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Companies 216

Written by August 02 2018 0

Medellin-based international banking giant Bancolombia reported August 2 that its second quarter (2Q) 2018 consolidated net income dropped 9.5% year-on-year, to COP$592 billion (US$204 million), from COP$653 billion (US$225 million) in 2Q 2017.

Despite the year-on-year decline, the 2Q 2018 profits were 13% better than first-quarter (1Q) 2018 profits, according to the company.

As of June 30, 2018, Bancolombia’s assets totaled COP$204 trillion (US$70 billion), up 1.8% compared to 1Q 2018 and up 0.4% compared to 2Q 2017, according to the company. Bancolombia’s liabilities totaled COP$180 trillion (US$62 billion), up 1.6% compared to 1Q 2018 but down 0.1% compared to 2Q 2017.

During the latest quarter, the Colombian peso depreciated 5.4% against the U.S. dollar, whereas in the prior 12 months, the peso appreciated 3.9% against the dollar.

“In 2Q 2018 there was a growth in the gross portfolio of 2.9% compared to 1Q 2018,” while “compared to 2Q 2017, the annual growth of the peso portfolio was 8.7% while the dollar portfolio decreased 2.4%,” according to Bancolombia.

“At the end of 2Q 2018, operations at [subsidiaries] Banco Agrícola in El Salvador, Banistmo in Panama and BAM in Guatemala represented 25% of the total portfolio balance,” according to the company.

“At the same time, the portfolio denominated in currencies other than the Colombian peso -- generated by operations in Central America, the off-shore operation Bancolombia Panama and the U.S. dollar portfolio in Colombia -- represented 33.4% of the total portfolio and had an increase of 7.4% for the quarter (expressed in pesos), mainly explained by the depreciation of the peso versus the dollar,” the company added.

Total reserves (provisions in the balance sheet) for delinquent loans increased 5.4% during the quarter, “equivalent to 5.8% of the gross portfolio at the end of the quarter,” according to Bancolombia.

At the end of 2Q 2018, Bancolombia’s investment portfolio declined 6.7% compared to 1Q 2018, but rose 2.2% compared to 2Q 2017. “The investment portfolio consists mainly of debt securities, which represented 70.5% of total Bancolombia investments and 5.4% of assets at the end of 2Q 2018,” according to the company.

At the end of 2Q18, the portfolio of investments in debt securities had a duration of 19.6 months and a yield to maturity of 4.7%.

The consolidated loan portfolio in 2Q 2018 grew 3.2% compared to 2Q 2017 “The annual growth reflects a moderate demand for credit in Colombia,” according to Bancolombia.

Net interest income fell 3.3% compared to 2Q 2017, according to the company.

“This decrease is mainly explained by the impact of the adoption of IFRS-9 [accounting standards] in 2018, which reduced revenue by COP$106 billion [US$36 million] compared to 2Q 2017, as well as margin compression during the year,” according to Bancolombia

Net annualized interest margin in the latest quarter was 5.9%. “The margin increased six basis points in the quarter, and decreased 31 basis points compared to 2Q 2017, impacted by the fall in net interest income due to the adoption of IFRS 9, as well as the reductions in the reference rate of the central bank in Colombia,” according to Bancolombia.

Provision charges against loans were COP$972 billion (US$335 million) and the 90-day past due loan coverage indicator was 157.3%. “Provision charges increased 23.1% compared to 2Q 2017 and 11.1% compared to 1Q 2018,” according to Bancolombia. “This level of provisions allows maintaining a solid coverage index in the middle of a challenging environment.”

The past due portfolio is “explained mostly by corporate clients,” according to the company.

“Net fees were COP$645 billion [US$22 million] and grew 4.8% compared to 2Q 2017. Debit and credit cards, payments and collections and fiduciary activities are the [venues] that contribute the most to this positive annual performance,” the company added.

Income taxes dipped to COP$195 billion (US$67 million) in 2Q 2018, down 37.3% from 1Q 2018, and down 30.6% compared to 2Q 2017.

“These variations are mainly explained by the depreciation of the peso versus the dollar in the second quarters of 2017 and 2018, since the operation in Colombia, which has the highest tax rate, represents a lower proportion in the consolidated results,” according to Bancolombia.

As of June 30, 2018, the Bancolombia Group had 31,000 employees, 1,045 branches, 5,746 ATMs, 11,269 correspondent-bank locations and more than 12 million customers.

Written by August 01 2018 0

Medellin-based multinational utilities giant EPM announced July 31 that its first-half (1H) 2018 earnings before interest, taxes, depreciation and amortization (EBITDA) grew 10% year-on-year, to COP$2.5 trillion (US$865 million).

