Grupo Argos 2017 Net Income Jumps 29% Year-on-Year

Medellin-based multinational cement, power and highway/airport-concession giant Grupo Argos announced this month that its full-year 2017 net income rose 29% year-on-year, to COP$453 billion (US$158 million).

Argos also reported earnings before interest, taxes, depreciation and amortization (EBITDA) rose 7% year-on-year, to COP$630 billion (US$220 million), with EBITDA margin hitting 53%.

Consolidated EBITDA results hit COP$3.9 trillion (US$1.36 billion), the highest in the history of the company. This was the result of “good moment of the concessions and energy businesses and the moderate recovery tendency of the cement sector in Colombia,” according to the company.

Year-end 2017 assets rose 6.3% year-on-year, to COP$47.6 trillion (US$16.6 billion), with liabilities totaling COP$23 trillion (US$8 billion) and equity at COP$24 trillion (US$8.4 billion).

While debt grew 9% year-on-year, “given the substantial improvement of EBITDA, we highlight that the adjusted net debt/EBITDA indicator stands at 2.3x, being one of the lowest leverage levels in the history of this group,” according to Argos.

“This indicator, added to the 4.7x operating cash flow/interest, shows the high flexibility that Grupo Argos has in order to continue with the growth strategy. At the cash flow level, it closed the year surpassing COP$300 billion [US$105 million],” according to the company.

Corporate revenues rose 7% year-on-year, to COP$1.2 trillion (US$419 million). “This variation is mainly explained by the divestiture of [ocean port operator] Compas, which generated COP$403 billion [US$141 million] in revenues,” according to Argos.

“In addition, revenues from the real estate business increased by COP$53 billion [US$18.5 million] to COP$260 billion [US$91 million], due to the contribution of Pactia and adjustments in the fair value of investment properties,” the company added.

As for the Cementos Argos division, adjusted EBITDA excluding non-recurring items came in at COP$375 billion (US$131 million) with a 17.8% margin. However, Cementos Argos posted a full-year net loss of COP$80 billion (US$28 million) mainly due to “effects of the [deferred] tax reform in the USA” along with lower sales volumes in Colombia, the company added.

Cementos Argos produces and markets cement and ready-mix concrete in 15 countries including the USA, Colombia, and the Caribbean & Central America (CCA) region. Total annual capacity is estimated at 24 million tons of cement and 18 million cubic meters of concrete.

Despite the 2017 financial setbacks in the USA, Argos foresees a “positive outlook in the United States after the fiscal reform, which is expected to generate positive effects in the country’s economy, the industry and in Argos operations.”

Meanwhile, the Celsia electric-power division – operating in Colombia, Panama and Costa Rica – now boasts 2.4 gigawatts of generation capacity through 28 hydroelectric, thermal, photovoltaic and wind-power plants, generating around 6,317 gigawatt-hours (GWh) per year, according to Argos.

During 4Q 2017, Celsia’s consolidated power generation was 1,769 GWh, “up 12% compared to the same quarter last year and up 23% compared with Q3 2017. Out of the consolidated generation, 77% came from hydroelectric generation, 20% from thermal power plants, 3% from the wind farm in Costa Rica, and 0.20% (4 GWh) from the new solar farm in Yumbo,” according to Argos.

However, Celsia’s full-year 2017 electric power generation dipped 11% year-on-year, to 6,317 GWh, the company added.

Celsia’s consolidated revenue for 4Q 2017 rose 4% year-on-year, to COP$824 billion (US$288 million) , while full-year 2017 revenue fell 18% year-on-year, to COP$3 trillion (US$1.05 billion), “in line with our expectations given the lower generation volume of the thermal power plants and the spot price decrease, influenced in 2016 by the El Niño phenomenon,” the company added.

Celsia’s 4Q 2017 EBITDA rose 21% year-on-year, to COP$309 billion (US$108 million), as “good performance in Central America together with a more efficient operation in Colombia allowed the power generation facilities to make a significant contribution to the results, which added to the stability of the distribution and retail sales business,” according to Argos.

Celsia’s full-year 2017 net earnings rose 47% year-on-year, to COP$251 billion (US$88 million) while net profit attributable to controlling shareholders more than tripled, to COP$149 billion (US$52 million), the company added.