Earnings Call: Q1 2024

May 17, 2024

2024. This space we have Jorge Mario Velásquez, President of Grupo Argos. Diana Peraíta, Vice President of Strategy and Corporate Finances for Grupo Argos. Rafael Olivella, Vice President of Corporate Matters for Grupo Argos. Mauricio Ossa, President of Odinsa. Maria Clara Aristizábal, Manager of the Urban Development Business. Pablo Arellaba, Vice President for Corporate Finances of Odinsa. Andrés Bejarano, President of Facsa. Remind you all that in our website, you might find all the quarters information joined with the presentation we will be following during this call. To download it, you can access the financial information menu and afterwards into section reports. Additionally, we are transmitting this conference through X space through Twitter. We want to invite you to move on to slide number 3 of the presentation so we can start our meeting. I am going to give the word to Jorge Mario Velásquez, President of Grupo Argos. Thank you, Juan. Good morning for all those that are with us in this call. I want to extend a warm welcome to the shareholders, analysts, and the executives that are with us today in this conversation. This first quarter, we have presented results in which country-wise, we recorded all the profits that we have harvested during 2023 with transformational transactions that will define the future path of the company. I would like to highlight the combination of the assets between Argos USA and Summit Materials that valuation our operations, our cement operations in that country for $3.2 billion. Also for this quarter, we have an agreement to disinvest the participation that Grupo Argos has had in Grupo Nutresa. This ended in larger economic rights for Grupo Argos and Grupo Sura, allowing at the same time that each organization will focus more, manage its particular route in order to keep on growing and keep on generating value for all our groups of interest. We will obviously be discussing about these two transactions that require a level of detail, and we want to share this with you all. Let me start by Summit. The successful close that happened in January this year materialized the transaction of the combination of the Summit Materials assets and Cementos Argos assets, creating a leader platform in the construction material sector for a national scale in the United States for a company value of around $9.5 billion. We want to highlight that the investment of a bit less than COP 5 trillion that was done for a period of 18 years in the United States resulted in a profit of COP 5.3 trillion, which is reflected in the status of results of this quarter. Since the announcement of this transaction that led to a significant discount in what were being negotiated in the Colombian stock exchange, the versatile value of the company or the market cap of the company has increased more than COP 7 trillion. As a result of the cash that was received by this transaction, Cementos Argos closed the month of May, with leveraged net debt, EBITDA indicator of 2 times. That is actually the lowest one that we have had for the last 2 years. This placed the company in a strengthened position in order to keep on consolidating and potentiating its presence in Colombia, Central America, and in the Caribbean, and also strengthening exportation capacities towards the U.S. and other geographies. Since the close of the transaction, the Summit stock price in the New York Stock Exchange has been growing. Up to the 15th of May, it was at $42, which represents an increase of $6 compared with those $36 of the close of the transaction. This equals a valuation of the investment for more than $300 million in just a couple of months. At current market values, the Summit investment has an estimated or close value or equal to COP 6,500 for each Cementos Argos share, given that the objective price by analysts for the Summit Materials share is around $50. That is why we are optimistic about the appraisal potential that this investment might have. From another side, in this first month of the year, we completed all the transactions that were agreed on the framework agreements celebrated on 15th of June 2023, by which Grupo Argos and Grupo Sura no longer have shares in Grupo Nutresa and IHC, JGDB or Nugil. They do not have shares in Grupo Sura. As you might see on this slide, you can find on slide number four, or the graph that you might find on slide number five, sorry. Grupo Argos exchanged 9.9% of its share participation in Grupo Nutresa and got $150 million in cash in this exchange. As a result of this transaction, Grupo Argos has the right of receiving 39.5% of the economic rights of Grupo Sura, considering both the shares from which we are beneficiaries, as well as the economic rights that we receive from this autonomous equity to which Grupo Sura shares were transferred. Besides that, we received a participation portfolio society in which the company has 16.6% of the circulating shares. Considering that Grupo Sura also received own shares in this share exchange, and while these shares are reacquired, its rights are suspended due to legal disposition. Grupo Argos had transferred shares of Grupo Sura for an amount that is equal or even higher, to which we had a right to receive, according to the framework agreement, to an autonomous equity that has an irrevocable instruction of not exercising political rights over the shares. As a consequence, Grupo Argos will not exercise those political rights further than the 49% of the shares that are represented in the Grupo Sura shareholder assembly. This considering that Grupo Argos has an infrastructure holding, and as we have constantly said, we do not have nor the intention, nor the vocation of constituting in a controller of Grupo Sura. From another side, last ninth of May, an extraordinary meeting was held for the shareholder assembly for the Sociedad Portafolio, in which the partnership bylaws were modified in order for them to end the fifth of June this year. After this date, the partnership will be dissolved and would start the liquidation process in order to distribute to the shareholders of Sociedad Portafolio, according to the pro rata of its participation, the remnant of the shares of this partnership once everything has been paid. Sociedad Portafolio is confirmed by mainly 62 million shares of Grupo Sura and 82.3 million shares of Grupo Argos. We want to highlight that after the transaction, S&P Global confirmed a AAA rating for Grupo Argos, which is a proof of the financial strength that the company has. Given that the investment of Grupo Nutresa was classified as a financial instrument that has been measured at a reasonable value with changes that were expressed in the other integral result known as ORI, the generated profit due to the share transfer of Grupo Nutresa for this quarter was reflected in the accumulated profits as a reclassification from the ORI. The rest of the effects associated with the transaction are recognizing the consolidated status of results. Because of this, both of them need to be considered jointly in order to visualize the economic benefit of the transaction. The increase in the accumulated gains was of COP 1.5 trillion, and the positive effect in the status of results, the consolidated status of results for COP 1 trillion for a net gain of COP 2.5 trillion. This profit includes the recognized profit by Grupo Sura over the transaction incorporated in the status of results of Grupo Argos via the participation method application. As it is traditionally recorded in terms of the profits for Grupo Sura. Grupo Nutresa, this investment marks a new stage of our history as Grupo Argos. The company will keep on focus on the value release for our shareholders and in the leadership endowment that the