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Companies 217

Written by March 25 2018 0

Medellin-based multinational personal-hygiene products manufacturer Grupo Familia announced March 23 that its full-year 2017 consolidated net income more than doubled year-on-year, to COP$231 billion (US$81 million).

Operating income also rose 75% year-on-year, to COP$343 billion (US$120 million), according to the company.

Gross income rose slightly (just under 2%) year-on-year, to COP$2.3 trillion (US$809 million) in the eight countries where Familia now operates.

Familia also boasted that it launched 15 new products last year, under its various brand names, including “Nosotras,” “Pomys,” “Petys,” “Pequeñín,” and “Familia,” according to the company.

Grupo Familia also noted that its 2017 highlights included purchase of 100% of the stock of Dominican Republic-based product distributor Continental de Negocios, for US$16.5 million.

During 2017, Familia also launched a partnership with Massachusetts Institute of Technology (MIT) to review the company’s environmental sustainability plans.

Finally, subsequent to the close of fiscal year 2017, Grupo Familia also noted that it has now completed the buy-out of 100% of the stock of Productos Sancela del Peru, for US$37.7 million. That move bolsters Familia's market strength in Peru and Bolivia, the company added.

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.

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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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