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Medellin-based multinational cement/concrete giant Cementos Argos on February 24 reported a 28% year-on-year decline in 2020 net income, to COP$141 billion (US$39.6 million), resulting from economic slowdowns during the Covid-19 crisis.

Earnings before interest, taxes, depreciation and amortization (EBITDA) also fell, to COP$1.6 trillion (US$449 million), from COP$1.7 trillion (US$477 million) in 2019.

However, adjusted EBITDA – once excluding the impact of the sale of pre-mixed concrete operations in the U.S. and payment of U.S. antitrust fines – actually improved by 4.5% year-on-year, according to the company.

Cost-reduction and efficiency moves totaled US$115 million during the year, enabling Argos to cut debt and maintain a “solid cash position” during the Covid-19 downturn, according to the company.

Corporate-wide, fourth-quarter (4Q) cement demand was aided by a "significant contribution from the Caribbean and Central America region, where growth was 13.5%,” according to the company.

However, in Colombia, Cementos Argos saw net profits decline 15% year-on-year, to COP$78 billion (US$22 million), while shipment volumes of cement fell 18% and concrete fell 25.7% here, according to the company.

“Although the industry as a whole was hit in its 2020 results, Colombia presented a favorable dynamic in the residential segment, reflecting the implementation of a successful national government program that seeks to deliver a total of 200,000 subsidies to acquire housing between 2020 and 2022,” the company noted.

Corporate-wide, cement shipments (excluding plant divestments in the United States) fell 15.8% during 4Q 2020 and 16.3% for the full year, “reflecting slower dynamics in the commercial segment in the United States and in formal construction in Colombia, in addition to impacts from hurricanes and heavy rains in the United States and closures between 10 and 12 weeks in Colombia and most markets in Central America and the Caribbean due to the pandemic,” according to the company.

“This impact was offset by improvements in prices in Colombia and the USA, efficiencies in costs and expenses in all operations and the devaluation of the Colombian peso,” the company added.

Celsia Full-Year 2020 Adjusted Net Income Rises 68%

Wednesday, 24 February 2021 07:58 Written by

Medellin-based multinational electric power giant Celsia on February 23 reported a 68% jump in net income for full-year 2020 -- after adjusting for the exclusion of its former 610-megawatt, natural-gas-fired “Zona Franca Barranquilla” power plant sold in September 2019.

For the full year 2020, consolidated net income hit COP$338 billion (US$94 million), while adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 17.9%, to COP$1.23 trillion (US$342 million). Adjusted 2020 revenues hit COP$3.54 trillion (US$985 million), up 17.6%.

As a result of selling the former Barranquilla plant, Celsia Colombia is now a 100% renewable-power producer -- mainly via hydroelectric plants, along with solar and wind-power farms.

Despite negative impacts on power demand and some financial hits resulting from the Covid-19 pandemic, Celsia still managed to push forward on several energy projects during 2020.

Among those were the San Andrés de Cuerquia small hydroelectric plant, the El Espinal (Tolima) and Carmelo (Valle del Cauca) solar farms, the La Paila solar farm in Córdoba, and the construction of a power-distribution facility tied to the El Tesorito thermoelectric project, also in Córdoba, according to the company.

Celsia’s strategic move away from fossil-based power generation to 100% renewable power accelerated in 2019 with the sale of the Barranquilla plant, tied to the acquisition of the energy service operation in Tolima and establishment of its “Caoba Inversiones” division, which now holds some of Celsia’s energy transmission assets.

During fourth quarter (4Q) 2020, consolidated generation dipped 11% year-on-year, to 1,185 gigawatt-hours (GWh). Of that total, 95.9% was hydroelectric, 2.9% wind and 1.2% solar, according to the company.

Celsia owns electric power generation, distribution and energy-service operations mainly in Colombia as well as in Panama, Costa Rica and Honduras, with total generation capacity of 1.8 gigawatts through 28 hydroelectric, thermal, solar and wind power plants, according to the company.

Colombia’s gross domestic product (“PIB” in Spanish initials) is likely to grow by 4.5% during 2021 -- up sharply from the 6.8% GDP net decline during the Covid-19 crisis of 2020, according to a just-released monthly survey of economists by Fedesarrollo, Colombia’s top economic think-tank.

According to the organization’s latest “Financial Opinion Survey” (FOS) for February 2021, Colombian economic growth for 2021 is now seen by most economists at 4.5%, with opinions ranging between 3.9% and 4.8%.

Other survey highlights:

Interest rates: Since the Colombian Central Bank (Banco de la Republica) set monetary policy interest rates at 1.75% during January 2021, “66% of the [economists] foresee an unchanged interest rate (1.75%) and 6.4% expect a reduction of 25-bps [basis points]” for the remainder of 2021.

Among those surveyed, 19% expect an increase of 25-bps, while 2.1% foresee a rate under 1%. Another 2.1% expect an increase to 2.25%, and the remaining 4.3% of those surveyed expect a 2.5% interest rate by the end of 2021, according to the survey.

Inflation: In January 2021, the annual inflation reached 1.6%, lower than the analysts forecast. In February, the analysts believe that inflation will be 1.5% , while inflation expectations for the end of 2021 are at 2.58%.