organization has achieved in the last decade in the infrastructure sector, with the consolidation of investment platforms for transmission and energy distribution projects, as well as solar generation and transportation platforms, attracting, in a way, capital coming from global investors that remunerate and recognize our operational and management capacity. Now, I want to speak about the new vision that Grupo Argos has in terms of adding different efforts. The materialization of this exchange through the participation I previously mentioned about Grupo Nutresa. Grupo Argos Portafolio has experimented a significant transformation. Focusing, obviously, more towards infrastructure and construction materials. Now, I want you to move on to slide number 6. Where we can see how the investment portfolio of Grupo Argos has transformed itself. Taking as reference the values that we have in our ledgers of the non-listed investments, such as Odinsa, the urban development business, Pactia, and others, and the price of the stock price in the Bolsa de Valores de Colombia, such as Celsia, Cementos Argos, Grupo Sura, Sociedad Portafolio, and previously Nutresa. We can see that in respect with first quarter of 2023, first quarter last year, Grupo Argos portfolio has valued in COP 4.1 trillion. This increase is supported in the closure of strategic transactions and the fine operational performance of our business. Besides this, the disinvestment of Grupo Nutresa and the operations such as Summit Materials, have allowed for the infrastructure segment to increase its weight from 55% to a 63% within the company's investment portfolio. Up until this moment of 2024, we keep on advancing in share repurchase programs for an aggregated amount of more than COP 1 trillion for companies of Grupo Empresarial Argos that are in the stock exchange. Right now, we've executed close to COP 330 billion in terms of that approved amount. In the measure that we buy our own shares at current market value, we increase the participation of each shareholder that keeps their investment, besides offering a larger dynamism and liquidity to the market in moments where it's required. Since we announced the repurchase program before the assemblies of 2023, and jointly with the financial results and the transactions that we have previously mentioned, the value of the Grupo Argos shares have doubled, and in the case of Cementos Argos, have tripled. In this term, the market cap for Grupo Empresarial Argos has grown close to COP 15 trillion. Now, I want to invite you to go over consolidated results. On slide 8, you could see that Grupo Argos closed this quarter with consolidated revenues of COP 4.5 trillion and EBITDA of COP 2.4 trillion. This means a growth of 21% and 90% respectively compared with the same period previous year. Bear in mind that as a result of the agreement between Cementos Argos and Summit Materials, Grupo Argos disposed 100% of its associated subsidiaries to the U.S. region, by which the assets involved in this transaction were classified as a discontinuous operation. As a consequence, the company made out changes in the presentation of the consolidated financial results up to 31st of March 2023, reclassifying all the associated parts into a group of assets in the region of the United States, under a unique line of net profit of discontinuous operations. As a result, the net profit closed in COP 6.5 trillion, and the controlled net profit closed in COP 3.8 trillion. These figures reflect the profits generated by the transaction and the exchange of the Nutresa shares. I want to make a comment here, in the sense that this a very important value expression that we see in this quarter, is the construction of a value that has been generated by the shareholders for a long period of time and were not reflected in the financial results. This obeys to the reality of the economic value that has been created, not just with the assets, but also with the investments that the group did in Nutresa. Driven by these non-recurring events that affected the consolidated results that I've already discussed, the separated financial results showed that the accumulated revenues for the year closed in COP 3 trillion, EBITDA in COP 2.94 trillion, net profit reaches COP 2.6 trillion. Now, I want to invite you to move on to slide number 10, where we could see the summarized structure of the asset that the company manages at the close of the first quarter 2024, and how they'll be recorded in terms of financial results. We can see how despite that Grupo Argos continues exercising control and consolidating Cementos Argos, in Odinsa, the transactions of our subsidiaries have made during the last year, framed under the revelation of value towards our shareholders, and as the strategy of the company transforming into an infrastructure asset manager have led that many of the results in depths associated with many of these assets are not consolidated line after line in the financial statuses, and as a consequence, neither in Grupo Argos. From now on, for example, 31% of the participation that Cementos Argos has in Summit Materials will be reflected in the consolidated financial results through the participation method. Likewise, the asset management business of Celsia, including the platforms that we know as C2 Energía or Tesorito, and that's a thermal generation plant in Sahagún, Córdoba or Laurel or Caoba, where we anticipate great part of the growth of this branch is through associations of third-party capitals. This will not be recorded line by line in the financial results of the company. Likewise, the creation of the platforms of roads and airports in Odinsa, in association with Macquarie, that in the results of this concessions won't be consolidated either. That's why it's so important to consider that from now on, the financial statuses will only incorporate a minority group of the assets that are being managed by the company. In other words, the revenues and consolidated EBITDA will not fully reflect the operational performance of our businesses. On the upcoming slide, I want to check the details that we have in the accounting changes that we'll have in the company for this 2024. Besides the deconsolidation of the Cementos Argos assets in the United States and the corresponding change in the financial result presentation, during 2024, the company will record a lower revenue level in its energy business, given the disinvestment of great part of its assets in Central America during 2023. Besides this, we'll deconsolidate the participation in Opaín and we'll record a lower method for the keyboard participation as a result of the airport vertical creation that was carried out with Macquarie Asset Management. There will also be an increase in the Grupo Sura's participation method, given the increase of its economic rights in that investment, and will stop recording the dividends that were being received from Grupo Nutresa. Graphs that you might find on slides 12, 13, and 14 present a summary of the revenue contribution, EBITDA contribution, and consolidated net profit contribution, John, with the non-recurring impact considerations that we have mentioned for this quarter and for each one of the segments. The results have been mainly influenced by the deconsolidation of Argos USA and the cost of the transaction that was reported by Summit in this quarter in the cement business that totalized $61.3 million, and that will be included into the status of results for submitting this first quarter. The deconsolidation after the sale of certain assets in Central America and the El Niño phenomenon effects in the energy business, which is a negative accounting impact in the adjustment of the reasonable value of the Pavas and Barú lots, a deferred tax in the real estate