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Medellin-based construction giant Conconcreto announced November 14 that its third quarter (3Q) 2018 net income rose 46.4% year-on-year, to COP$50 billion (US$15.6 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 6.6%, to COP$147 billion (US$46 million), while EBITDA margin climbed to 20.9%, from 14.7% a year earlier.

Gross revenues however dipped 25% year-on-year, to COP$703 billion (US$220 million), from COP$938 billion (US$294 million) in 3Q 2017.

In a separate November 21 posting to Colombia’s Superfinanciera regulatory agency, the company pointed-out that problems with EPM’s under-construction, 2.4-gigawatt “Hidroituango” hydroelectric plant haven’t had any follow-on financial impact to date on the “CCC Ituango” construction consortium, of which Conconcreto is one of the company members. Nor do the company's recent sales of some assets have anything to do with EPM's financial problems arising from the three-year delay of power sales from that project.

In the company’s infrastructure projects segment in the latest quarter, Conconcreto explained that it has signed a deal with Colombia’s Agencia Nacional de Infraestructura (ANI) to terminate the existing “Via Pacifico” highway contract because of geological problems in the sector Loboguerrero-Mediacanoa.

A new ANI contract aims to overcome those issues – and simultaneously free Conconcreto from certain excess-cost issues arising from the geological problems.

In its highway concessions division, Conconcreto signed a deal to launch construction of a section of the Soacha-El Muña highway near Bogota.

As for the proposed “Doble Calzada Oriente” (DCO) divided highway project east of Medellin (between Sancho Paisa and El Tablazo), this project awaits a final approval from Colombia’s Treasury Ministry. Once that’s completed, the project then will be put out to bid, with Conconcreto aiming to become the construction contractor.

As for its over-all construction backlog, Conconcreto reported that as of end-September 2018, COP$1.975 trillion (US$619 million) in projects are outstanding, two-thirds of which are in infrastructure and the remaining one-third in housing.

So far this year, Conconcreto’s construction services division has focused on projects for the “Pactia” commercial real-estate venture including Hotel Corferias (Bogotá), the El Ensueño Shopping Center (Bogotá), and Cedi Colgate Palmira (Valle del Cauca).

“Execution was also focused on projects for third parties such as the Chamber of Commerce of Medellín [Poblado branch], Admininstration EPSA (Valle del Cauca), Torre Avianca Calle 26 (Bogotá), second-stage Nova (Jumbo, Valle del Cauca), and complementary buildings for the Ecocementos plant (Antioquia),” according to the company.


Medellin-based gold mining giant Mineros SA on November 20 reported a 10.2% boost year-on-year in third quarter (3Q) 2018 net income, to COP$19.7 billion (US$6 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) for 3Q 2018 also rose 7.6% year-on-year, while EBITDA margin rose 13.5%, according to the company.

Cash cost of operations dipped 2.9% year-on-year, to US$824 per ounce versus US$873/ounce in 3Q 2017.

A stronger U.S. dollar this year has hurt world gold prices, but Mineros managed to offset some of this penalty by dollar hedging.

Colombian alluvial output has dipped this year (down 1.9%), but 3Q 2018 operations still were profitable, with net income up 23%. Nicaragua net income has been even better in the latest quarter, up 49.7% this year versus last, and production rose 7.7%.

A pending deal announced last month with Argentina-based Yamana Gold is expected to be completed by year-end 2018. That deal and related plans to boost gold production elsewhere in South America could help Mineros win a stock listing on the Toronto Stock Exchange (TSX), coveted by major miners.

Gran Colombia Gold Results

Meanwhile, Toronto-based Gran Colombia Gold (GCG) announced November 13 that its 3Q 2018 net income rose to US$12.4 million, up sharply from a US$1 million net loss in 3Q 2017.

However, for the first nine months of 2018, GCG reported a net loss of US$13.0 million, , versus a net profit of US32 million in nine-months 2017.

“The net loss reported for the first nine months of 2018 includes $22.2 million of losses on financial instruments, primarily triggered by the extinguishment of the 2020 and 2024 debentures in the second quarter, and a $7.6 million charge for the costs associated with the offering completed in the second quarter of 2018.,” GCG explained.

In addition, “the net earnings in the first nine months of 2017 included a reversal of impairment of the Segovia [Antioquia] gold mining operations in the amount of US$45.3 million,” according to the company.

Commenting on the results, GCG executive co-chairman Serafino Iacono said: “We are very pleased with the continuing improvements in our operating and financial results and the strengthening of our financial position . . .

“Our senior debt is now down to US$88 million and our cash position increased further in the third quarter to reach US$29 million at the end of September.

“With our trailing 12-months adjusted EBITDA surpassing the US$100 million level at the end of September, our focus on our high-grade Segovia operations to drive our cash flow generation is providing the funding required to support our ongoing exploration and capital programs.

“We are encouraged by the initial exploration results we reported in October from this year’s drilling campaigns at each of Segovia, Marmato and Zancudo and we will have further results to report as these program progress,” he added.


Wall Street bond rater Fitch on November 14 issued a “stable” outlook for Colombian sovereign debt and simultaneously upgraded its GDP forecast to 3.3% growth in 2019 and 3.5% in 2020.

“Ivan Duque’s 2018 presidential election victory is expected to lead to continuity in the government’s monetary and fiscal policies, including abiding by its fiscal rule,” according to Fitch. “The new president also has pledged to enhance the business climate in Colombia.

“Growth prospects are consolidating towards Colombia’s medium-term growth potential of 3.5% after three years of underperformance (with average growth of 2.1% in 2016-2018). Higher exports, supportive consumption and higher investment are expected to underpin higher growth."

