Grupo Argos : Increases its Revenue in the Second Quarter reaching COP 3.6 Trillion

Grupo Argos Increases its Revenue in the Second Quarter reaching COP 3.6 Trillion

15/08/2017 7:59:11

Grupo Argos increased its consolidated revenue by 5% in the second quarter of 2017 with respect to the same period of the previous year, reaching COP 3.6 trillion. In terms of profitability, this was reflected in the stability of a 25% EBITDA margin.

• The separate profit of Grupo Argos increased 9% in the semester, amounting to COP 148 billion.

• The results of the second quarter confirm the advantages of the Grupo Argos portfolio with presence in several infrastructure sectors and different regions, which complements and adds balance to the results.

• By the end of the period, the assets portfolio managed by Grupo Argos was COP 48 trillion; a 7% increase from December 2016.

Grupo Argos increased its consolidated revenue by 5% in the second quarter of 2017 with respect to the same period of the previous year, reaching COP 3.6 trillion. In terms of profitability, this was reflected in the stability of a 25% EBITDA margin.

The operating revenue achieved by Grupo Argos reflects the advantages of its balanced portfolio in infrastructure with presence in different regions, permitting adequate capital allocation.

As announced to the market, and in its role as active portfolio manager, in August, Grupo Argos reached an agreement to divest its 50% share in Compas for COP 407 billion, making a return of 2.5% on the investment. The transaction, which is subject to the normal closing conditions provided for this kind of operation, is equivalent to 25 times the EBITDA of Compas in 2016. The positive effects of this transaction are reflected in the financial results once it is completed.

'Together with good operating and financial indicators in energy, as well as road and airport concessions, this quarter showed a positive change in the cement business in Colombia, with shipments increasing by 7%. This means we can be optimistic about our performance in the second semester,' states Jorge Mario Velásquez, CEO of Grupo Argos.

Results of Grupo Empresarial Argos in the Second Quarter

The consolidated EBITDA between April and June amounted to COP 873 billion, with a notable positive contribution of COP 177 billion by the concession business and of COP 280 billion by the energy business. The consolidated net profit amounted to COP 215 billion and the net profit of the controlling company to COP 106 billion. By the end of the period, the assets portfolio managed by Grupo Argos was COP 48 trillion; a 7% increase from December 2016.

The concessions business started to gain importance in the results of Grupo Argos and in the second quarter of 2017, Odinsa represented 13% of the consolidated revenue, compared to 6% in the same quarter of the previous year.

In this quarter, Grupo Argos maintained its rating from Fitch and S&P with a stable outlook, while both Celsia and Odinsa managed to improve the outlooks of their ratings from negative to stable.

This portfolio strategy has been accompanied by the confidence of the financial markets. During the quarter, they responded positively to the issuance of Grupo Argos commercial papers for COP 350 billion, with a demand 2.7 times the amount offered at a rate of 6.14%, and to the successful issuance of Cementos Argos straight bonds for COP 1 trillion, with a demand 1.7 times the amount offered and highly competitive rates of 7.22% on average.

Commitment to Sustainability

In June 2017, Grupo Argos and its subsidiary, Cementos Argos, were elected for the second year in a row as members of the FTSE4good Global Index for their performance in environmental, social and corporate governance practices. The index assesses more than 4,000 companies on several issues including corporate governance, anti-corruption, human rights, community, climate change and biodiversity.

Results

Concessions Business:Odinsa's consolidated revenue was COP 203 billion with a 54% increase year on year. It is notable that the clearing of the portfolio allowed Odinsa to contribute COP 134 billion in EBITDA in the second quarter of 2017, with a 65% growth from the second quarter of 2016 to an EBITDA margin of 66%. Concerning operations, Odinsa records stability in the growth of vehicle and passenger traffic in the first semester with 1.5% and 3.3% increases, respectively.

Cement Business:The results of Cementos Argos in the period demonstrate the company's great capacity to adapt in light of the challenges of the market in Colombia, with figures that show a change toward recovery. This is demonstrated by the sustained increase in the shipped volumes of cement, which by the second quarter had increased 18% year on year; the 9% increase in sales in the United States; and the rise of 400 basis points in the EBITDA margin from the first quarter of 2017, exceeding a margin of 21% in June, the highest in the last 18 months.

Energy Business: Celsia obtained highly satisfactory results, which reflect strengthened operations with EBITDA margins of 38%. The consolidated revenue amounted to COP 743 billion, a lower figure than in the same period of 2016 as a result of less thermal power generation and a lower spot market price. However, it had a marked reduction in costs, which allowed it to achieve an EBITDA of COP 279 billion for the quarter, 6% higher than in the same quarter of 2016.

Real Estate Business: The registration of deeds for 29,000 square meters stands out in the second quarter, which generated COP 45 billion in revenue and COP 55 billion in cash flow. We highlight the positive results of the Pactia real estate fund which, since January 20, 2017, has increased the unit value with effective annual returns of 7.7%.