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ISA 2Q 2019 Net Income Jumps 89% Year-on-Year

Tuesday, 06 August 2019 13:22 Written by

Medellin-based multinational electric-power transmission builder/operator and highway concessions giant ISA announced August 6 that its second quarter (2Q) net income soared 89% year-on-year, to COP$439 billion (US$128 million).

“This variation was due to higher revenues from the entry into operation of new projects, the incorporation of the 50% of IESUL [a Brazilian power-transmission subsidiary], construction efficiencies and the adjustment of the tariff cycle in Brazil [as well as] lower expenses for foreign exchange differences,” according to ISA.

Operating revenues for 2Q 2019 rose 37.5%, to COP$2.1 trillion (US$612 million), “mainly due to the entry into operation of several energy transmission projects and to higher construction-related revenues.

Construction revenues for latest quarter reached COP$380 billion (US$11 million), 117% higher than in 2Q 2018.

Meanwhile, 2Q 2019 earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 50.6% year-on-year, to COP$1.4 trillion (US$408 million).

During 2Q 2019 in its Chile operations, the ISA Interchile subsidiary put into operation the final section of the Cardones-Polpaico Line, “the most important transmission project in Chile of the last 50 years, contributing revenues of US$31.7 million per year,” according to ISA.

Meanwhile in Brazil, “beginning in September 2018, ISA CTEEP [another transmission subsidiary] and its companies started to recognize, on a monthly basis, the inflationary adjustment for revenues for the June 2018-May 2019 tariff cycle and subsequent tariff cycles,” boosting 2Q 209 income by COP$49 billion (US$14 million), according to ISA.

Currency Hedging Benefits

“ISA’s natural hedging strategy, through which each company incurs debt in the same currency as revenues, reduces the volatility of its results and therefore the impact on consolidated net income,” according to the company.

“For 2Q 2019, the variation was 5.2% (COP$12 billion/US$3.5 million) of net income . . . which is evidence of the effectiveness of the strategy,” according to ISA.


Medellin-based textile giant Fabricato announced August 1 that its second quarter (2Q) 2019 net loss hit COP$12.7 billion (US$3.8 million), 70% worse than the COP$7.4 billion (US$2.2 million) net loss in 2Q 2018.

On a parallel front, Fabricato and its manufacturing neighbor – Medellin-based textile giant Coltejer -- simultaneously announced that they’re cooperating on a new joint study on the textile market.

“Considering the different circumstances that impact the textile sector at present, Fabricato has agreed to contract jointly with Coltejer S.A. a study of the textile market,” according to filings with Colombia’s Superfinanciera corporate oversight agency.

“The objective of the study is to make a general diagnosis of the textile market, identify the variables of different nature that affect it and the opportunities and threats of the participants in that market, including Fabricato S.A. and to Coltejer S.A.,’ according to the filings.

According to Fabricato’s latest 2Q 2019 report, the national textile business hasn’t shared in Colombia’s economic rebound this year – at least, not so far.

“Unlike what one might expect, the Colombian manufacturing sector does not perceive this positive effect in the same proportion,” according to Fabricato.

“This is explained by a strong credit restriction, in addition to the factors already known as the increase in legal importation [of textiles and clothing], importation under unfair practices and contraband” of textiles and finished clothing.

In addition, “the second quarter of the year for the textile manufacturing sector presents a particularity: it is the quarter in which the need for production grows, demanding greater cash effort, but at the same time it is a quarter of low revenues, since accounts receivable were generated by first quarter sales, which is traditionally a low-sales quarter.

“This cash deficit is compensated in the fourth quarter, when production volumes already fall and the collections of the period are generated by third-quarter sales, historically the best sales period.

“Understanding this particularity of the business for this period, and in turn relating it to the almost non-existence of credit for the sector, the alternative is to continue financing with our own resources, if possible, or resort to the most expensive financing options.

“At Fabricato, we reduced the volume of inventory of finished products in the period, one of the sources to finance the operation, and reduced the volume of production in relation to the same period of the previous year.

