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Companies 216

Written by March 22 2018 0

Medellin’s “Ruta N” technology-company hosting center announced March 22 that Madrid-based Konecta now has 100 engineers working here -- and exporting services to nine countries including Spain, Portugal, United Kingdom, Morroco, Argentina, Chile, México, Perú and Brazil.

Konecta offers business process outsourcing (BPO, software development and a contact center for “diverse sectors,” according to Ruta N.

The company’s goals for 2018 include updating its technology capacity and providing “effective mechanisms to connect clients with solutions for their needs,” according to Ruta N.

“Our company’s strategy defined the need to centralize software development in one country,” added Konecta Colombia president José Roberto Sierra.

“We analyzed different alternatives before finally deciding upon Medellin, given the high availability in this city of professionals with good qualifications, as well as the decided commitment of local government in favor of innovation and development of projects in the technology sector,” he added.

With coordinated help from Colombian business-development agency Procolombia, Ruta N and Medellin’s ACI (Agencia de Coopercion e Inversion de Medellin y el Area Metropolitana), Konecta first installed its multi-disciplinary innovation center in October 2017, the agency noted.

Separately, Konecta announced February 1 that its full-year 2017 sales hit €770 million (COP$2.7 trillion) thanks to “sustained organic growth” along with integration of recently acquired Allus and B-Connect in Latin America.

“Over the past year, [Konecta] launched a digital transformation and efficiency unit, as well as Konecta Software Factory, its center for technological innovation in Medellin,” the company added.

“Looking ahead, Konecta will keep on searching for opportunities that favor its growth in the American, Brazilian, and European markets, to allow Konecta to meet its goal of ranking among the top world’s five companies in the sector,” according to the company.

Written by March 22 2018 0

Medellin-based textile manufacturer Fabricato announced March 21 its that full-year 2017 net loss grew to COP$6.4 billion (US$2.2 million), down from a COP$845 million (US$295,000) net loss in 2016.

Earnings before interest, taxes, depreciation and amortization (EBITDA) fell to a negative COP$3.2 billion (US$1.1 million) , down from a positive COP$26.9 billion (US$9.4 million) in 2016.

Sales also declined 12.5% year-on-year, to COP$337 billion (US$117 million), down from COP$385 billion (US$134 million) in 2016.

Meanwhile, fellow Medellin-based textile giant Coltejer reported a net loss of COP$24 billion (US$8.4 million) in 2017, worse than the net loss of COP$7.7 billion (US$2.7 million) in 2016. Coltejer's sales likewise declined 30% year-on-year, to COP$169 billion (US$59 million), down from COP$241 billion (US$84 million) in 2016.

Operating income also fell 23% year-on-year, to COP$212 billion (US$74 million), down from COP$277 billion (US$96 million) in 2016, according to Coltejer.

“The net loss of the year is basically due to financial expenses, plus a drop in the domestic market which led to a reduction in production -- due to the importation of Asian products at a low price,” Coltejer added.

On a similar note, Fabricato explained that "the general business environment in Colombia in 2017 was unfavorable, as reflected in the lower level of growth in the country in recent years.

“The year [2017] began with a significant reduction in consumer confidence, a variable that has not fully recovered and that influenced sales and production indices throughout 2017,” as textile production nationwide fell 7.6% and clothing manufacture declined 8.4% year-on-year, according to Fabricato.

“Also during 2017, the textile-clothing chain faced acute competition based on unfair practices from imports of fabrics and finished products. At the end of the year, the national government implemented corrective measures to combat these unfair practices, which will surely improve the business environment for Colombian companies in 2018, namely:

“1. The resolution accepting the antidumping proceeding against denim of Chinese origin. Figures accumulated from January to October 2017 reveal that 17.2 million tons of fabrics entered [Colombia] below the price of US$4.63 per-kilo at the end of the year. This represents 72% of total denim imports in this same period, with China being the main country of origin, followed by India.

“2. Corrective measures: Decree 2218 defines more stringent customs controls for imports to combat textiles with ostensibly low prices (below US$2.50 per kilo). The average price of these imports in 2017 was US$1.36 per kilo.