segment, and the deconsolidation of Opaín after the creation of the airport platform and the concession businesses. Likewise, there is a summary of the revenue variations, EBITDA, net profit for the energy platforms, roads, airports, as well as the Summit Materials results. These investments for the company, despite the fact that they do not consolidate the financial statuses, are not evident in its contribution due to the consolidated segments, but do keep on showing growth and very positive operational performances. Now, I want to reiterate an open and sincere invitation so you could approach the different teams that the organization has in order to drill down deeper in these accounting changes that we are having. I am aware that these are not just operational transformations that are very relevant, but also an accounting transformation that is due to the association model that we have been doing with several businesses, such as in the energy and infrastructure businesses, with business partners that contribute with capital. This strategic definition, joined with the transformational events that we are recording, we are aware do lead to more complex dynamic in terms of understanding the financial results. As when we had industrial operations where we have revenues, costs, expenses. This is the dynamic of these types of holdings, and I do understand the complexity that this is in terms of interpretation. That is why I want to reiterate that all our accounting team, all our financial team, all our legal team, investor relations team, we are all open to help you deeper understand all this information. Now, I want to invite you, to move on to the results found on slide number 16. This is for the cement business. In the middle of a challenging landscape, Cementos Argos kept showing positive results, focusing on profitability in the operations of Latin America, improving the EBITDA margin close to 200 basis points, despite the economic deceleration in several markets in which we operate. In another front, the objective of improving the share liquidity and bearing in mind the criteria compliance in order for us to be eligible in the emerging market index, the extraordinary assembly of Cementos Argos approved the conversion of the preferential shares for the company for ordinary shares. As a result of this process, 99.8% of the preferential shares turned into ordinary shares, and this way, these last shares start representing 99.96% of the shares that are under circulation right now for the company. We expect for this measure to improve the liquidity of the share, bringing it closer to its fundamental value. In addition, and following the measures in terms of revealing value for all our shareholders, including Grupo Argos, Cementos Argos kept, during this quarter, its share reacquisition program, acquiring since the program started, 26 million shares. Bearing in mind the growth of this product of the reacquisition program as well as the conversion program, the 705 million shares that Grupo Argos has went from being 51.3% of the economic rights at the end of 2023 to represent today 53.4%. This equals an increase of 2% in the participation that at current values in the market is equal to something close to COP 200 billion that is generated for the Grupo Argos shareholders. This favors even more our position as a leader player in the construction material sector for Latin America, Colombia, and the Caribbean, with relevant exposition to the most important economy of the world, through the participation of Summit Materials. During the quarter, Cementos Argos dispatched 2.1 million tons in its Colombian operations. In Colombian, Central American, and Caribbean operations, 13% less than the same period previous year in those geographies. Revenues dropped 6% in the quarter, while the EBITDA grew by 2%, which was translated in a quarter where there is improvement in the EBITDA margin that reached a maximum of 22%. When analyzing the figures in dollar terms, the functional currency of the majority of the countries in Central America and the Caribbean where the company has a presence, we found that the revenues in that specific currency grew by 13% and EBITDA in at 23%. Now, I want to invite you to move on to the energy business results. Financial results for the quarter in terms of our energy business have presented a significant drop in terms of EBITDA and net profit, which is explained by the El Niño phenomenon and its challenges in terms of hydro generation. Nevertheless, the capacity of the company to contribute to the system has proven the strength of our assets and the balance that we have between our business. This is contrasted with the situation that a company faced during El Niño phenomenon back in 2015 and 2016, when the company reported a loss that could be attributed to the controllers that was close to COP 82 billion, and where we were in the need of selling part of our investment portfolio in order to decree dividends in the share, in order to ensure the liquidity that was necessary in order to be able to find a way out. This was nine years ago. The strength that the company has proven during this quarter in terms of similar climatic conditions, and even worse, is the result of a portfolio optimization that has happened last year towards a more equal generated generation balance. This is an evidence that we can contribute to today's electric system and the future Colombian electric system, even facing challenging environmental conditions. For the upcoming months, we anticipate a recovery to an EBITDA margin closer to 32%-35% in the measure that the weather conditions come back to normal. This, joined with the positive results in Tesorito, the reduction of the debt cost, and the de-leveraging that came from the sales of certain assets in Central America at the end of last year, this should allow Celsia close in 2024 with a net profit that would be similar to the one we had previous year. In terms of the asset management business, we want to highlight the results of the C2 Energía platform, specialized in large-scale solar energy with 300 megawatts in operation, recorded a generation of 127 gigawatts-hour of energy. This means growth of 17%, and reported revenues for COP 44 billion and a COP 37 billion EBITDA, both with an increase of more than 150% compared with the same period, 2023. Besides, this platform has today 308 megawatts under construction and close to 522 megawatts in development. Keep following this growth trajectory that will consolidate Celsia as the leader for the renewable energy generation in Colombia, the non-conventional renewable energy in Colombia. In terms of revenue for Celsia, the first quarter, we reached COP 1.4 trillion, which represents a drop of 3% compared with 2023, same period. Given the effect of the sold assets in Central America during the last year, the consolidated EBITDA was COP 326 billion, which led to a drop of 36%. Nevertheless, when we bear in mind the EBITDA coming from the Celsia investment platforms, that, as we've mentioned, will not be consolidated in the financial results, the total EBITDA for the quarter is close to COP 437 billion. This is a figure that, if we compare with the EBITDA of platforms that have been excluded from the Central American assets in the first quarter 2023, represent a drop of around 20%. During the quarter, the generated energy was of 962 megawatts-hour, which represents a drop of 45%, product of a lower hydro generation due to an El Niño phenomenon. Now, I want to invite you to move on to the Odinsa's results found on slide 20. The airport traffic keeps showing sustainable growth. Outstanding growth. The platform accumulates 48 million passengers that have been mobilized during the last 12 months, from which 42 million