“Both decisions negatively impacted the contribution margin, which we believe will be recovered in the following period by the decision to anticipate [cash] flows of one of our real estate projects, which will allow us to leverage the largest production volume needed for the third quarter; change the purchasing strategy of several raw materials, with a consequent reduction in the cost of the operation; reduce financial costs, and; increase sales, as there will be the opportunity to expand the offer of our ‘Essentials’ line, high demand classic products whose availability of some inventory invariably translates into business.

“The decision to anticipate future flows to allocate them to working capital reinforces the confidence of the management and the board of directors in the textile operation of Fabricato, based on its process of complete business conversion, with refocusing on the added value of our offer of both of products and services.

“The results of this reconversion process are perceived by the increase in our participation in specific market segments, such as recognized brands in Colombia, manufacturing companies exporting from Colombia and large foreign manufacturing companies,” according to the company.

In its real-estate division, “Fabricato decided to anticipate future cash flows derived from the economic rights it has on the sales of the first stage of the real estate project Plaza Fabricato Shopping Center and the Oceana and Mediterranean housing developments for the remainder of the year 2019, 2020 and until December 2021,” the company added.


U.S.-based global air freight giant FedEx announced July 31 the launch of six flights weekly between Miami, Medellin and Bogota.

The new service aims to grab a share of the six million pounds of perishables shipped via air-freight every day from Colombia to Miami, including flowers, fish, fruits, vegetables and coffee, according to the company.

“The new B-767 flight will facilitate the arrival of Colombian products to the U.S. via the installation of ‘Gateway’ in Miami and will open new markets for Colombian companies,” according to FedEx.

“FedEx has been present in Colombia for more than 25 years, with operations in the 12 main cities throughout the country,” added FedEx Express Latin America president Juan Cento.

“Adding capacity and a more direct connection with Miami will give Colombian companies a greater competitive advantage to reach markets and customers worldwide. In addition, it will also help boost the local economy in the two largest cities in Colombia, which are central hubs for some of the most important perishable goods in the country, including flowers,” he said.

New export facilities at Medellín’s Jose Maria Cordoba (JMC) international aiport now offer convenient cold-storage capacities and storage space for perishable cargo, the company noted.


Colombia President Ivan Duque announced July 31 on his state visit to China that Chinese President Xi Jinping signed protocol deals that eventually will boost exports of Colombian bananas, avocados, coffee, meats and shellfish to China.

Initial deals enable export of 4 million boxes of bananas (mainly produced in Antioquia) and 960 tons of Haas avocados to China this year, according to the announcement.

Further initial agreements “open up the possibility for us to have greater exports of Colombian coffee,” according to President Duque.

In addition, the Chinese government announced that it will grant 100 full academic scholarships so that more young Colombians can study in the best Chinese universities.

On another front, a new communications deal will enable exporters “to use the electronic commerce platforms of the People's Republic of China to offer Colombian products,” according to the announcement.

As for the possibility of expanding Chinese tourism to Colombia, President Duque said he talked to President Xi about a project that eventually would open a direct flight between China and Colombia.

“Chinese tourism in Colombia barely represents 0.5% of our visitors,” according to President Duque. “Last year [2018], we had only about 15,000 Chinese visitors to the country, and that figure can be multiplied,” he added.


Medellin-based multinational foods giant Nutresa announced July 26 that its first half (1H) 2019 net income rose 14.6% year-on-year, to COP$2.5 trillion (US$759 million).

Consolidated sales also rose by 7.4% year-on-year, according to the company.

“Colombia [revenues] continue with a positive performance, at COP$2.9 trillion [US$880 million], representing 62.7% of total revenues and up 5.2% compared to the same period of the previous year,” according to Nutresa.

International sales, at COP$1.7 trillion (US$516 million), represented 37.3% of total sales and were 11.2% higher than in the first half of 2018, according to the company.

Operating expenses grew by 4.5%, but operating income jumped even higher, at 16.2% year-on-year.

As for earnings before interest, taxes, depreciation and amortization (EBITDA), this metric rose 20% year-on-year, to COP$648 billion (US$196 million), while EBITDA margin came-in at 13.9%, according to the company.


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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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