COP/U.S. Dollar Exchange Rate: In January, the exchange rate closed at COP$3,559.46 to the U.S. dollar, with a monthly appreciation of 3.69%.
According to the survey, “the exchange rate forecast by the end of [February] ranges between $3,450 and $3,550, with $3,510 as median response. The exchange rate forecast for the end of 2021 is COP$3,450, ranging between $3,400 and $3,530.

“Finally, the exchange rate forecast for next three months ranges between $3,400 and $3,550, with $3,475 as median response,” according to Fedesarrollo.

Colombia Treasury Bond Trading: In January, the traded volume of the Colombian treasury bonds reached COP$47.4 trillion (US$13 billion), up 183% from December 2020.

Now, 57% of analysts surveyed believe that T-Bill interest rates will range from 3.0% to 3.25% during the next three months, while 27% believe that the rate will be between 3.25% and 3.5% and the remaining 6.4% of those surveyed expect a rate over 3.5%.

“Regarding TES bonds maturing in 2028, none of the analysts considers that the rate will be under 4.5% during the next three months, while 29.8% consider it will be between 4.5% and 4.8%. The percentage of analysts who expect that the rate will be between 4.8% and 5.2% during the next three months was 66%. Finally, 4.3% expect a rate higher than 5.2%,” according to the survey.

Investment Determinants: “Economic growth continues ranking as the most important aspect considered for investing decisions, reaching 45.65%” of those surveyed.

“Fiscal policy and external factors placed second and third place, respectively. Concerns accounting for fiscal policy reached 28.26% (up from 20.9% in the previous month), while external factors reached 10.87% (down from 11.6% in the previous month),” according to the survey.

“Other factors” took fourth place, with the rate of Covid vaccinations being the main reason for “other factors.”

“Monetary policy, sociopolitical conditions and security conditions were the least in the investment determinants with 4.35%, 2.17% and 0.0% respectively,” according to the survey.

Investment preferences: Compared to January 2021, in Februrary 2021 “portfolio managers increased their preferences for private debt indexed to the CPI, foreign stock, private equity funds, international bonds, fixed rate private debt and cash,” according to the survey.

Colombia’s “Colcap” stock index: In February, 76.6% of the analysts (84.1% in January) expect a Colcap valuation [rise] during the next three months,while 19.1% of the analysts expect the index to devaluate and 4.3% to remain the same,” the survey found.

While many companies have suffered steep reversals in 2020 during the Covid-19 pandemic, Medellin-based multinational supermarket/dry-goods retailer Grupo Exito actually saw its net profits soar 300%, to COP$231 billion (US$64 million).

Recurring earnings before interest, taxes, depreciation and amortization (EBITDA) was nearly flat, at COP$1.27 trillion (US$353 million), while sales were up 7.2%, to COP$15 trillion (US$4.1 billion), according to the company's February 22 filing with Colombia's Superfinanciera oversight agency.

Operating income rose 2.9% year-on-year, to COP$15.7 trillion (US$4.4 billion), “as a result of the rapid adaptation of the company to the needs of customers and new ways of buying,” according to Exito.

Consolidated sales in Colombia rose 5.6% year-on-year, to $12.2 trillion (US$3.4 billion), representing 77% of the group’s consolidated income. while consolidated recurring EBITDA margin for the year was 8.1%, “mainly benefitting from the contribution of retail and the strict control of expenses,” according to the company.

“Electronic and direct commerce channels in Colombia represented 12.4% of the sales, multiplying 2.7 times compared to the previous year. More than 8.5 million orders, of which 85% were home deliveries, 1.8 times more than in 2019,” the company added.

“Differential formats also grew their sales significantly, twice digit, in the country: those of Éxito ‘Wow’ grew 13.9% in the year and represented 20.7% of the brand sales, while those of ‘Carulla FreshMarket’ increased by 18.4% and represented 26.5% of Carulla brand sales,” according to Exito.

Uruguay, Argentina Results

In Uruguay, Exitos saw revenues grow by 10.3% in local currency, above inflation, with recurring EBITDA margin at 10.3%. Electronic and direct commerce channels grew by 61% and accounted for 3.3% of total sales.

As for Argentina, Exito revenues grew 20.7% in local currency terms while recurring EBITDA margin came-in at 1.8%, according to the company.

Medellin-based electric power giant Isagen revealed in a February 22 filing with Colombia’s Superfinanciera oversight agency that it just signed a tentative deal to buy two smaller-scale hydroelectric plants (39.8 megawatts total capacity) owned by Generadora Luzma ESP in Amalfi, Antioquia

Price wasn’t disclosed as the transaction still must be finalized “in the coming weeks,” according to Isagen.

“This purchase is in addition to recent announcements about the ‘Guajira 1’ wind-power farm and the ‘Llanos 4 and 5’ solar-power farms [all in Colombia], which will allow us to add an additional 100 megawatts of clean energy with a total investment of approximately COP$700 billion [US$195 million], consistent with our strategy growth with renewable sources,” according to the company.

"With this [Luzma hydroelectric purchase] decision, we continue to strengthen our generation matrix, making it more resilient to climate change and contributing to [Colombia’s] energy transition at this key stage for the reactivation of the economy,” the company added.

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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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