of March, April and May.

“Fabricato -- having received [government] permission to partially start its activities (approximately 25%) from April 7 -- will reach sales in the order of 30% of the budgeted value, which added to 55% sales levels in March and 60% estimated for May, collectively represent an average reduction of 52% in this period.

“It is also estimated that the [textile/clothing] trade will restart its activities with a 40% reduction, which means that the entire production chain will be affected in its turnover in the coming months,” the company added.

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: 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.

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