On the other hand, “infrastructure projects related to the 4G [fourth-generation highways] rollout have witnessed several bottlenecks that have slowed their progress, representing downside risks to the growth outlook,” Fitch added.

Meanwhile, a proposed tax reform in Congress “is key to achieving the [government revenue] target as well as meeting spending pressures such as from the immigration crisis stemming from Venezuela, although higher expected oil revenues from Ecopetrol dividends will help,” according to Fitch.

However, “if the tax reform does not pass or is heavily watered-down, [then] we think the government would revise the 2019 budget passed by the Congress in October 2018 with significant cuts in budgeted capital expenditure,” Fitch concluded.

DANE: 3Q 2018 Rebound

On a related front, Colombia’s national economic statistics agency -- Departamento Administrativo Nacional de Estadística (DANE) – on November 15 released its latest study on national economic indicators.

For the third quarter (3Q) of 2018, Colombia’s GDP (“PIB” in Spanish initials) grew at a 2.7% rate, up sharply from the 1.7% rate in 3Q 2017, DANE found.

Sectors showing relatively strong GDP growth (4.5%) in 3Q 2018 were public administration, defense, social security, voluntary pensions, health services and education, according to DANE.

Wholesale and retail commerce, vehicle repair, transport and warehousing, and hotel-and-restaurant services grew at a 2.6% rate, according to DANE. Industrial manufacturers meanwhile saw a 2.9% GDP growth in the latest quarter, the agency added.

In the mining sector, metals extraction grew by 14.3%, while oil-and-gas extraction rose 1.3%. However, carbon and lignite extraction declined by 4.1%, according to the agency.


Enka 3Q 2018 Net Income Jumps 66% Year-on-Year

Thursday, 15 November 2018 16:00 Written by

Medellin-based textile manufacturer and plastics-recycling specialist Enka Colombia announced November 14 that its third quarter (3Q) 2018 net income rose 66%, to COP$1.8 billion (US$564,000), from COP$1.09 billion (US$342,000)in 3Q 2017.

Both domestic and export sales revenues improved by 15% year-on-year, to COP$304 billion (US$95 million), from COP$264 billion (US$82.7 million), while volume (in tons) also rose 5% year-on-year, to 43,780 tons, from 42,660 tons in 3Q 2017.

Earnings before interest, taxes, depreciation and amoritization (EBITDA) also rose 19% year-on-year, to COP$19.8 billion (US$6.2 million), from COP$16.7 billion (US$5.2 million) in 3Q 2017.

Colombia revenues rose 19% year-on-year, while Brazil sales climbed 12%. USA/Canada sales jumped by 113% and Argentina sales soared 99%. The only sales declines were in Mexico, Peru and Spain, but these were relatively small.

Greater sales volumes and better realized prices in foreign markets were especially virtuous, given the weakening Colombian peso against the U.S. dollar, Enka noted.

The local Colombian market also improved thanks to greater efforts by the Colombian government to thwart below-cost contraband along with good performance in Enka’s recycled-plastics fibers markets.

Exports grew by 12% in pesos and 6% in volume, mainly in the USA and Canada, the company noted. Brazil and Argentina sales also rose despite recent economic difficulties in those nations, Enka added.

The “EKO-Fibras” line – derived from processing of waste plastics – saw a 16% boost in sales (in pesos) and 4% by tonnage, mainly to export markets, according to the company.

Meanwhile, the “EKO-Poliolefinas” recycling-production line is performing as expected in its first few months of operations here, according to Enka.

The export outlook for the fourth quarter 2018 is “in line with our expectations,” given a favorable situation in principal markets and a relatively weak Colombian peso-to-U.S. dollar rate. However, Enka added that it’s taking note of political and economic turbulence in Argentina and Brazil, which could affect future sales there.

As for the possible impact of higher USA tariffs on various Chinese goods, it’s possible that Colombian goods could gain greater market shares in the USA as a result. On the other hand, if China retaliates via devaluation of its currency -- and redirects more exports to South America – then this could negatively impact Colombian producers, Enka warned.


Medellin-based highway construction giant Construcciones El Condor announced November 14 that its third quarter (3Q) 2018 net income for its construction operations more than tripled year-on-year, to COP$53.5 billion (US$16.7 million), from COP$15 billion (US$4.7 million) in 3Q 2017.

The figures for the latest quarter “reflect a high level of project execution,” according to the company. "We note a 52.9% increase in construction services [in latest quarter] compared to the prior-year quarter.”

Likewise, earnings before interest, taxes, depreciation and amortization (EBITDA) improved along with a “very positive” boost in EBITDA margin, thanks mainly to efficient execution and favorable weather for outdoor construction, according to the company.

The improvement came despite a 7.6% decline this year in national construction activity in Colombia as measured by DANE, the national economic-statistics agency, El Condor noted.

Colombia’s “fourth-generation” (4G) highway construction projects continue to provide credits to construction companies, the company added.

Gross revenues so far this year are up 49%, hitting COP$676 billion (US$212 million), and the company expects similar growth in 4Q 2018.

Nine-month 2018 company-wide EBITDA dipped to COP$126 billion (US$39.5 million), from COP$252 billion (US$79 million), but this was because of a non-recurring, one-time sale of investments last year, El Condor noted.

If only measuring construction activity -- rather than including the one-time asset sale last year -- then nine-months 2018 EBITDA was up 40% year-on-year, the company added.

Similarly, nine-months net income corporate-wide was higher in 2017 that in 2018. But this was the result of the same non-recurring sales-of-investments last year, the company noted.


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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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