Net profits for 1H 2018 were steady year-on-year, at COP$1 trillion (US$ 346 million), according to the company.

The city of Medellin – EPM’s 100% owner – received COP$806 billion (US$279 million) in profit payments during the semester, according to the company.

“Increased energy sales and the increase in the number of users of water services are the main elements that gave rise to good financial results for the EPM Group,” according to the company.

During 1H 2018, EPM Group revenues hit COP$7.9 trillion (US$2.7 billion), with foreign subsidiaries contributing 33% and national energy subsidiaries 15%, according to the company.

While net profits were steady, “costs increased by 10% and expenses by 9%, partly due to the provision of expenses associated with the Hidroituango [hydroelectric dam] contingency,” according to the company.

Payments to the city of Medellin were equivalent to 55% of the company's net profit of 2017, of which COP$150 billion (US$52 million) came from EPM’s sale of minority shares in power generator Isagén.

Written by July 31 2018 0

Medellin-based textile giant Fabricato on July 31 posted a COP$7.4 billion (US$2.6 million) net loss for second quarter (2Q) 2018, down from a COP$16 billion (US$5.5 million) net profit in 2Q 2017.

Earnings before interest, taxes, depreciation and amortization (EBITDA) came-in at COP$2.8 billion (US$970,000) in 2Q 2018, an improvement over the COP$1.6 billion (US$554,000) EBITDA in 2Q 2017.

So far this year, first half (1H) net loss stands at COP$19 billion (US$6.6 million), an improvement over the net loss of COP$25 billion (US$8.6 million) in 1H 2017, according to the company.

“Despite the expectation generated by the [Colombia] presidential elections [won by pro-business, moderate conservative Ivan Duque, rather than socialist-populist Gustavo Petro] and the great interest that the [World Cup] soccer world arouses -- both events that took place in this [2Q 2018] period -- we saw the same recovery trend of the economy already perceived in the first quarter of the year,” according to Fabricato.

“Inflation remained under control and the price of oil remained above the budgeted target, two good elements that allow us to suppose that the trend of recovery in economic activity will continue,” according to the company.

However, “the point of alert in this second quarter was the deviation between the exchange rate of Colombia with the exchange rates of Argentina [Argentine peso down 35% against Colombia peso] and Brazil [Brazilian reais down 17% against Colombia peso], countries with which the free trade agreement entered into force in January of this year.

“The proximity of these countries with Colombia, associated with the devaluation of their currencies, makes the commercial effects immediate, making us [suffer] the increase of Brazilian products both in Colombia and in Ecuador and Peru, main destinations of our exports.

“In addition to the macroeconomic factors, in the textile sector there are positive effects of the measures against unfair competition adopted by the government at the end of last year, that is, the intensification of programs to combat smuggling, the decree with import price thresholds and especially the anti-dumping measure against China denim fabrics.”

However, “we still had many [cost penalties] due to the transfer of the [Riotex affiliate] plant from Rionegro to Bello, with the inevitable difficulties and cost overruns that this represents.

“EBITDA in the [latest] quarter was 3.2% on sales versus 1.8% in the same quarter of the previous year, despite the fact that sales in value were practically the same, a sign that operating efficiencies are beginning to be reflected in the results.

In addition, thanks to Fabricato’s move to meet U.S. environmental and social responsibility standards, “by complying with the standards, values and products required, Fabricato today is a licensed and recognized company in this segment,” the company added.

“Regarding the Colombian domestic market, we perceive a higher level of activity in the [clothing] trade and a lower level of activity in the industry, which can be explained both by the increase in the imports of manufactured clothing and by the excessive stock of imported fabrics in the last year.”

Meanwhile, as for Fabricato’s investments in commercial real-estate businesses, “the start of construction of the [Bello, Antioquia] shopping center is scheduled for September this year. For the defined business model, from the start of construction Fabricato will receive 49% of the revenue that corresponds to future cash flows and the remaining 51% with participation in the areas of the center that will be leased.

“With this income from leases, Fabricato will cover in the future a high percentage of the cash flow needs demanded by our pension liabilities. The approximate value for this year of the shopping center is approximately COP$6 billion [US$2 million].

“For the ‘Ciudad Fabricato’ [real-estate] project, the company has an estimated value of revenues of COP$162 billion [US$56 million] up to the year 2025, being that part of these resources must be received in the first four years of the project.”

As for its Ibagué real-estate project, “Triada S.A.S. continues to advance with the definition of the project and processing the proper permits for the launch of the development, which is scheduled for October of this year. The estimated value of revenues for this project for Fabricato is COP$25 billion [US$8.6 million] over a period of eight years, after the start of construction.”

