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Medellin-based multinational utilities giant EPM announced October 29 that its third quarter (3Q) 2020 net income hit COP$1.3 trillion (US$337 million), up sharply from COP$457 billion (US$134 million) in 3Q 2019.

As for the first nine months of this year (January through September), EPM Group revenues are up 6%, to COP$14.1 trillion (US$3.65 billion), “thanks to the responsible management of finances and the diversification of the portfolio of services in six countries, which includes water supply; wastewater management; generation, distribution and transmission of energy; natural gas supply and solid waste management,” the company noted.

Nine-months 2020 operating income dipped 7% year-on-year, to COP$3.2 trillion (US$829 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) fell 4%, to COP$4.3 trillion (US$1.1 billion). EBTDA margin came-in at 31%.

“Of the COP$14.1 trillion [US$3.65 billion] of income achieved by the Group for the January-September period, EPM’s parent company contributed 51%, foreign affiliates 33% and national energy and water affiliates 16%,” according to EPM.

For full-year 2020,  EPM Group now estimates corporate profits between COP$2 trillion (US$518 million) to COP$2.4 trillion (US$622 million).

These estimates consider factors including “the coronavirus pandemic with its effect on the demand for public services and the payment of bills, the evolution of energy prices in the medium and long term, macroeconomics and the behavior of the exchange rate, as well as the incorporation of the new [Caribbean electric power] subsidiary Afinia to financial statements,” according to the company.

Covid-19 Impacts

Because of Colombian government decrees aiming to help families and businesses financially hurt by the Covid-19 shutdowns, EPM has had to absorb significant revenue cutbacks, the company noted.

Through the first nine months of 2020, EPM suffered revenue losses totaling almost COP$500 billion (US$130 million), “mainly due to lower revenues of COP$369 billion [US$95 million] and higher costs and expenses of COP$124 billion [US$32 million],” according to the company.

“The increases are in accounts-receivable (COP$269 billion/US$70 million); lower collections (COP$360 billion/US$93 million); discounts on timely payment (COP$19 billion/US$5 million) and freezes on financing installments (COP$31 billion/S$8 million),” according to EPM.

EPM finances also have been hurt by an exceptionally long drought season (through August this year) with resulting low hydrology in Colombia, impacting hydroelectric output.

“Another factor that weighed on results for the period was the lower demand for water, energy and natural gas associated with [reduced] economic activity, as a result of Covid-19,” according to EPM.

“In addition was the effect of a higher net accounting expense, excluding cash, due to an exchange difference of COP$748 billion (US$194 million), mainly caused by the restatement of debt in the U.S. dollars associated with the accumulated 18.36% devaluation of the Colombian peso.”

However, EPM has recouped COP$603 billion (US$156 million) of earlier exchange-rate losses recorded in March, “given the revaluation of the Colombian peso as of the second quarter of this year,” according to the company.

“Additionally, EPM has carried out actions in development of its foreign exchange risk hedging strategy that has allowed it to significantly improve its risk profile against currency volatility,” the company added.

Of the COP$1.49 trillion (US$389 million) budgeted for 2020  for profit transfers to the city of Medellin (its sole shareholder), EPM has already made payments of COP$1.3 trillion (US$337 million), the company added.

For the upcoming 2021 year, EPM estimates profit payments to the city of Medellín to be in the range of COP$1.1 trillion (US$285 million) to COP$1.3 trillion (US$337 million).

 At the end of September 2020, EPM reported total assets of COP$62.8 trillion (US$16.3 billion), up 14%, while liabilities rose 23%, to COP$37.9 trillion (US$9.8 billion). The debt/EBITDA ratio closed the third quarter at 4.41, compared to 3.80 in 2019.


Medellin-based multinational supermarket and home-products giant Grupo Exito announced October 28 that its third quarter (3Q) 2020 net profits jumped by 369% year-on-year, to COP$52 billion (US$13.5 million).

On the other hand, recurring earnings before interest, taxes, depreciation and amortization (EBITDA) actually dipped 9.4% year-on-year, although sales rose a modest 2.4%.

Through the first nine months of 2020, net profits are COP$86 billion (US$22 million) -- a substantial improvement over the COP$19.5 billion (US$5 million) net loss for first nine months of 2019, according to the company.

The improved results “were leveraged especially by the positive performance of direct and electronic commerce channels in Colombia, which had a record growth of 250%, or 3.5-times the figure of the previous year, and by the good evolution of retail sales in Uruguay, which increased by 11.3%,” according to Exito.

