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Written by May 15 2021 0

Medellin-based multinational insurance, health-care and financial services giant Grupo Sura announced May 14 a COP$211 billion (US$57 million) net profit for first quarter (1Q) 2021, compared to a COP$76 billion (US$20.6 million) net loss in 1Q 2020.

The big change “was mainly the result of the devaluation of the markets in the region” last year, as the Covid-19 crisis began to hit, according to Sura.

Sura also credited improved 1Q 2021 results to “a recovery in income due to investments in Sura Asset Management, higher profits of associated companies and control of operating expenses.”

Total revenues in 1Q 2021 rose 13.7% year-on-year, to COP$5.6 trillion (US$1.5 billion), “reflecting a growth of 7.1% in written premiums and 9.3% in income by commissions. Additionally, investment income reached COP$296 billion [US$80 million], compared to the atypical losses in the first quarter of last year, generated by the fall of the capital markets globally.

“Likewise, the increase in income from the equity method stands out due to the higher profits of [Sura’s partial shareholdings in] Bancolombia and Grupo Nutresa and a recovery of Grupo Argos and Protección,” the company added.

Among the 1Q 20201 highlights:

-- The Suramericana insurance subsidiary in Colombia “has vaccinated more than 400,000 EPS Sura [health insurance network] subscribers against the Coronavirus at 91 vaccination centers, with a total capacity for applying around 25,000 doses per day, depending on the availability of these vaccines,” according to the company.

As a result, the Covid-19 fatality rate among Sura subscribers and policy-holders was less-than one-third that of the total Colombia population, according to the company.

While Suramericana obtained a 7.3% growth in written premiums, totaling US$1.3 billion, “retained claims rose by 14.5%, mainly in the Life and Health Care segments,” which resulted in a net loss of US$3 million for this subsidiary -- a consequence of Covid-19 claims.

-- Growths in written premiums and fee and commission income, a recovery in returns from the proprietary investments made by pension fund management firms (legal reserves), as well as an increase in the revenues received via the equity method from the stakes held by Grupo Sura, collectively boosted operating income to US$1.56 billion in 1Q 2021.

“We are seeing the benefits of a well-balanced portfolio that is driving the growth of our revenues and bottom line, as well as the headway made by Suramericana and Sura Asset Management in consolidating efficient operations,” added Sura chief financial officer Ricardo Jaramillo.

“Also worth noting is the controlled rise in expenses of just 6.3%, thanks to our ongoing focus on gaining greater efficiencies together with operating expenses that dropped 0.4% in spite of the increase in claims with Suramericana’s Life and Health Care Insurance segments,” he added.

-- Sura Asset Management recorded a growth of 7.5% in fee and commission income, mainly driven by its line of retirement savings (pensions), “Inversiones Sura” (savings for private individuals) and Sura Investment Management (asset management for institutional clients).

Corporate-wide assets-under-management meanwhile grew 16.6% year-on-year, to US$150 billion, the company added.

Written by May 14 2021 0

Toronto-based Gran Colombia Gold (GCC) – operator of Colombia’s biggest gold mine at Segovia, Antioquia – on May 13 announced US$21.2 million in adjusted net income for first quarter (1Q) 2021, up slightly from US$21.2 million in 1Q 2020.

The year-over-year improvement in adjusted net income came mainly from existing mine operations “together with a decrease in finance costs due to the reduction in the company’s debt over the last year,” according to GCC.

In February 2021, GCC finalized a partial spin-out of its Marmato mining assets in Colombia, leaving it with a 44.3% equity stake in “Aris Gold Corporation.”

The company also added a 27.3% equity interest in Denarius Silver Corp. to its portfolio in the first quarter of 2021, “giving it exposure to the Lomero-Poyatos polymetallic deposit located in Spain, in close proximity to the Matsa JV project, and to the Guia Antigua and Zancudo Projects in Colombia,” according to GCC.

GCC gold production at Segovia totaled 49,058 ounces in 1Q 2021, down from 50,346 ounces in 1Q 2020. “The company remains on track with its annual production guidance for 2021 of 200,000 to 220,000 ounces of gold,” according to GCC.