As for the re-purposing of its former Riotex industrial park in Rionegro, “at the end of June, 45% of the available area is already leased. The objective is that by the end of this year the occupation is 100% or close to this,” according to Fabricato.

“In the case of full occupancy, we estimate that for leases and services, the industrial park should generate annual revenues between COP$5.5 billion [US$1.9 million] and COP$6 billion [US$2 million],” according to the company.

Written by July 30 2018 0

Medellin-based international packaged foods giant Grupo Nutresa announced July 27 that its second-quarter (2Q) 2018 profits rose 27% year-on-year, to COP$124 billion (US$43 million), while sales rose 5%, to COP$2.2 trillion (US$765 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose a modest 1.6%, to COP$267 billion (US$93 million), while EBITDA margin hit 12.5% during the first half (1H) of 2018, according to the company.

While Colombia currently represents 64% of its total global sales, Central America now accounts for another 9.3%; Chile 8.6%; the USA 7.5%; Mexico 2.6%; Peru and the Caribbean each 1.8%; and Ecuador 1.4%, according to Nutresa.

During 1H 2018, sales in Colombia rose 4.4% year-on-year, to COP$2.8 trillion (US$974 million), due to a 3.8% hike in product volumes “accompanied by a prudent pricing strategy and a decisive investment in brands in the different channels served,” according to Nutresa.

Also during first-half 2018, international sales grew 5.9% (as measured in U.S. dollars), hitting US$547.3 million, according to Nutresa.

Gross profit for 1H 2018 grew 5.6% year-on-year, to COP$1.9 trillion (US$661 million), reflecting “the increase in sales, efforts in productivity and the constant search for greater efficiencies in purchasing strategies and coverage of our raw materials,” according to Nutresa.

In Colombia, the company boasts of a 71% market share in sales of processed meats (Zenu and Pietran brands); a 54% share in crackers/cookies (Noel, Tosh, Dux); a 69% share in packaged chocolates (Corona, Jet, ChocoListo); a 50% share in coffees (Colcafe, Sello Rojo, La Bastilla, Matiz); a 52% share in pastas (Doria); and significant market shares in fast-food restaurants (El Corral, Leños y Carbon, Helados Bon, Krispy Kreme, Taco Bell, Starbucks, Papa John’s and Beer Station).

The company also boasts of robust sales of Italian processed-food specialties through its Tresmontes Lucchetti division in several countries.

Written by July 27 2018 0

Cemex Latam Holdings -- a division of Mexico-based cement giant Cemex -- announced July 26 that second-quarter (2Q) 2018 operating earnings before interest, taxes, depreciation and amortization (EBITDA) for its Colombia operations dipped 4% year-on-year, to US$21.6 million.

Sales in 2Q 2018 in Colombia also dipped 5% year-on-year, to US$129 million, while operating cash flow dipped to US$22 million, from US$23 million in 2Q 2017, according to the company.

Colombian sales volumes of cement, concrete and aggregates all fell between 9% to 13% year-on-year, mainly because of weakness in Colombia’s construction sector, according to the company.

However, year-on-year deliveries of cement for highways and infrastructure sectors were actually improving during the latest quarter, the company added. Meanwhile, prices for gray cement in Colombia during 2Q 2018 rose 8% year-on-year (measured in Colombian pesos).

As for the current situation facing Cemex Colombia’s in-limbo cement plant at Maceo, Antioquia (see: "Cemex Colombia Loses Appeal on Price-Fixing; Former Execs Charged in Maceo Plant Scandal," Medellin Herald, June 22, 2018), Cemex revealed that it’s now trying to work-out a new lease-extension deal with Colombia’s Sociedad de Activos Especiales (SAE) for lands around the Maceo plant.

SAE supplanted the now-liquidated Direccion Nacional de Estupefacientes (DNE) agency, which originally had moved to seize lands around the plant because of alleged tax fraud by the former owner of the properties.

Since then, Cemex Colombia had enjoyed a temporary “lease contract” with DNE to continue construction and an eventual planned-but-not-yet-executed start-up for the plant. But that contract expired July 15, 2018.

“Despite the expiration of the validity of the lease agreement, Cemex Colombia estimates that the lease agreement has the benefit of a renewal prerogative that operates in accordance with the terms and conditions of the lease agreement and by the Ministry of Justice, and that we also have the right to continue using Maceo’s assets in accordance with the terms [of the original lease] until the end of the domain termination process,” according to Cemex Colombia.

“Although the SAE questions the validity of the documents signed by the DNE, the SAE and Cemex Colombia continue to work on a long-term scheme that allows the Maceo plant to be commissioned while the extinction-of-domain process [that is, the economic seizure of property assets due to the tax-fraud allegations] is resolved,” according to the company.

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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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