“For a reference, the average price of cotton (the main raw material of these products) on the world market in the same period was US$1.58 per kilo.

“3. There were also intensified police operations that led to important achievements against smuggling, including the apprehension of large volumes of products illegally entered into the country, and the [shut-down] of several companies . . .

“Understanding the movements by both Fabricato [to reduce production] and the national government [to block illegal imports] in 2017, the impacts expected for [2018] are as follows:

“Despite our consolidation of production in a single industrial unit [at Bello, Antioquia], Fabricato starts its operation in 2018 without affecting installed capacity in relation to 2017. As a natural consequence, better efficiency is expected, lower operating costs and lower administrative costs, that is, a higher level of competitiveness.

“The Rionegro [Antioquia factory] property will be destined for the development of an industrial park, which will represent additional income for the company.

“Fabricato will reorient its production program internally without considering the use of 100% of its installed capacity as a primary objective, controlling in a more strict way the level of inventories and stimulating the anticipated programming by the customers; this will represent a better flow of business and consequently a lower stress on cash flow.

“In November 2017, the national government accepted the anti-dumping proceeding against denim fabrics of Chinese origin. This measure will allow local producers to access this portion of the market.

“In December 2017, the national government issued a decree in which the price thresholds for the importation of textile products were defined, with the aim of providing a solution to the problem of under-invoiced imports. This measure covers approximately 30% of textile imports of 2017 from all sources and specifications, and will also allow local producers to access this portion of the market.

“As of the second half of last year, the intensification of operations against smuggling was perceived. In one of them, the largest in recent history in the country, record volumes of smuggled products were apprehended, leading to the extinction of several companies.

“In addition to these measures, and their expected positive consequences, the expectation of a business environment will also be positive for the year 2018. Some indicators that lead us to this optimistic view are the higher price of oil, the reduction in the basic interest rate, controlled inflation, the improvement of consumer perception and the good turnover that was perceived at the end of 2017.

“Due to the foregoing, we believe that the year 2017 does not reflect a structural change in the business environment; We understand that many factors of negative impact coincided in this year and that they were delayed by the competent authorities.

“We certify a gradual recovery of our businesses starting in 2018, as the stocks of imported products under unfair practices are depleted,” the company concluded.

Written by March 21 2018 0

Medellin-based pension-fund administrator Protección announced March 16 that its full-year 2017 net income rose 34% year-on-year, to COP$343 billion (US$120 million).

Protección is one of the largest of the private pension funds in Colombia, and also owns the “AFP Crecer” pension fund in El Salvador.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 17% year-on-year, to COP$489 billion (US$171 million), with an EBITDA margin of 42%, up 6.48% year-on-year.

Commenting on the positive results, Protección cited “demographic changes that heighten the urgency to save from an earlier age, for a life expectancy that continues to grow.”

While Colombian gross domestic product (GDP) grew by a weak 1.8% last year, key financial markets outperformed, as the S&P 500 stock index soared 22% and Colombia’s “Colcap” stock index gained 12% last year, the company noted.

Protección administers three funds – “obligatory” pensions (contributions from workers and employers); “voluntary” pensions (contributions entirely from individuals) and worker-compensation funds (“cesantias”), collectively covering 6.7 million Colombians. Proteccion’s assets-under-management (AUM) for these three funds now tops COP$91 trillion (US$32 billion).

The “obligatory” sector accounts for the bulk of AUM, at COP$82 trillion (US$28 billion). This fund covers 4.4 million workers and 32,000 current pensioners. Proteccion has a 36% share of the Colombian “obligatory” pension market (measured by AUM) and 29.6% by number of affiliated workers.

The “voluntary” sector assets under Protección management hit COP$7.2 trillion (US$2.5 billion) in 2017, or 42.3% of the entire Colombian “voluntary” pension sector (as measured AOM) and 53.9% by number of persons affiliated, the company added.

Outlook for 2018

Meanwhile, Protección now foresees a relatively positive outlook for 2018, based on assumptions including three more interest-rate hikes by the U.S. Federal Reserve and better GDP growth in Colombia this year.

“We agree with [Colombian government] and International Monetary Fund forecasts indicating [Colombian] GDP growth between 2.8% and 3%” this year, according to Protección.

