Business 630
Construcciones El Condor Posts Net Loss for 1H 2021
Sunday, 15 August 2021 08:33 Written by Roberto Peckham
Medellin-based highway construction giant Construcciones El Condor on August 13 reported a first half (1H) 2021 net loss of COP$7.67 billion (US$2 million) -- mainly a temporary accounting impact from presumed losses arising from its partial stake in the "Vías de las Américas" highway concession project, which is in bankruptcy.
“This is a non-recurring effect recognized at the end of March 2021, only as an accounting phenomenon, and does not generate an impact on cash and therefore it does not affect the financial situation of the company,” according to El Condor.
“Excluding this accounting effect, net profit [for 1H 2021] would be COP$4.69 billion [US$1.2 million],” according to the company.
As of June 2021, income from ordinary activities totaled COP$258 billion (US$67 million), down 25.6% compared to the same period in 2020.
“This result is associated with the completion period of the projects that were executed during previous years with significant billings [and] the suspension of some projects pending environmental and property decisions, as well as the Magdalena 2 project, which is in the beginning stage,” according to El Condor.
“Additionally, the National Strike that began at the end of April also affected the pace of the works for reasons of physical security of our collaborators in some areas and shortage of the main supplies in the projects,” the company added.
“During 2021, the company is finalizing the profitable execution of fourth-generation ‘4G’ superhighway contracts, and begins the execution of new contracts, among which the EPC [engineering, procurement and construction] contract of the Magdalena 2 Consortium and public works contracts awarded by [Colombia’s highway agency] Invias in March 2021.”
Operating margin through June 2021 was 2%, while earnings before interest, taxes, depreciation and amortization (EBITDA) hit COP$22.5 billion (US$5.8 million), equivalent to an EBITDA margin of 8.72%, down from 14.9% in 2020, according to El Condor.
As of June 2021, the company’s construction backlog -- defined as the balance of works contracted and to be executed -- stood at COP$1.869 trillion (US$486 million).
An additional COP$1.05 trillion (US$273 million) in “projected backlog” is expected from the upcoming Santana-Mocoa-Neiva highway construction project. As a result, total backlog would rise to COP$2.9 trillion (US$755 million), according to the company.
Gran Colombia Gold 2Q 2021 Net Income Improves Year-on-Year
Sunday, 15 August 2021 07:40 Written by Roberto Peckham
Toronto-based gold miner Gran Colombia Gold (GCG) announced August 12 that its second quarter (2Q) 2021 net income climbed to US$29.8 million, a reversal from a US$18.6 million net loss in 2Q 2020.
The reversal “reflects a $9.2 million improvement in income from operations and a gain on financial instruments of $1.5 million in the second quarter of 2021 compared with a loss on financial instruments of $35.4 million in the second quarter of 2020,” according to GCC.
As for first half (1H) 2021, net income soared to US$148.1 million compared with $5.7 million in 1H 2020.
The 1H 2021 gains reflect both operational improvements as well as a “$56.9 million gain on loss of control of Aris Gold, a $44.3 million gain on financial instruments (compared with a $18.9 million loss on financial instruments in the frst half last year) and the $8.9 million gain on sale of the Zancudo Project,” according to GCC.
“Gran Colombia has completed a major step forward in its strategy to grow through diversification, completing an acquisition on June 4, 2021 of all the shares of Gold X Mining Corp. that it did not already own, and then closing a $300 million offering on August 9, 2021 of 6.875% Senior Unsecured Notes due 2026 to fund the development of the Toroparu Project in Guyana, to prepay the remaining $18 million balance of its Gold Notes and for general corporate purposes,” the company added.
“The company added a 27% equity interest in Denarius Silver Corp. to its portfolio in the first half of 2021, giving it exposure to the Lomero-Poyatos polymetallic deposit located in Spain, in close proximity to the Matsa JV project in the Iberian Pyrite Belt, and to the Guia Antigua and Zancudo Projects in Colombia.
“In February 2021, Gran Colombia also successfully brought its spin out of the Marmato [Colombia] Mining Assets to a conclusion, one in which the company has a continuing equity ownership of 44% in Aris Gold Corporation. The Marmato operating and financial results are only consolidated up to February 4, 2021 and thereafter the company equity accounts for its investment in Aris.”
GCC's gold production from its core Segovia, Antioquia operations totaled 52,198 ounces in the 2Q 2021, up from with 44,377 ounces in 2Q 2020. Total gold production from Segovia in 1H 2021 amounted to 101,256 ounces, compared with 94,723 ounces in 1H 2020.
“The company remains on track with its annual production guidance of 200,000 to 220,000 ounces of gold from Segovia in 2021,” GCC added.
Consolidated revenue in 2Q 2021 rose to $96.4 million, from $77 million in 2Q 2020, while 1H 2021 revenues rose to $198.3 million, up from $178.1 million in 1H 2020.
“The year-over-year increase in revenue largely reflects an increase in the company’s realized gold price, which averaged US$1,805 per ounce sold in the first half of 2021 compared with an average of $1,622 per ounce sold in the first half last year,” according to GCC.