correspond to El Dorado International Airport. This is a record figure for this asset that's operating at full capacity. From another side, the company began the construction of the road exchange that will replace the external roundabout of the José María Córdova Airport in Rionegro, Antioquia. The objective of this work can be filled by the Túnel de Oriente concession, joined with the Antioquia Governor's office, is to contribute to the improvements of the mobility of this part of the department in reducing the traveling times for the subregion. The investment for this project will be close to COP 67 billion, and the execution time will be close to 24 months and will generate close to 300 direct employments. With this and with other investments, we keep on betting not just on Medellín's connectivity with the airport, but that's of growing importance, giving the position that the city has in terms of tourism and businesses, but also to connect the Aburrá Valley and the San Nicolás Valley, which are two economic poles that are destined to be connected in order to improve the competitiveness of the region. In terms of the commitment that we have in shared value generation, Odinsa was included as one of the most sustainable companies around the world. In the most recent edition of the Sustainability Yearbook made by the S&P Global, the company occupied a very interesting position between the 297 companies that were evaluated within the industry. Now moving on to the operational results that can be found on slide 21. The road platform closed the quarter with an average traffic of 107,000 in daily vehicles. This is stable compared with the same period previous year. The revenues of the platform's concession grew 23% for the quarter, while the EBITDA was placed in COP 164 billion. This is an increase of 3%. In airports, which figures are found on slide number 22, traffic during the quarter reached 13 million, sorry, growing at 20%. The Opaín revenues reached COP 458 billion with 3% increase, and the EBITDA reached COP 144 billion, which is equal to a drop of 12%. This is an effect that is explained by the drop of the exchange rates. Of the interest rate, sorry, given that between 55% and 60% of these revenues of the asset are in dollars. From its side, the revenues for EBITDA and key profit grew 15% and 16% respectively. In the real estate business, the effective gross revenue was COP 121 billion, which is equal to a growth of 10% year-after-year, and the EBITDA for the quarter was COP 67 billion, also with a 10% growth year-after-year. In total, we renewed contracts for 63,000 square meters, and there were new contracts for 16,000 square meters for the first quarter 2024. At the end of the period, the fund closed with a non-hotel portfolio of 96.1%, which is a drop of 24 basis points compared with the same period 2023, and a drop of 113 basis points versus the previous quarter. Compared with the first quarter 2023, the logistics and storage sectors obtained a higher increase in terms of revenues, with an increase of 15%, followed by offices with a 13% increase. On the urban development business, the net cash flow for the quarter was COP 23 billion. This is a positive result considering the market's deceleration. Our plans keep on improving resiliency compared with the less dynamic market, which reflects the differentiation that we reach thanks to our quality urbanism and strategic location of our projects. For this year and next year, we expect a recovery imposed by the unsatisfied demand of housing of social interest and the reactivation of the government subsidies. In the first quarter 2024, the revenues for lot sales was 24% higher. Nevertheless, the total revenues and the EBITDA recorded negative figures. This is explained to an adjustment in the reasonable value that we have made in the Pavas and Barú lots, where we modified the disposal of urbanism cost, which resulted in the detriment for this quarter. We might highlight that this effect is an accounting effect and will allow us to consider more usage, which can also accelerate even more the sales towards the future. Speaking about the Ciudad Mallorquín project that being developed in Puerto Colombia Atlántico, the project is advancing complying with all the social, legal, and environmental commitments. Besides this, generating unseen transformation for the social inclusion and development of the region. Ciudad Mallorquín is developing with the best urbanistic standard from Grupo Argos, which includes a central park of 130,000 square meters, which first 10,000-meter quadrant was recently inaugurated. From its side, the housing projects are being led by some of the most important construction companies in the country. Grupo Argos does not construct in its land lots. Its construction began in 2019 in an area of 80 hectares, from which 45 are being developed for a total of 16,000 housing units. 14,000 of these are social interest housings. Up to the moment, more than 1,000 of these apartments have been delivered and more than 5,000 have been already constructed, and more than 9,200 families have separated or acquired housing solutions within this development. This is a project that, in terms of density, will double the tax collection for Puerto Colombia and will generate more than 2,000 employments in its constructive stage. Even though it has already in 2023 included more than 3,000 people. In total, Ciudad Mallorquín will represent more than COP 3.5 trillion. This capital irrigation that is relevant in a moment for housing construction, has been decelerating in the country, where Barranquilla just recorded a stop of more than 60% of housing sales in 2023. The urban development business will keep on moving forward, seeing how can we generate value for all our groups of interest with this project and other relevant projects that we might carry out. Now, let's move on to slide 27 and go over the evolution of the consolidated indebtedness. In this front, the net debt closed in COP 7.6 trillion. This is equal to a drop of 42% compared with the same period last year, mainly explained by the cash received during the Summit transactions. Likewise, the net financial expenses for the quarter dropped at 20% year-after-year. Thanks to the cash position with which the company counts with. The net debt for Grupo Argos that is detailed on slide number 30, closed the quarter with COP 789 billion. This is 34% less compared with the same period last year, which grants a complete financial flexibility to the company and allows closing the year with healthy indebtedness indicators and with our current credit rating. Within the treasury strategies, we want to highlight that the company closed the period with fixed rent papers for close to COP 820 billion, which generate a positive carry, given that its performance is higher than the cost paying for the debt. A product of the OPA of Nutresa shares, the company disinvested COP 432 billion, and the company did not have to require into additional indebtedness. This will be reflected in a lower cash position, obviously, for the upcoming quarter. To close, we would like to share the sustainability milestone that fills us with pride as a business group. The U.S. Department of Energy published the list of high impact projects in terms of CO2 emission reduction, with initiatives that add close to $20 billion as commitment to find new technologies in industries in order to fight climate change. Summit Materials was chosen as one of those projects with a grant that is basically a government contribution, that totalizes $215 million for the negotiation of the construction protocol for four facilities in the United States. This project was conceived initially by the innovation team of Cementos Argos in Colombia, where the first