“As for the [Colombian national] pension system, we are sure the next government will make adjustments [following this spring’s elections],” the company added.

“We have to face the reality of longer life-spans. The portion of adults in the general population will more-than triple by 2050 in Latin America -- from 16.5 million today to 55.8 million -- in contrast to general population growth of only 20%.

“These factors will force us to act in advance -- to develop complementary models for pensions as well as [to improve] public education about savings,” the company added.

Written by March 21 2018 0

Medellin-based multinational utilities giant EPM announced March 20 that full-year 2017 net profits rose 19% year-on-year, to COP$2.2 trillion (US$772 million).

As a result, the city of Medellin – EPM’s sole owner -- netted COP$1.2 trillion (US$421 million) in profit-sharing, accounting for roughly 20% of the city’s total finances.

EPM also invested COP$2.5 trillion (US$877 million) in water, power and sewage infrastructure in Antioquia last year, the company added. Of that total, COP$1.7 trillion (US$596 million) went into the continuing construction of the US$5 billion, 2.4-gigawatt “Hidroituango” hydroelectric plant in Antioquia, due for initial start-up at year-end 2018.

“When EPM does well, Medellín and its inhabitants win, because there are more resources via transfers for social programs and for the development of the city,” the company added.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 27% year-on-year, to COP$3.1 billion (US$1.08 billion).

Despite profit improvements, Colombian revenues actually declined 12% year-on-year, to COP$7.4 trillion (US$2.6 billion) because of the impact of relatively rainy 2016 (helping hydropower output) versus the relatively drier 2017.

Consolidated revenues (all subsidiaries included) were COP$14.9 trillion (US$5.2 billion), of which EPM’s Colombia parent contributed 48%, foreign subsidiaries 35%, national energy subsidiaries 15% and national water subsidiaries 2%, according to the company.

EPM general manager Jorge Londoño de la Cuesta added that 2017 delivered the highest net profit in company history, mainly thanks to “proper management of costs and expenses.”

Corporate-wide debt-to-EBITDA ratio improved to 3.43 in 2017 versus 3.69 in 2016

Total asset value rose 10% year-on-year, to COP$47.3 trillion (US$16.6 billion), while equity grew 5%, to COP$20.9 trillion (US$7.3 billion), the company added.

Written by March 17 2018 0

Medellin-based gold miner Mineros SA announced March 16 that its full-year 2017 net profits in Colombia rose 16% year-on-year, to COP$114.7 billion (US$40 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) in Colombia hit COP$187.9 billion (US$65.8 million), or 48% of sales.

Corporate-wide, consolidated net income rose 32% year-on-year, to COP$117 billion (US$41 million), while consolidated EBITDA rose 17%, to COP$283 billion (US$99 million).

Total gold output rose 8.7% year-on-year, to 208,054 ounces, while average sale price rose 4.1%, to US$1,250/ounce.

Commenting on the results, Mineros noted that world gold prices at year-end 2017 hit US$1,302 per ounce, up 13% year-on-year; average 2017 gold prices were US$1,257.

Relatively strong gold prices came in reaction to falling values of the U.S. dollar along with international political troubles, including threats of war between the USA and North Korea, the company noted.

Meanwhile, world gold production last year reached a new record of 3,268.7 tons, “marginally higher than that observed in 2016 (3,263 tons),” Mineros noted.

“From the point of view of demand, the global manufacture of jewelry increased by 4% to 2,135.5 tons,” according to Mineros.

“This is the first annual increase in this item since 2013, when the demand for gold for investment fell 23%, passing from 1,595.5 tons in 2016 to 1,231.9 tons in 2017.

“Central banks continued to increase their gold reserves for the eighth consecutive year, but at a slower pace than the one observed the previous year, buying 371.4 tons compared to the 389.8 tons purchased in 2016.

“The demand for gold for the technology industry and for dentistry increased 3% compared to that observed in 2016, going from 323.4 to 332.8 tons. These changes generated a net reduction in demand close to 7%, going from 4,378.20 tons in 2016 to 4,071.7 tons in 2017,” Mineros noted.

