Interconexión Eléctrica S.A. E.S.P, also known as ISA, is a Colombian firm whose main businesses are electric power, roads, ICT, and telecommunications. In its quarterly report, the firm not only reiterated its commitment to economic revitalization but also to the environment.
In this quarter, after two years of negotiations, Ecopetrol finally became the principal shareholder in ISA, acquiring 51.4% of ISA’s shares for an amount of COP USD 3.6 mm. This transaction seeks to provide better results for both Ecopetrol and ISA.
ISA’s CEO disclosed, “Today, ISA Group is a larger, more profitable, more sustainable organization. ISA is better diversified and is a leader in Colombia and throughout the region where it is present in all these dimensions. This is in addition to having more robust corporate governance, ethical controls, transparency, and sustainability systems, which have earned it multiple awards from expert local, regional, and even global organizations.“
The good news was coupled with its strong consolidated quarterly results.
In the third quarter of the year, ISA’s operating revenues rose 7.1% compared to the prior-year quarter, amounting to 2.9 trillion Colombian Pesos (COP). The growth is mainly explained by the beginning of operations of the energy transmission project, the consolidation of ORAZUL ENERGY GROUP as of the end of the third quarter of 2020, and by higher construction activity in Brazil and Chile. Accumulated operating income 9M closed at 8.0 trillion, increasing by 7.5% compared to the same period last year.
Whereas the construction revenues decreased 19.9% compared to 3Q20, revenues from the energy sector rose 12.7% in a YOY comparison.
The performance of the construction sector is mainly due to lower construction activity in Peru and Brazil and, therefore, lower revenues. Nevertheless, in the energy sector, Brazil, Colombia, and Peru reported higher revenues, mostly explained by the consolidation of the ORAZUL ENERGY GROUP (COP 10.624) in Peru and the effect of the macroeconomic variables in Colombia.
In the same way, both Telecommunications and the Roads segment showed good results. The former increased 32.9%, amounting to COP 83.53 bn compared to the third quarter of 2020, essentially as a result of the incorporation of RUTA COSTERA (COP 64.635mm) and greater revenues originated from the maintenance in concessions and toll management in Chile.
In general construction costs and AOM grew mainly to an increase in construction activity, which reflects the recovery in the countries in which the firm operates.
Although the EBITDA margin experienced a slight decrease, passing from 66.0% to 65.2%, EBITDA ended up at COP 1.9 trillion, increasing by 5.2%. For the accumulated 9M, this concept grew 5.2%, reaching a total of COP 5.3 trillion.
In light of the above, operating income increased 6.3%, reaching COP 1.7 trillion. Although operating income increased, the operating margin experienced a smooth reduction, passing from 60.3% to 59.8%. In the accumulated, the firm reported an increase in its operating income of 6.2%, amounting to COP 4.9 trillion.
Net income totaled COP 121.366 million, experiencing a reduction of COP 444.76 mm. This result is explained mainly due to the meager performance of some regions and the increasing costs.
As of September 30, 2021, ISA’s assets were COP 62.6 trillion, which represents an increase of 15.5% compared to December 30, 2021. The company disclosed that the expansion in its assets is due to the firm’s expansion through new projects in Colombia, Peru, Chile, and Brazil. On the other hand, total liabilities ended up at 41.1 trillion, representing 65.6% of total assets. The effects of depreciation due to the exchange rate affected both.
ISA’s equity amounted to COP 13.7 trillion, reflecting an increase of 4.3% compared to December. The increase is mainly due to higher profits and a positive exchange rate effect.
Finally, concerning its financial ratios, the firm reported a Net Debt/EBITDA ratio of 3.0 x, steading at the same level of the previous quarter and an EBITDA/ Financial Expense ratio of 4.8, decreasing significantly compared to the previous quarter in which ended at 5.9x.
Regarding ROA and ROE, the former closed at 5.3% and the latter at 12.5%.
Once the agreement between ISA and Ecopetrol was completed, both firms reiterated their commitment to protect the planet, and as an example for other companies, both firms offset the carbon footprint of the entire Colombia Pavilion in the first week of October in order to become Net Zero Carbon. The resources obtained through this compensation will be invested in a project to prevent the deforestation of the Chocó forests in Colombia, one of the most biodiverse places on the planet.