plant was established in 2016. This is a milestone for our R&D teams. That as we've been previously mentioned, we're about to become in one of the most important initiatives that will be built in the U.S. in order to make a relevant contribution to the greenhouse effect gases reduction. With this, sorry, we would like to finish this part of the presentation. I want to invite you now to ask any questions that you might have. No, thank you. I want to remind all the assistants that the Q&A session, or the Q&A widget, is open in Zoom. You can ask your questions there. We have a couple of questions right now that I'll start. Anonymous assistant asks the following thing. The profit of the discontinuous operations is cash, or is this an accounting matter, such as in the associate participations? Yes, thank you very much. The results that we gave as product of the Summit transaction with Cementos Argos from the 4.33 billion appear as a discontinuous operation that does not reflect cash. Nevertheless, we cannot forget that the transaction that was done with Summit had two components. It was a 31% that was received by the company, that today at market prices is equal to close to $2.3 billion in cash for $1.2 billion. So this is the effect that we have. In addition, if you add the results of Cementos Argos, you can see that the in-depth level that we had through March 2023 was of COP 7.38 trillion. After this quarter, the value is COP 4.68 trillion. Because of this, and as Jorge Mario mentioned, the net EBITDA was 2.9 last year, and this year is 2 times. This is the component that was shown, that's the accounting component. But there's some real effects on the cash that have been previously mentioned that are actually reflected with lower level of in-depth last. Thank you very much. We have a question from Ana Plata. Given the revenue drop in the main operational segments, those that consolidate, have you considered in reducing the Grupo Argos debt? Well, yes. Thank you. Let me give you a bit of the detail of the leverage instructor that we have in terms of each one of the companies, so you could see the efforts that have been made, not just in terms of consolidated levels, but also in terms of the independent results for each business. As Jorge Mario was previously mentioning, the consolidated level in terms of leveraging for us, last year it was close to COP 15.3 trillion, and today it's close to COP 11.85 trillion. So here, just in a consolidated manner, we're seeing a significant drop of close to COP 4 trillion. In terms of Cementos, I've previously mentioned already, there is a leveraging drop of COP 7.38 trillion to COP 4.68 trillion. This is a significant drop, as I was mentioning. In Celsia's case, that Jorge mentioned, that had a challenging quarter. The leveraging 1 year ago for Celsia was COP 5.7 trillion. Today, that leveraging value is COP 5.27 trillion. Its net debt EBITDA ratio was 2.9, right now it's 2.8. So despite the drop in leveraging and with the EBITDA effect, we're able to drop this leveraging ratio. In the case of Odinsa last year had debt for COP 16 billion. Right now, it is close to COP 263 billion. Basically, with the cash that Odinsa has, its leveraging indicator is close to zero. In case of Grupo Argos, we had a leveraging indicator of 1.65, and now it is 1.63. Our net debt in terms of EBITDA is under 0.7 times. What this has proven is that in terms of other companies, we do have a larger flexibility and less leveraging. All the efforts will keep on happening in order to have the larger flexibility and the lower levels of debt, both at business level and as well as consolidated level. Okay. We have an additional question from an anonymous assistant that says, "You asked relevant shareholders for Grupo Sura, and since the success that the Cementos Argos share conversion, do you think asking Grupo Sura doing the same?" The second question, "The hard study with Bain Capital, are you thinking making this public or how do you see the future of this new economic group?" Let me answer this question. A share conversion, each of the partnerships are based on the discussion that happens within governance institutionality that happens within each one of the companies. It goes for Grupo Argos as well as for Suramericana, as well as in Grupo Sura. The discounts, the prices are different in each company. Because of this, the moment of making these types of operations is not necessarily the same one with all the organizations. Grupo Sura has publicly mentioned the interest. It is interested in looking at the conversion of the preferential shares the moment that we have the possibility of doing so, and the conditions that we allow to do so. This will be an operation that will have to go over within Grupo Sura in its right moment and in its right time. Let me say, once again, this is different from the Cementos ones, and these were different also in the ones for Cementos when the decision was made. Summarizing, this is an option that is being considered, but it has to be analyzed under its institutionality in a different moment. That is not today. In terms of the future, the board of the company has been working on analyzing different options, different organizational architectural options in order to face the realities that come from this share exchange between Grupo Nutresa or with larger economic participation. That as I mentioned before, it is close to a 54% of the economic rights of Grupo Argos and its branches in Grupo Sura. Simultaneously, as it has been said, and as it has been publicly announced, Grupo Argos does not have the intention of consolidating nor becoming the matrix of a financial conglomerate such as Grupo Sura is. Those two realities have driven the company to study with different consultants, different organizational alternatives in order to structure this with its property structure and holding structure. The results of this evaluation are the owners of the company, and these are strategic sensible elements. Because of this, these are not publicly available documents. These are reserved for the board, given to the authority delegation that the shareholder assembly has. Those decisions, the measures that have not been made, are not constituted as relevant information. The moment that we take decisions that are not defined yet, we will inform this to the market through relevant information mechanisms with conversations such as these ones. But for the moment, this information is strategically sensible, and it's confidential for the board. Okay, we have an upcoming question coming from Catherine Ortiz. How will the participations be for Grupo Argos and SPV in Grupo Sura after liquidating the Sociedad Portafolio over the ordinary shares? I can take that question. First, let me speak of the current participation of Grupo Argos in Grupo Sura. For the moment, Grupo Argos has 56 million shares in Grupo Sura, which represent 18% of the political rights of that company, and the autonomous equity, and I guess that's what Catherine speaks of, SPV has 114.5 million shares with an inhabit vote. Jointly, this was expressed on slide 5, where Grupo Argos has 39.5% of the political rights of Grupo Sura. Now, after liquidating the Sociedad Portafolio, Grupo Sura will receive shares, which will increase to all its shareholders, including Grupo Argos, and Grupo Argos will also receive some additional shares from Grupo Sura. This leads the economic participation of Grupo Argos in Grupo Sura will be 45.8%. As we've been mentioning in the past, Grupo Argos doesn't have the intention or the vocation of having more than 49% to control Grupo Sura. That's why the participation in the SPV will also increase in an anticipated manner, but will always to be under that percentage. I don't know if my