“At the Segovia operations, total cash costs averaged $767 per ounce in the second quarter of 2021, compared with $654 per ounce in the second quarter of 2020, bringing the average for the first half of 2021 to $796 per ounce compared with $625 per ounce in the first half last year.
“The year-over-year increase in Segovia’s total cash cost per ounce in the second quarter and first half of 2021 reflect 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,” GCC added.
Grupo Argos 2Q 2021 Profits Skyrocket 534% Year-on-Year
Saturday, 14 August 2021 18:37 Written by Roberto Peckham
Medellin-based multinational cement, electric power and airport/highways concessionaire Grupo Argos announced August 12 that its second quarter (2Q) consolidated net income soared 534% year-on-year, to COP$392 billion (US$102 million).
Revenues rose 20% year-on-year, to COP$4 trillion (US$1.04 billion), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 46%, to COP$1.3 trillion (US$338 million).
First-half (1H) 2021 net income likewise soared 561%, to COP$583 billion (US$152 million), according to the company, which produces cement/concrete (Cementos Argos), electric power (Celsia) and operates airport/highway concessions (Odinsa).
By segment, the Argos cement group produced COP$257 billion (US$67 million) in net income for 2Q 2021, while the electric power segment netted COP$198 billion (US$51 million).
Portfolio investments produced another COP$112 billion (US$29 million) in 2Q 2021 net income, while real estate investments netted COP$39 billion (US$10 million).
The only money-losing segment for 2Q 2021 was in highway/airport concessions, which suffered a net los of COP$13 billion (US$3.4 million) as the Covid-19 pandemic continued to hurt airline traffic and highway vehicle movement through toll booths.
“Increased revenues from the sales of goods and services during 2Q 2021 can mainly be explained by growth in all business lines, including contributions from Cementos Argos (up COP$347 billion) and the growth in [revenue, but not profit in] the concessions business (+COP$180 billion),” according to the company.
“Increased costs and expenses for the period (+17% year-on-year) is due to increased variable costs from greater sales volumes during the period. This 17% increase is less than the 20% increase in revenue, which translates into a higher contribution margin, evincing the company’s operating leverage.
“Higher sales levels resulted in increased EBITDA, which closed out the quarter at COP$1.3 trillion [US$338 million] and the year-to-date at COP$2.3 trillion [US$598 million]. Even eliminating the effect of the divestment in the Dallas concrete operations, equal to COP$174 billion [US$45 million] in EBITDA, operating results grew compared to 2020 and 2019,” the company added.
Grupo Sura 2Q 2021 Profits Jump 43% Year-on-Year
Saturday, 14 August 2021 17:52 Written by Roberto Peckham
Medellin-based multinational insurance, finance and health-care giant Grupo Sura announced August 12 that its second quarter (2Q) net income jumped 43% year-on-year, to COP$461 billion (US$120 million).
Revenues likewise rose 15% year-on-year, to COP$6.1 trillion (US$1.58 billion), according to the company.
As for first half (1H) 2021, net income is up a whopping 174% year-on-year, to COP$672 billion (US$175 million), from COP$245 billion (US$63 million) in 1H 2020, according to the company
The profit surges are “due to a faster-than-expected recovery of the group’s different businesses, with Sura Asset Management (Sura AM) recording improved operating revenues, associates scoring higher net income figures along with a firm control over operating expense,” according to the company.
“Thanks to positive levels of business performance, written premiums posted a growth of 10.2% with fee and commission income securing another growth of 16%. Likewise, the increase in revenues obtained via the equity method was driven by higher net income figures posted by [stock holdings in] Bancolombia, Grupo Argos and Protección,” the company added.
Total costs and expenses rose by 13.2% for 1H 2021 and 20.4% for 2Q 2021, “mainly due to the continued impact of the pandemic on [health insurer] Suramericana, including Covid-19-related costs and expense amounting to COP$1.1 trillion [US$286 million] on a year-to-date basis and COP$686 billion [US$178 million] for the second quarter,” according to the company.
During the latest quarter, “Grupo Sura continued to execute the share buyback program, reaching a total of COP$30 billion [US7.8$ million] to date where 86% corresponds to common shares and 14% are preferred shares. The company will continue buying back shares as a measure that we perceive as an efficient capital allocation which creates value for both the company and our shareholders,” the company added.
The Suramericana insurance division saw written premiums rise by 10.8% through 1H 2021, “driven by the health care and life insurance segments with individual increases of 34.9% and 11.7% respectively,” according to the company.
“On the other hand, retained claims rose by 26.7% due to the effect of the pandemic, with Covid-19 claims accounting for a total of COP$1.1 trillion [US$286 million], compared to COP$236 billion [US$61 million] at the end of the first half of 2020, when infection curves were still at an early stage,” according to the company.
“These higher claims rate was partially mitigated by lower fees and commissions paid, which showed a decline of 10.7%, along with greater efficiencies that kept the growth in administrative expense to just 0.6%.
“Investment income decreased by 21.3%, mainly due to the prevailing increases in interest rates that in turn affected securities that are value at mark-to-market. In the light of this, the [Suramericana division] recorded a net loss of COP$750 million [US$195 million] on a year-to-date basis.
