September 27, 2023

Grupo Argos 1Q 2022 Net Income Jumps 65% Year-on-Year

Medellin-based cement, electric-power, real-estate and airport/highways conglomerate Grupo Argos announced May 12 that its first quarter (1Q) 2022 net income rose 65% year-on-year, to COP$315 billion (US$77 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA rose 28%, to COP$1.2 trillion (US$293 million), while revenues rose 23.6%, to COP$4.6 trillion (US$1.12 billion), according to the company.

“Increased revenues from the sales of goods and services during 1Q 2022 is mainly explained by increased contributions from the Celsia electric power group (+COP$328 billion/US$80 million), Cementos Argos (+COP$260 billion/US$63 million), and the Opain concessions business (+COP$139 billion/US$34 million),” according to Grupo Argos.

“Increased costs and expenses for the period (+ 24% YOY) were due to increasing variable costs due to higher sales volumes during the period and to cost inflation occurring in all sectors, but particularly in the cement business where the cost of fuel has increased substantially.

“Financial expenses for the quarter increased 27.5% year-over-year due to higher index rates even with a reduction in overall debt during the period,” the company added.

Real Estate Business Boost

“The real estate business achieved historical figures in 1Q 2022, with positive net cash flow and EBITDA,” according to Grupo Argos.

“This is a milestone for the real estate business as all property taxes are paid during the first quarter and deeding plots is difficult because of a lack of free-and-clear certificates.

“This was achieved thanks to property tax management by the team, where this expenditure was reduced by 11%, and deeding of a plot for building a Four Seasons Hotel in Baru [near Cartagena].

“This business deal, signed in November 2021, required timely management of the land division license with the Cartagena authorities. This procedure was approved in December 2021, and, after meeting certain legal deadlines, we were able to divide and sell the property,” netting Argos COP$40 billion (US$9.7 million).

“We also highlight the signing of a promise of sale for COP$17 billion [US$4 million] for a housing project in Barranquilla of which we received COP$5 billion [US$1.2 million) this [first] quarter. The above figures plus customer interest and ongoing negotiations allow us to foresee a positive year for the real estate business,” the company added.

Odinsa Concessions Revenues Dip

As for the Odinsa airport/highway concessions business, gross revenues dipped 15% year-on-year.

Revenues from the road concessions business fell 30% year-on-year, to COP$157 billion (US$38 million). “This decrease is mainly due to deconsolidation of the concessions in the Dominican Republic concessions, which were terminated in advance at the end of 2021,” according to Grupo Argos.

“All other concessions in Colombia — Túnel de Oriente, Autopistas del Café, Malla Vial del Meta, and Green Corridor — made positive contributions to year-over-year variations in revenue, except for Pacifico 2, with a 33% decline in contributions via the equity method,” according to Argos.

In the airport concessions business, Odinsa saw 1Q 2022 year-on-year gains in revenue, EBITDA, and net income “as a result of an evident recovery in passenger traffic,” according to the company.

Over-all, Grupo Argos consolidated financial debt ended 1Q 2022 at COP$1.9 trillion (US$464 million), down 35% year-on-year.

“This reduction corresponds mainly to deconsolidation of the debt from Autopistas del Nordeste and Boulevard Turístico del Atlántico and early payment of debt in Odinsa Holding and Odinsa SA,” according to the company.

During the latest quarter, cost of debt in as expressed in U.S. dollars rose 39 basis points, while cost of debt expressed in COP increased 475 basis points “explained by the increases Bank of the Republic interest rates, higher inflation, and other index rates,” according to Grupo Argos.

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