colleagues want to complement on that. Okay, we have another question from Juan Keys. Good morning. How will the construction business evolve while the Colombian economy keeps decelerating? What yields and what returns is the company expecting in that sense? Thank you, Juan. That's a very interesting question. I conceptually introduce the strategy that we are managing in terms of the businesses that are related with the construction business, basically, the construction material business and the cement business. I also want to give the word to Andrés Bejarano, so he can also speak of the real estate business that also has to do with this sector. I want to say something. Clearly, the construction sector in Colombia, and there the figures show this, is facing a challenging market that's fallen in deceleration, more specifically in the social interest housing area. I guess that the announcement that has been previously mentioned in terms of the reconsideration of social interest housing subsidies in order to stop using the suspense levels. I would hope that these types of measures will offer a positive dynamic in terms of the subsidy allocation for programs such as Mi Casa Ya. That way, we could reactivate the social interest housing. In the meanwhile, the expectation of the businesses is based in two parallel paths. One, and the most important one, is efficiency. As you were able to see in the Grupo Argos result, we had an EBITDA margin of 22%. That's close to 200 basis points in respect with the previous year. That gain of 10% in terms of competitiveness is due to an expense revision and improving our operational processes, and also as supported by an innovation process and market presentation process into different segments. These are added value products. I believe that the result is clearly seen. The spike, the acceleration that we could see in the market, that's close to 50%. The company's results are positively growing, and this is our first strategy that has been implemented, that has been very successful, but that we need to keep on strengthening even more in competitiveness and efficiency in the businesses. In terms of real estate business development, I would like to highlight, as I previously mentioned in the call, I'd like to highlight projects such as the one that's happening in the city of Puerto Colombia, Ciudad Mallorquín, as it's known. Another project that was made a couple of years ago that was Alameda del Río. These are projects that have extraordinary quality in terms of the urban development conceptualization, in terms of parks, in terms of roads, in terms of networks, in terms of pedestrian paths, in terms of cycle routes, in terms of urbanism quality, that are inviting to a multi-stratus urbanism with transportation access, health access, best real estate conditions in order to attend a demand that it's there but did not have an available supply. In other words, we are creating the demand. We are creating an opportunity in order to attend markets. If we just stay waiting to develop those traditional urbanism models, probably this will take years for these houses to be constructed, as I also mentioned during the conference, and later on, I'll give the word to Maria Clara Restrepo. Examples as the ones we're carrying out in Barranquilla are examples of business innovation models in order to develop a demand that would not be reflected elsewise in these terrains. In summarizing, the answer to this good question is that it goes through careful work within the organization in order for us to be more efficient, and also working on innovation in terms of product and in terms of business model. With those two variables, we're attacking realities that we face in a country such as Colombia, that deaccelerates. From a corporate object, Grupo Argos has the virtue of geographic diversification in terms of cycles, in terms of currencies that allows dampening deacceleration cycles in certain countries, such as the one Colombia is experiencing. Let me give the word to Andrés Bejarano and then to Maria Clara Restrepo, so we can drill down deeper in the strategies that we have for this urban development business, because I do believe it's a very interesting question because this touches the strategy that we are trying to develop. Thank you, Jorge. Real estate rentals, there is a very particular situation, and that is that despite the deacceleration of the economy, the free spaces that are available are very low. For example, the end of last year, only 3% in terms of logistics and industry was available. The trade occupations are close to 95%, and the offices that we thought that were going to be the most affected segment, at the end of last year, only 10% of the area was free. If we add this to the increase in construction materials and the increase in interest rates, the expectations in this sector, despite the economy deacceleration, are good, because when we need to construct new infrastructure, this will be higher costs with rents that obviously will have to be higher, and this will have a positive effect for funds such as ours that has new assets, that because of what we have been explaining, might have larger rentals towards the future. Despite the difficulties, I believe we are pretty optimistic about the situation. Yeah, pretty clear. Thank you. Maria Clara Restrepo, maybe you could mention about the primary demand generation. Thank you, Jorge Mario Velásquez. Good morning to you all. Effectively, if there is a deacceleration in the market, this demographic destination in a market such as ours in Barranquilla, there is a quantitative habitational benefit of the asset is pretty high. At the rhythm that they are being sold, despite the deacceleration up to April, will take 70 years to close that gap. Projects such as Ciudad Mallorquín will accelerate this gap closure. Now, non-VISs, we also have an opportunity. This market has to come back to those sustainable levels. As Jorge Mario Velásquez mentioned, the subsidy allocation, according to the Ministry of Housing, once the requirements are complied, this should accelerate the market. Finally, I just wanted to complement what Jorge Mario Velásquez mentioned about quality urbanism. At the end, this is translated that projects such as ours rotate four times faster than the rest of the projects in the city. For example, the VIS, that is Social Interest Housing, takes 10 months to sell versus 44 months that take other projects within the city. These larger times also are less profits for the developers, and that is why it is more attractive to look at Grupo Argos lands, because we have a higher activity. There is a deacceleration, but nevertheless, our differentiated product allows us to rotate faster and thinking on the mid and long term, demographically speaking, conditions are there for the market to recover. That was very clear. Thank you. We extended ourselves a bit, but it was totally worth it. A very interesting question. Okay, so we keep on answering questions in the measure we receive them. Alvaro Leiva and Catherine Ortiz ask about the share conversion in Grupo Argos from preferential to ordinary shares. We can come back to this if you find it necessary. Catherine Ortiz, news about the portfolio restructuring after Sociedad Portafolio liquidation, and we have been mentioning the work that we have been doing with Bain. We will move on to this, but if you have additional questions about these points, we can approach them. We have a question from an anonymous attendee that says as follows: "To what value per share are the Grupo Sura shares being reflected in the Grupo Argos balance?" It is very important to bear in mind that the values are differentiated as we have them in the consolidated, and as we have them in the separate balance. In