Sales via electronic and direct commerce reached COP$1 trillion (US$259 million) in September, “a first in the history of Grupo Éxito or any other merchant in Colombia,” according to the company.

Colombia operations generated sales of COP$2.67 trillion (US$692 million), “even with the negative effect generated by mobility restrictions as a result of Covid-19,” according to Exito.

“Innovation continues to be a differential element. In Colombia, ‘Éxito Wow’ sales grew by 8.1% and ‘Carulla FreshMarket’ by 24%,” according to the company.

In Uruguay, sales grew 11.3% in local currency, “driven by the result of the electronic and direct commerce channels, as well as the ‘FreshMarket’ format, which had a sales growth of 11.7% and represented 41.7% of total sales in this country,” according to Exito.

“In Argentina, recurring EBITDA reached a positive margin of 1.9%, even in the midst of a complex macroeconomic environment and mobility restrictions,” the company added.

‘Sustainable Livestock’ Initiative

On another front, Grupo Éxito announced the launch of its “Sustainable Livestock” initiative.

“We are making progress in the consolidation of our sustainable livestock model, which has satellite-monitored the preservation of forests [surrounding] farms where the livestock that supplies the company are scattered in eight departments of [Colombia],” according to Exito.

“With this process, we have evaluated at 70% of our live cattle suppliers, and we expect to reach 100% of them by the end of the year.

“In November we will launch our ‘premium quality’ product that includes audit processes to guarantee a sustainable livestock process,” according to Exito.

Grupo Éxito ended 3Q 2020 with 630 stores: 515 in Colombia, 90 in Uruguay and 25 in Argentina, the company added.


Colombia-based Cemex LatAm Holdings on October 28 posted a US$109 million net loss for third quarter (3Q) 2020, worse than the US$4 million net loss in 3Q 2019.

The company attributed the net loss to “non-monetary impairment of intangible assets and assets in disuse.”

Cemex LatAm produces cement, concrete and aggregates in Colombia, Panama, Costa Rica, Nicaragua, El Salvador and Guatemala.

Corporate-wide consolidated net sales for 3Q 2020 decreased 8% year-on-year, but earnings before interest, taxes, depreciation and amortization (EBITDA) increased 19%.

EBITDA margin in 3Q 2020 increased 5.5 percentage points, “mainly due to higher cement prices as well as lower costs and selling and administrative expenses, despite lower volumes,” according to the company.

“Our cost savings program reached US$39 million [in the latest quarter] and it is expected to reach US$46 million dollars in total for 2020. We reduced our net debt by US$48 million and our leverage by 0.4 times to 3.7 times, from June to September.”

Commenting on the results, Cemex LatAm general manager Jesús González stated: “Our operations functioned relatively normally during the third quarter in Colombia, Guatemala, Nicaragua and El Salvador, while [Covid-19] restrictions had an impact in Panama and to a lesser degree in Costa Rica.

“We continue to support our clients in some of the challenges they face due to Covid-19 through our ‘Cemex Te Acompaña’ program and our ‘Cemex Go’ digital platform. As a result of these actions, during the quarter we increased our Net-Promoter-Score by 19 points compared to the same period of the previous year.”

Colombia Results

EBITDA in Colombia rose 59% year-on-year, to US$28 million, while net sales increased 1% in comparable terms, reaching US$115 million, according to the company

Colombia cement sales volumes industry-wide “reached levels close to 2019 in 3Q 2020” while “our cement volumes increased 66% sequentially [from 2Q 2020] but decreased 6% compared to the same period last year, reflecting a new competitor and an impact from our price increases,” according to the company.

“Our quarterly cement prices were the highest since 2016; an increase of 2% sequentially and 8% compared to the same period last year."

In Colombia’s “fourth generation “ (4G) highway-construction sector, “4G projects continued apace. As of September, we have delivered, in cement and/or concrete, the equivalent of more than 420,000 cubic meters of concrete,” according to the company.

“In Bogotá, projects already awarded should start soon, including three hospitals, Transmilenio [bus rapid transit] extensions and a water treatment plant. The ‘Metro’ and the ‘Regiotram’ [rail mass-transit projects] should start cement consumption in 4Q 2021.

“For 2021, [Colombia’s national] investment budget for transportation is 36% higher compared to the previous year. In addition, cement consumption from 4G projects should peak and some 5G [next-generation highway] program projects could start,” according to Cemex LatAm.

In Colombia’s residential, industrial and commercial-construction sectors, “demand for cement in the self-construction sector recovered in June and this trend continued during 3Q 2020. Home sales recovered in 3Q 2020 increasing 2.8% compared to the same period last year,” according to the company.