“The company’s ongoing drilling program at Segovia continues to provide encouraging results, reaffirming confidence in the high-grade nature of the Segovia gold deposits,” according to GCC.

Consolidated revenue amounted to US$101.9 million in 1Q 2021, up slightly from US$101 million in 1Q 2020, “reflecting an increase in the company’s realized gold price to an average of $1,812 per ounce sold from $1,570 in the first quarter last year, offset by lower gold sales volume this year, which included only one month of Marmato’s operating results prior to the loss of control of Aris in early February 2021,” according to GCC.

Total cash costs at Segovia averaged $825 per ounce in 1Q 2021, “a slight improvement from $830 per ounce in the fourth quarter of 2020 and up from $604 per ounce in the first quarter of 2020,” according to GCC.

“The year-over-year increase in Segovia’s total cash cost per ounce reflects an increase in contractor and artisanal mining payment rates (which had not changed since 2017) implemented in the third quarter of 2020 in response to the current gold market conditions; higher spot gold prices which increased production taxes on a per ounce basis, and; additional costs to maintain the necessary Covid-19 protocols required to protect the health and safety of Segovia’s workers and the local communities,” according to GCC.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) dipped to $46.3 million for 1Q 2021, compared with $50.4 million in 1Q 2020.

“The company’s balance sheet remained solid with total cash of $73.6 million at the end of the first quarter of 2021. After the quarterly amortizing payments in 2021 and the early optional redemption completed on May 10, 2021, the aggregate principal amount of Gold Notes currently outstanding is $19.75 million. The company also completed a partial redemption in April 2021 of 10% of its Convertible Debentures bringing the amount outstanding down to Cdn$18 million [US$14.8 million],” GCC added.

 

Written by May 14 2021 0

Medellin-based textile and plastics-recycling giant Enka Colombia reported May 13 a COP$$12.6 billion (US$3.4 million) net profit for first quarter (1Q) 2021, a big reversal from the COP$3 billion (US$814,000) net loss in 1Q 2020.

“The results of the first quarter of 2021 present the best result of recent periods, as a consequence of the good demand behavior in strategic businesses and the benefits of a higher exchange rate, whose effects had been limited in previous quarters by exchange hedges taken prior to the Covid-19 crisis,” according to Enka.

“So far this year, EBITDA [earnings before interest, taxes, depreciation and amortization] amounts to COP$17 billion [US$4.6 million], exceeding the 1Q 2020 result by about 50%,” the company added.

EBITDA margin during 1Q 2021 rose to “a historically high level, ending at 15% of sales, while the previous year it stood at 11%,” according to Enka.

“This behavior is explained by several factors:

“1. The impact of the stoppage of operations of a large part of Enka's production during the last week of March 2020;
“2. The benefits of a higher TRM [Colombian peso-exchange rate] on the company's income, a high percentage of which is indexed to the U.S. dollar.
“3. The strong increase in international prices, as a consequence of the rapid recovery of world demand and its pressure on the supply of transport services, which was a carryover to sale prices,” the company added.

Operating income grew 10.7% year-on-year, to COP$113.6 billion (US$30.8 million), “as a result of the increase in international prices and higher sales volume, mainly due to the reactivation of virgin PET [waste plastic] sales.”

“At the end of 2020 a raw material supply agreement was reached with Alpek to reactivate the sales of virgin PET, seeking to offer a local supply alternative to customers,” the company added.

Export Markets

Exports in 1Q 2021 came-in-at US$12.5 million, representing 43% of total sales.

“Market diversification continues to be essential to mitigate the effects of Covid-19 on some regions, highlighting the increase in the United States, Canada and Mexico (NAFTA), which increased their participation to 23% (2020: 17%) and offset the lower sales to Brazil, a market strongly affected by the pandemic,” according to Enka.

‘Green’ Businesses

Income in this segment rose 3% year-on-year, to COP$34 billion (US$9.2 million), accounting for 33% of sales, while exports of “green” products amounted to US$1 million, or 11% of business revenues.

Waste-plastic-bottle uptake “grew 24% versus 4Q 2020 due to the pricing and recovery strategy and gradual development of the PET market, which covered the current demand of the ‘EKO-PET’ plant (4,510 tonnes), ensuring operation of the plant at 100% in the period,” according to Enka.