the opening balances, both values start exactly the same, but at the market values that Grupo Sura had in those days or in those moments. In the case of the consolidated value, that value in the measure that we receive the participation methods from Grupo Sura, that value starts increasing, and today, that value is in COP 56,000. For the case of the separate one, we start with that opening balance, and it is a value that is kept fixed, that was recently updated with an average according to the values that we take from the transaction exchange that were recently announced. That value is at 38,216 Colombian pesos. I want to mention this because due to IFRS, the value is different. That is what we see, the differences between both consolidated and separate balances. We have an additional question from Catherine Ortiz. "What was the profit in first quarter 2024, excluding the effect of the Summit transaction and the effect of the transaction over the Grupo Nutresa shares?" To give the word to Alejandro. Thank you, Catherine. We need to bear in mind, even when we eliminate the effects of the participation method, for Cementos, that has the results of the combination of the Summit assets and the first exchange, as we were explaining, the transformation of the business models also makes the comparison between 2023 and 2024 is not as one to one. Only just that excluding these operations, comparing both years, does not come from the same base. Once again, I repeat, for example, last year, we consolidated Opaín, this year we are not. Energy platforms, whereas the growth is found, is not seen in the energy consolidated reports. The disinvestment in the energy assets that happened in the end of 2023 in Central America, does not allow to make an easy comparison. But with that caveat, let me give the word to Alejandro once again, so they could drill deeper in this. Yes, Jorge, as you mentioned, this is completely right. These are figures that have several adjustments that are important. If make that theoretical exercise for removing that pro forma, the revenues will be close to COP 3 billion, the EBITDA close to COP 860 billion, a net profit close to COP 276 billion, and a controlling net profit of COP 252 billion. But something that is very important, as Jorge mentions, if you get that figure and compare it with the same Q last year, there are two or three elements that are very important. Let me summarize once again. First one is that we consolidated the airport under those figures, and it is not found here now. Second, we had the revenues for all the Central American assets for Celsia. They are not included here either. The other thing, that all the revenue of Argos USA was included here, and they are not included now. This is also something that we need to be aware of. But these are the figures also. If you remove those requiring effects of Sura sale and the Summit operation. I have an upcoming question from Gerardo Otero from Valora Analitik. "I would like to ask about advancements and next steps in the projects such as Túnel de Oriente, Conexión Dorado, El Dorado Max, and Majuara Airport. How are these right now?" Let me give the word to Mauricio, as the President of Odinsa. Thank you, Jorge Mario. Thank you, Gerardo, for your question. For all of you to know, we are working on six projects right now. The first one is Túnel de Oriente amplification. We are right now in the final stage of the bid, according with the Antioquia Governor's office, following the different items that we need for these types of projects, CapEx, OPEX, financial model, and the additional period for the concession. According to the route map, this should be ended by the end of this semester. We expect that for the Túnel de Oriente, times will work. It would be signing and amplifying the contract for this project, departing from the second semester, that we will connect with the exchange of the airport roundabout that Jorge Mario Velásquez already mentioned. This is one of six. The other five are private initiative projects. In the private initiative projects, let me speak about Conexión Centro. There is a typo, it is Conexión Centro. This is a project that has Calarcá-La Paila road amplification, and it is what is necessary for it to be a double lane between the roads of Caldas, Pandi, and Risaralda. This has ended its technical stage. It has the socialization stage ready also, where ANI has constructed the evaluation phase. This should be ending by October, November this year and should be a concession contract close to July 2025. The other road is Perimetral de la Sabana, that as we have mentioned before, it is a corridor towards the eastern part of Bogotá, adjoining the north and south. It has a frequent consultation phase ready. It has an environmental diagnosis. Socializations have also come to an end. It has an advancement of 96% in its evaluation phase. We should be delivering this before the end of May, and we should hire an evaluator for them to give a final concept from here to October and a bit of the expectation that we share with the Instituto de Desarrollo Urbano in Bogotá. In June next year, this is going to be a concession stage. In airport topic, Bayunca, we have delivered the feasibility stage. We should hire the appraiser in order to make an additional evaluation, because we had to do some technical adjustments. This would be during May, June, and that way in the third quarter of this year, the project will be complete. That is the expectation that ANI has, that we also share, a concession contract towards the end of 2025, October, December. El Dorado Max, that is the most complex and largest, the one that is requiring the largest effort due to the amount of tasks that we have to carry out. We have as a date, October this year, in order to deliver feasibility. For you all to know, feasibility stage is all of the studies and designs from a technical aspect, the social aspect, risk aspects, legal, geological, absolutely everything, all the cycles you can imagine. It is a project that is on phase 2, and we have to deliver this in October, and it will be covering this in October. The expectation that the government has, and that we also share, is that there should be a concession contract till the end of 2026. Definitely speaking, all the projects are running pretty smoothly. We want to have this for this semester, and the other ones would be mid next year and between December and next semester of 2026. I just want to end by saying, because we have discussed this in the past, that in Odinsa this year, we have made a huge human effort, a huge economic effort, and have come in agreement with association with Macquarie necessary requirements in order to drive this project simultaneously. Well, thank you, Mauricio. Perfect. We have another question from Catherine Ortiz. The Nutresa disinvestment, despite the effect that had in Grupo Sura, also affected the quarter pre-profit for Grupo Argos and things like this. What would be the effect in the controller, given that in the second change in April, there also be an effect in the profit of the second quarter due to this fact? A very important question. I made a reference during the call about the ORI effect or due to the classification nature within Nutresa, but I want to give the word to Claudia Alvarez. She is the accounting consolidation manager that is with us today. We could discuss a little bit about this concept. Effectively, as it has been mentioned, we have two components here. The other component that is close to COP 373 billion. That is basically transaction cost. This has to do with taxes, deferred taxes, and with the honoraries we pay for a transaction. This is being reclassified according to the retained gains. It has been in use, but it is not seen