Peru's GyM, Cosapi boost Q2 profits

Thursday, July 27, 2017

Peruvian engineering company Graña y Montero (GyM) boosted its second quarter net profit as the sale of assets offset higher costs and financial expenses, while rival firm Cosapi also increased net income.

The net earnings were 149mn soles (US$50mn) for the quarter compared with a 105mn-sol profit a year earlier, Lima-based GyM said in a corporate filing to securities regulator SMV. Revenue climbed 1.7% to 2.85bn soles from 2.80bn soles a year ago.

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About 51% of revenue came from engineering and construction, 21% from technical services, 18% from infrastructure and 11% from real estate, the company said.

The group's GMP unit saw stronger revenue due to higher crude oil prices and output in the quarter, while its real estate division sold the Cuartel San Martín property for US$50mn, together with its stakes in Red Eagle Mining, Prinsur, GMD and Coga. The real estate unit, which is working on 22 projects, delivered 537 units in the quarter.

While general expenses rose 3%, financial expenses doubled due to financial commitments related to the canceled southern gas pipeline project. GyM also posted a 1.3mn-sol FX loss compared with a 455,000-sol FX loss a year ago.

GyM, which raised US$413mn from the 2013 sale of ADRs in New York and US$205mn from bonds in 2015, had US$875mn in debt as of June 30, about half of which falls due in the next two years.

The company added it allocated 100mn soles to capex in the second quarter.

GyM, which also owns subsidiaries in Chile and Colombia, said it is working to clear a US$3.20bn project backlog, of which US$789mn will be executed this year, US$790mn in 2018 and US$1.02bn from 2019 on. The company's Peruvian projects include the Lima Metro and the Norvial and Survial toll roads, in addition to contracts abroad with companies including Cobre Panamá.

The group registered a US$21mn impairment charge last year for its stake in the southern gas pipeline, which included Brazil's Odebrecht and Enagas of Spain as partners. The government earlier this year canceled the pipeline contract and executed a US$262mn guarantee.

A partner with Odebrecht in several key infrastructure projects in Peru, GyM shuffled its top management in February following accusations it was aware of the scandal-plagued Brazilian firm's policy of paying bribes in exchange for contracts.


Cosapi posted a 14.9-mn sol profit in the second quarter compared to a 4.8mn-sol profit a year ago, the Lima-based company said in a corporate filing to SMV. Revenue rose to 271mn soles from 211mn soles a year earlier.

The company said it secured eight contracts totaling US$120mn in the quarter including the 119km Moquegua-Arequipa highway and a sewerage treatment plant in Piura.

Cosapi built up a US$1.77bn backlog through June 20, adding it plans to execute US$274mn this year, U$340mn and US$274mn in 2018 and 2019, respectively, and the remainder from 2020 onwards.