“However, Suramericana reported a net income of COP$9.8 billion [US$2.5 million] for the second quarter 2021, also impacted by Covid claims given higher infection curves, mainly in Colombia, as well as by lower investment income,” the company added.
As for Sura Asset Management results, “operating revenues reached COP$1.4 trillion [US$364 million] so far this year, with growths of 21.1% in pesos and 15.5% in local currencies.
“This positive level of performance was mainly due to a 15.2% increase in fee and commission income, improved revenues obtained via the equity method, mainly from [pension-fund administrator] Proteccion, which came to COP$68 billion [US$17.7 million], coupled with better returns from its reserve requirements.
“Likewise, Sura Asset Management continued with a firm control over spending, which, in addition to higher revenues, produced a net income of COP$305 billion [US$79 million] at the end of 2Q 2021, this representing a growth of 154% compared to the same period last year.
“Furthermore, good levels of performance on the part of its Investment Management and Inversiones Sura divisions continued during this past quarter producing positive levels of operating earnings,” the company added.
Update: Ecopetrol Completes US$3.67 Billion Buyout of ISA Shares; Profits Also Improve
Saturday, 14 August 2021 12:22 Written by Roberto Peckham
Colombia President Ivan Duque announced August 20 that Colombia's mostly stated-owned Ecopetrol oil company has just paid US$3.67 billion to finalize the acquisition of 51.4% of the shares of Medellin-based multinational electric-power transmission giant, ISA.
That 51.4% block of ISA stock had been held by Colombia’s Finance Ministry. Hence Ecopetrol’s buyout deal helps Colombia’s national government recoup part of the massive debt it incurred in order to subsidize mainly poor and working-class populations suffering from the Covid-19 pandemic over the past 18 months and beyond.
The US$3.67 billion buyout follows a US$4 billion credit agreement between Ecopetrol and four multinational banks: Banco Santander S.A., Citibank N.A., JPMorgan Chase Bank N.A. and The Bank of Nova Scotia, each with a 25% interest in the loan deal, according to Ecopetrol.
“The main financing conditions are: (i) 100% capital payment upon maturity within a period of two years from the contract signing date; (ii) an interest rate of Libor USD (3M) + 80 basis points and (iii) an initial aggregate commission of 30 basis points," according to Ecopetrol.
“With the [loan] authorization resolution obtained from the Ministry of Finance, the company has complied with all the procedures and internal and external approvals required for the execution of the credit agreement. The conditions obtained confirm the confidence of the financial sector in the financial soundness of the Ecopetrol Group and its future prospects with this acquisition,” Ecopetrol added.
Reacting to the buyout deal, ISA on August 13 issued this statement:
“At a press conference chaired by the Ministers of Finance, Mines and Energy and the Ecopetrol’s CEO, it was emphasized that the [proposed share buyout] strengthens the capabilities of both companies in view of the future challenges of energy transition and sustainability, opening the possibility of achieving synergies, enhancing innovation and the adoption of new technologies. It was also highlighted the importance that the two companies will continue to belong to the Colombian people.
“During the conference, Ecopetrol emphasized that ‘ISA will continue to be ISA’ and reiterated that ISA’s strategy will be respected . . .
“In addition, ISA, as a company that belongs to all Colombians, is committed to the energy future of the country and the leadership of Colombia in Latin America . . .
“Once the Ministry of Finance notifies ISA of the closing of the transaction, it will be made public in a timely manner,” ISA added.
ISA 2Q 2021 Profits Rise
On a related front, ISA announced August 13 that its second quarter (2Q) 2021 net income rose 6.4% year-on-year, to COP$586 billion (US$152 million).
Operating revenues rose 6% year-on-year, to COP$2.8 trillion (US$729 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 3.2%, to COP$1.9 trillion (US$494 million).
Assets rose 15.9%, to COP$62.6 trillion (US$16.3 billion), while 2Q 2021 investments totaled COP$770.6 billion (US$200.5 million), according to the company. Consolidated financial debt rose 16%, to COP$26.4 trillion (US$6.87 billion).
As for first half (1H) 2021 results, ISA’s net income rose 17.8%, to COP$11 trillion (US$2.86 billion), with a net margin of 21%.
EBITDA for 1H 2021 rose 7.8% year-on-year, to COP$3.4 trillion (US$885 million), while EBITDA margin came-in at 65,6%.
During 1H 2021, ISA invested COP$2.7 trillion [US$702 million] in construction of electric power transmission lines as well as for highway construction projects in Chile and Colombia.
“The entry into operation of the 230/500kV ‘Interconexión Noroccidental’ project, a megaproject that runs through 36 municipalities in the departments of Antioquia, Córdoba, and Santander, allows to ensure the reliability of the National Transmission System. This project has the first 500kV gas-insulated substations and will generate annual revenues for approximately US$42 million,” according to ISA.
On another front, “ISA developed in Colombia a project to bring drinking water to thousands of families of the Wayúu community in La Guajira. The project is called Pilas Públicas Sararao, and it is the first ‘Works for Taxes’ project developed by our affiliate ISA Intercolombia, which joins those projects already delivered in previous years in Peru,” the company added.