As for the “EKO-Fibras” market (2,740 tonnes), this dipped 422 tonnes “mainly in Brazil and Argentina due to the effects of Covid19.”

As for the “EKO-Polyolefins” market (373 tonnes), demand fell 193 tonnes “due to lower inventories and reduction in bottle collection by Covid-19 in 2020, partially offset by better margins,” according to the company.

Textile and Industrial Businesses

Excluding a temporary dip in virgin PET production, revenues rose 2% year-on-year, to COP$70 billion (US$19 million), “due to higher international prices that offset the lower volume (-2%),” according to Enka. “Exports reach US$11.5 million, representing 92% of the company's exports.”

Industrial threads tonnage sales (3,319 tonnes) grew 8% year-on-year “due to strategy in ‘Lona,’ which grew by 29%, against technical thread sales where the most profitable markets are prioritized,” according to Enka.

The textile filaments division (2,018 tonnes) saw a 20% decline in sales volume “due to the pandemic that affected demand both in the local market and in exports. Although sales have been recovering its dynamics have not yet reached the levels prior to Covid-19,” according to Enka.

Written by May 14 2021 0

Medellin-based cement, electric power and airport/highway concessionaire Grupo Argos announced May 13 that its first quarter (1Q) 2021 net income jumped 622% year-on-year, to COP$190.5 billion (US$51.7 million).

Argos credited the boost “mainly due to the increase in sales, our operating leverage and a decrease in financial expenses.”

Consolidated revenues rose 3.2% year-on-year, to COP$3.7 trillion (US$1 billion). “This is an important growth considering that the result registered in 1Q 2020 had few effects from the pandemic and reflected the good regional economic dynamics,” according to the company

“The increase in income from sales of goods and services is mainly explained by an increase in the contributions of Cementos Argos (+ COP$141 billion/US$38 million) and the increase in Celsia (+COP$51 billion/US$13.8 million) that are higher than the contraction in the concessions business (-COP$112 billion/-US$30 million) in which the airport business continues to be affected by lower traffic as a result of the pandemic,” the company added.

Cost-of-sales remained stable “even with a significant increase in the sales of the different businesses (volume of cement +16% year-on-year and power generation + 18%),” according to Argos.

“This stability in costs with growing sales is an example of the efficiency and operating leverage that the company achieved during the 2020 juncture and that it maintains in 2021 to improve its profitability incrementally.”

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 16% year-on-year, to COP$952 billion (US$258 million), “explained by 3.2% higher sales, which is magnified when combined with the efficiency in costs and expenses that the company achieved during 2020,” according to Argos.

Written by May 12 2021 0

Medellin-based electric power giant Celsia announced May 11 that its first quarter (1Q) 2021 net income rose 33% year-on-year, to COP$115.7 billion (US$31 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 1.7% year-on--year, to COP$336 billion (US$90 million), with an EBITDA margin of 34.3%.

“By regions, in the first quarter, Colombia contributed 86% of EBITDA, adding COP$289 billion [US$77 million] and Central America contributed 14%, reaching COP$47 billion [US$12.5 million],” according to Celsia.

Consolidated revenues rose 5.6% year-on-year, to COP$980 billion (US$262 million).

“The good performance of income is due to the start-up of PCH [small hydroelectric plant] San Andrés and the solar farms of El Espinal and El Carmelo, and higher income from generation and connection services,” according to the company.

“The reduction in financial expenses associated with debt management and the decrease in reference rates contributed to the consolidated net profit for the quarter,” according to Celsia. “After discounting the minority interest, the net result attributable to the owners of the parent company records a gain of COP$83.5 billion [US$22 million], an increase of 28.4%.”

Celsia closed 1Q 2021 with a consolidated debt of COP$4.2 trillion (US$1.12 billion) and a leverage ratio of 3.1 times net-debt-to-EBITDA. “Compared to 2020, the effect of the devaluation of the Colombian peso on [Celsia’s] Central America's debt was COP$86 billion [US$23 million],” according to the company.

“These first quarter results reflect the commissioning of generation and transmission assets that took several years to build,” Celsia chief exec Ricardo Sierra 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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