In Colombia, Mineros SA’s mainly alluvial gold production remained flat year-on-year, at 89,709 ounces. Underground gold production in Colombia fell 14% year-on-year, to 13,664 ounces.

In Nicaragua, production at its Hemco subsidiary rose 22% year-on-year, to 104,681 ounces of gold equivalent, according to the company. Mineros added that in 2018, the company will concentrate greenfield exploration mainly in Nicaragua.

Socially Responsible Mining

Meanwhile, Mineros continues to support environmentally and socially responsible mining in Colombia – in part by eliminating toxic mercury from is mainly alluvial operations, in contrast to criminal and reckless mining practiced by others.

Among Mineros social-environmental projects in 2017:

1.A “business strengthening” program, which last year provided financial credits and consulting to 25 entrepreneurial companies, “aimed at developing skills that not only help them to be better entrepreneurs but also better citizens.”

2. Apicultural production project: This program – supported in part by the U.S. Agency for International Development’s “Legal Gold” program -- continues to grow, with 100 families associated to the ASAPIBAS (Association of Beekeepers of the Lower Cauca and Southern Bolivar) cooperative in 20 villages near El Bagre, Nechí, Zaragoza, Anorí and Caucasia, Antioquia. These cooperatives produced 13 tons of honey last year, netting close to COP$271 million (US$95,000) in supplemental income.

These families also recently founded three laboratories for the production of bee-biological nuclei, “in order to continue growing and populating their apicultural units. Also, 120 new hectares were reforested in order to increase the floral supply available, while also serving as an environmental contribution for the region, rehabilitating areas [wrecked] by informal mining,” the company added.

3. Business and human rights project with the United Nations: “We continue supporting the Office of the United Nations High Commissioner for Human Rights in actions for the construction of peace and citizen coexistence” in mining areas, Mineros noted.

This project “supported the training of 50 members of the Committees of Coexistence of El Bagre that participate in the formulation of development programs with a territorial approach, while six education and recreation campaigns were carried out to generate bonds of trust, confidence and coexistence in neighborhoods of El Bagre and Zaragoza.”

4. Mining legalization: In 2017, Mineros provided technical-assistance loans to the informal miner group EMIJOM (Empresa de Mineros de Jobo Medio-Emijom) "for the improvement of ore beneficiation processes, in order to increase gold recovery and avoid the use of mercury."

5. Wetlands program: During 2017, Mineros helped clean 14 hectares of water and water-supply access pipes in natural marshes, working jointly with the communities of Sabalito Sinaí, Guamo-Guachí, El Pital, San Pedro and La Esperanza.

“In the same way, the community of Puerto Gaitán worked on cleaning the waters of the La Esperanza swamp,” with Mineros payments for this project generating extra income for local workers while also boosting environmental protection, the company added.

6. Conservation of river turtles: “In 2017, communities from the municipalities of Nechí, Zaragoza, Caucasia and El Bagre participated in nine conservation-center operations, achieving the release of 1,300 individuals of this species,” according to Mineros.

7. Fish farming and repopulation program: “Fulfilling the environmental management plan, during 2017 the repopulation of the Bocachico species was continued -- considered of great importance in the diet of the riverside populations and also because Bocachico is classified as an endangered species. With the participation of the fishing communities of Nechí and the National Authority of Aquaculture and Fisheries (AUNAP), we introduced 500,000 Bocachico fingerlings in strategic wetlands including La Taburetera, El Sapo, Corrales and La Esperanza,” according to Mineros.

8. Reforestation program: “In 2017, we planted about 120,000 trees of different native species on 60.5 hectares of land left behind after the alluvial operation (involving hydraulic landfills),” the company noted.

9. Agroforestry plots: This program added 48 more plots in 2017, “all built in the recovery zones left by the [alluvial] production units. In agroforestry systems, there are about 750 hectares [of reforested plots], where honey is produced, along with yam, yucca, banana, corn, rice, fruit and vegetables in home gardens. These activities are complemented with artisanal fishing, poultry, pigs, rams and cattle,” according to Mineros.

10. Rubber plantations: As of 2017, “the population of rubber trees planted amounted to 450,000 trees in about 1,000 hectares. Of these, the first 28,000 trees entered latex production,” the company added.

Page 8 of 17

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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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