“However, housing starts fell in the middle-double-digits. In the industrial and commercial sector, [Covid-19-caused] trends such as telecommuting, restricted travel and online shopping could reduce the demand for cement. However, it is encouraging that industrial and business confidence indices reached levels close to pre-pandemic levels in September,” the company added.

Elsewhere in Cemex LatAm markets, Panama sales dropped 64% year-on-year, while Costa Rica sales fell 12%. However, Nicaragua, El Salvador and Guatemala sales collectively rose 19% year-on-year, according to the company.


U.S.-based multinational snack-foods giant PepsiCo announced October 14 a US$93 million investment in a production plant in Guarne, Antioquia, just east of Medellin.

Colombia President Ivan Duque hailed the announcement during a nationally televised address October 14, citing this latest example of economic reactivation initiatives here even in the face of the Covid-19 pandemic.

“This investment will strengthen the company’s value chain in four pillars: innovation and infrastructure, agriculture, communities, and sustainability,” according to PepsiCo Colombia.

The Guarne plant project “began in August 2020, with local labor, and is expected to be completed in 2022,” according to the company.

“This will be the largest PepsiCo plant in the country, with different production lines that include brands such as ‘Natuchips,’ ‘DeTodito’ and ‘Doritos,’ and will have around 400 workers,” according to the company.

“The investment, which includes packaging automation technologies, will complement PepsiCo’s manufacturing system in Colombia and will allow it to continue to consolidate itself as one of the most important companies in the country, as it has been since its arrival in 1947.”

On a parallel front, “PepsiCo and its [charitable] Foundation will continue to develop initiatives along priority lines such as water [conservation], recycling, the empowerment of women and sustainable agriculture,” the company added.

“Currently there are 10 programs in 12 municipalities throughout the country, a number that is projected to increase after the investment. In addition, PepsiCo will continue to strengthen associations of small farmers and expand its areas of intervention in the Colombian countryside,” according to the company.

Water conservation, recycling and solar-electric power production are among the technologies to be employed at the new plant in Guarne, Antioquia, the company added.


Colombia’s national government on September 30 officially signed papers handing-over half of the former “Electricaribe” power operation in five Caribbean coastal departments to Medellin-based EPM effective October 1.

The deal for what was once dubbed “CaribeMar” means that as of today (October 1), the new “Afinia” unit of EPM is now responsible for investing at least COP$8 trillion (US$2 billion) in required infrastructure upgrades over the next 10 years -- and simultaneously trying to find a way to get hundreds of thousands of habitual non-paying customers in that region to start paying their electric bills.

EPM’s new “Afinia” division (a.k.a. “CaribeMar”) now assumes power-service obligations in all of Bolívar, Cesar, Córdoba and Sucre departments, plus 13 municipalities in Magdalena. As a result, EPM’s national share of the Colombian power market rises to 35% -- biggest in the nation.

Under the deal, EPM initially must invest COP$4 trillion (US$1 billion) in the first five years of "Afinia" operations, then double that investment in the subsequent five years, to a cumulative COP$8 trillion (US$2 billion) over 10 years, according to the company.

Beyond this initial US$2 billion investment risk is the challenge of finding ways to overcome the massive losses suffered by all prior Electricaribe operations -- because of a widespread culture of customer non-payment.

According to Colombia’s Public Services Superintendant Natasha Avendaño, fully 32% of Electricaribe customers never pay their electric power bills. Illegal power connections in many Caribbean municipalities are so massive that the former Electricaribe company inevitably fell into bankruptcy.

To convince EPM to buy the “CaribeMar” (now Afinia) operation despite the disastrous history of Electricaribe, the Colombian government agreed to assume some huge costs:

1. COP$2 trillion (US$519 million) of pension liabilities covering more than 3,000 current Electricaribe pensioners.
2. COP$4.56 trillion (US$1.18 billion) in operating-cost credits and power purchase guarantees.
3. COP$860 billion (US$223 million) in required infrastructure investments.

Since the government took-over essentially bankrupt Electricaribe in 2016, “priority interventions were carried out to improve the infrastructure of power networks, substations, new circuits, distribution transformers, as well as the implementation of a loss-reduction plan,” according to Colombia’s Ministry of Mines & Energy.

“As a result, the service interruption duration indicator (SAIDI) has been cut from 75.11 hours in 2019 to 56.34 hours in August 2020. Likewise, the service interruption frequency indicator (SAIFI) was reduced from 77.15 times in August 2019 to 67.33 times in the same month of 2020,” according to the Ministry.


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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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