in the P&L. If you would see the transaction as a whole, for COP 1.1 trillion. This is product without counting with Sura at 373, that you could see in the P&L as an expense, and COP 1.4 trillion of materialized profit through retained gains. And the other question that has to do We have 1.5 for a complete profit of COP 2.5 trillion from this transaction and including also dematerialization. What is the second part of the question? And due to the second exchange. In the second exchange, we are not expecting a percentage profit, given that these are shares that we purchased in the OPA, that we purchased at $12 and we sold at $12 too. We will have a small profit that has to do more with dematerialization of an exchange rate change, that when we purchased it, the dollar was a bit lower, and when we sold, the dollar was a bit higher, but it is just like a residual figure. Okay, we have this next question from Simone Diaz. Good morning, thank you for the information. I would like to know if the company, its branches or some of the projects, has legal or judicial processes that should be bear in mind. If it is like this, could you give us an update on this? Let me give the word to Rafael Olivella. Thank you. Judicial processes. Organization of the size of Grupo Argos will always have judicial processes, but these are revealed in the notes of the financial results. And if you would like to discuss a particular project through the investor relation office, we could gladly do so. As Jorge mentioned at the beginning of the presentation, we could drill deeper in this, but the processes are, you could effectively find in the Celsia notes, in Odinsa and Grupo Argos. With pleasure, we can look at this particularly if there's something that you would like to drill deeper in. Thank you, Rafael. We have three questions from Rafael Gallego. First question that we have, a three-year time for the SPV that, for the Sura shares is still kept. Can you tell us, how much time do we have still? Could this be reprogrammed or if that period is still going in order to define properly future? Well, thank you, Sebastian, for your question. The times are still the same. We signed the fiduciary contract in November 2023. And effectively, this is maximum time that we've fixed as an organization in order to do everything that has to do with this that has been announced to the market, revision and execution for this new stage by which you are asking. A three-year period is kept. We received the economic rights, that autonomous platform equity does not vote, and effectively is still applicable under three year time that we announced to the market, is the one that we are keeping. Second question from Sebastian is about our investment in Pactia. What strategic plans do we have in Grupo Argos in terms of Pactia, bearing in mind a return of 5.62% yearly with an inflation that is clearly higher than this? Well, thank you. As it was mentioned by Andrés, what we are seeing in the Pactia business, in terms of asset profit, we have a performance that's even higher than the budget that we had initially estimated. The other important thing is the participation that we have within the portfolio is basically the stabilized assets. What we've been saying is that we are open to see possibilities of asset, specific asset disinvestments, where we will see the capacity of profiting from this, with the idea also of reducing the leveraging indicator. So this is basically keep on working with the operational efficiency of the businesses that we currently have, following the dynamic that Andrés also mentioned, from another side to look at the possibility of disinvesting in certain assets. More specifically looking profit options and reducing the leveraging levels so we can have a better maximization of returns. The third question from Sebastian goes as follows: Can you go over the expectations you have in terms of the cash flow at a holding level for 2024 and capital allocation plans? Of course, we have a graph that we can show. Yeah, Jorge, I could give a certain level of detail. We need to remember that at the end of last year, Grupo Argos had a cash of COP 984 billion. That was basically the materialization of the profitabilization of certain businesses, such as our disinvestment in El Dorado Airport that was given to Macquarie, plus another series of revenues that we obtained. Nevertheless, if we look at how we have uses for this year, we basically have thought an operational revenue that's COP 1.8 trillion. That's dividends, cash generated by the urban development business, mainly in terms of expenses, they are close to COP 660 billion. There we have taxes included, the dividends that are more than COP 500 billion, and also administrative expenses. In addition, this year, we have the repurchase of shares that we have announced to the market that was in totality transaction around COP 446 billion. That gives us, together with some financial expenses of COP 100 billion, a total movement for the period from some cash needs close to COP 540 billion. When you look at the revenues minus all these expenses, we have cash expenses close to COP 540 billion. But let's remember that we have an excess cash of COP 984 billion. And with that, we've estimated that we will close this year with the cash closer to COP 360 billion. And this is very important because this obeys to a plan that started last year, effectively for these extraordinary needs, that were announced to the market, would not have any type of effect in the leveraging of the company. And proof of this is the ratification of the AAA rating that we have with a stable outlook that Standard & Poor's has just made. Thank you, Alejandro. Finally, we have a question from Felipe Gomez. Good morning, Felipe. Cementos Argos says he wants to disinvest its shares in Grupo Suramericana. What mechanism have you thought in order to carry this out? Do you have a time estimation for this? Well, I want to frame this under the process that has been structured for Grupo Argos and Grupo Sura branches. The priority in the moment we decide will come from the possibility of Grupo Argos being able to carry out or materialize the structuring of its shares in Grupo Sura. We need to remember the genesis of these shares. These shares were included in the opening balance for Cementos Argos when the decision of 2012 was materialized. That was the origin of Cementos being a specialized player in several of the real estate assets that don't make sense. Port assets, other assets were transferred to Grupo Argos, product of that decision made in 2012. So they were left in Cementos Argos as an equity reserve in order to strengthen the balance of the company, while we consolidated the phase of identity and strategic growth. That premise is still applicable in the sense that the strategic plan is still going. It's not logical that a company can obtain shares from another company, another holding company, in terms of for financial services. We'll have to find, once again, within the options that we are analyzing, when is the best moment and when is the best condition to make a disposition of the shares. But once again, I would say it's like the top of the priorities for those shares not to be included within the Cementos Argos balance. But we have to see this within the integrality of the decision. Okay. We don't have any additional questions. Thank you for the questions. Very complete questions. We do thank these questions because they help us to have a deeper understanding. And as Rafael and Alejandro mentioned before, we are completely open and available for any additional questions that you might have, that you might consider convenient. So thank you for being with us and for your interest in the organization. A nice day to you all.