Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Grupo de Inversiones Suramericana SA (BOG:GRUPOSURA, Financial) reported a positive trend in profitability, with a compound annual growth of 13% since 2019.
- The company achieved an operating revenue of COP18.6 trillion in the first half of the year, driven by strong performance in premiums and commission revenue.
- Net profit reached COP5.1 trillion, with a tangible profitability of 22.7%, indicating strong business performance.
- SURA Asset Management showed a positive operational performance with an operating profit of COP837 trillion, up 9% in local currency.
- The company has increased its net profit guidance for the year, expecting it to be between COP5.8 trillion and COP6 trillion, reflecting confidence in future performance.
Negative Points
- The deconsolidation of EPS SURA resulted in a loss of COP5 trillion for the first five months of 2024.
- Suramericana's net profit decreased by 18% compared to the first semester of 2023, mainly due to lower investment returns.
- The company faces challenges from exchange rate fluctuations, impacting revenue conversion in Colombian pesos.
- Higher interest expenses were reported due to increased debt from additional acquisitions and obligations.
- The pension reform in Colombia could potentially impact the number of affiliates and revenue, though specifics remain unclear.
Q & A Highlights
Q: Will there be future mergers for Suramericana and SURA Asset Management in Latin America?
A: Ricardo Jaramillo Mejia, CEO, stated that mergers and acquisitions are tools for executing their strategy. While they constantly evaluate opportunities, there are no current transactions to announce. Recent activities include divestments in El Salvador and Argentina and acquisitions of Grupo SURA stocks.
Q: What is the impact of the proposed forced investments by the government on Bancolombia?
A: Ricardo Jaramillo Mejia, CEO, expressed uncertainty about the implementation of forced investments. He emphasized that such mechanisms could distort market operations and stressed the importance of supporting initiatives for economic reactivation within the current market structure.
Q: How has Grupo SURA progressed in the rentabilization of its business?
A: Juan Esteban Toro, CFO, highlighted that 72% of their capital is creating value, with Suramericana showing a pro forma ROE close to historical levels. They aim to reach 14%-15% ROE for Suramericana and expect double-digit profitability for SURA Asset Management.
Q: What are the expected impacts on SURA Asset Management after the pension reform in Colombia?
A: Carlos Esteban Oquendo, VP of Corporate Finance, noted that the reform could affect the number of affiliates and revenue. They anticipate a transition of affiliates to Colpensiones but expect to retain a significant number. Revenue impacts are still unclear due to pending regulation.
Q: What is the status of the transaction with Grupo Olivet?
A: Ricardo Jaramillo Mejia, CEO, mentioned they are awaiting regulatory approvals, particularly from Mexico. The first payment has been made, and subsequent payments will follow once approvals are received.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
