Jun 2008 Financial News

Corporate Jamaica performed in March quarter

Jun 04, 2008

The first three months of 2008 proved to be a good one for listed firms, which mostly posted an improvement to their profit performance for the period over the comparative quarter last year. Only six of 21 firms reporting for the period showed a decline in net profit.

Most of the publicly listed financial institutions that reported their financial results for the three months to March 31, 2008, saw an increase in interest margins, but varied earnings from securities trading resulted in a mixed bag of results to the banks' bottom lines.

Pan Caribbean Financial Services (PCFS), Capital and Credit Merchant Bank (CCMB) and National Commercial Bank (NCB) reported increases in net interest income - 21 per cent, 16 per cent and four per cent respectively - during the review period when compared to the comparative period.

Mayberry Investment Limited (MIL) saw a 32 per cent reduction, but the massive increase in securities trading, from $63 million during the quarter ended March 31, 2007 to $515 million during the period under review, generated primarily from liquidating its Lascelles de Mercado holdings, helped pushed the financial institution's net profit up from $58 million to $631 million.

NCB also saw doubled its net trading income from $667 million to $1.34 billion, which the banking group attributed largely to "a one-off gain of $514 million", which helped push the bank's profit up 42 per cent to $2.6 billion earned during the March 2008 quarter.

PCFS and CCMB, on the other hand, both saw reductions in their trading income. PCFS saw its net trading income drop by $90 million from the March quarter of 2007 to $22 million during the review period while CCMB had a $127-million reduction in revenue from securities trading. CCMB also saw an $56-million increase in non-interest expenses, but increases in other revenue streams resulted in the marginal increase in profits up from $154 million to $166 million.

PCFS, however, reported a reduction in its net profit for the three months to March 31, 2008, down from $279 million in the comparative quarter the year before to $254 million during the review period.

GraceKennedy's banking and investment arm, which operates under the First Global brand, saw a reduction in pre-tax profit - from $270 million to $245 million in March 2008 quarter.

In its segment results, GK didn't show the details of the bank's income and expenses, but First Global would have incurred additional costs with the opening of its fifth branch in Liquanea and is in transition to a new banking information system that is expected to improve efficiency.

GK's insurance arm which includes Jamaica International insurance Company (JIIC) and Allied insurance Brokers, improved its pre-tax profit from $98 million during the quarter needed March 31, 2007 to $110 million during the period under review, a 12 per cent increase.

NCB Insurance company increased its profits from $90 million to $132 million over the comparative quarters, although the banking group reported to shareholders that it was still experiencing "challenges in this business segment and are currently in the process of a major restructuring exercise".

"With our recent strategic alignment of this business with our wealth management segment, we expect to reap future benefits from the synergies," said the company's board in its report to shareholders.

Life of Jamaica (LOJ), which operates in the same sector of the insurance business as NCB insurance, saw a $161- million increase in its net profit to $879 million.

LOJ attributed its profit performance to "continued strong business growth, higher interest rates, a larger share of the earnings from Sagicor General - from 51 per cent to 75.2 per cent in November last year - lower reinsurance premiums costs and lower amortisation charges for purchased intangibles".

GK's food trading business and retail trading business both saw declines in pre-tax profits from $274 million to 4234 million and from $75 million to $59 million respectively.

Other food manufacturers saw improvement in their profit performance, such as Salada Foods which increased its net profit from $14 million to $25 million over the comparative periods, an improvement which the coffee maker attributed to its recovery from a bottle shortage during the comparative period last year.

Seprod's acquisition of Kraft Foods last September for US$4.2 million and continued expansion of its dairy operations meant that its revenue increased by $626 million or 45 per cent over the comparative period in 2007, resulting in a 35 per cent increase in net profit to $241 million.

Local brewer of Red Stripe, Desnoes and Geddes, net profit of $246 million during the three months ended March 31,2008 was double the net profit earned during the corresponding period in 2007.

D&G's profit contribution after marketing costs saw improvements in both the domestic and export market on marginal volume growth - one per cent in each market. The segment result for the export market improved from a loss of $145 million to a small profit of $5 million.

Tyre distributor Goodyear Limited, which improved its net profit position from $4 million loss during the March 2007 quarter to $2 million during the period under review, made most of its profit from trade outside Jamaica where it made $17 million in profit up from $5 million during the corresponding quarter last year. Jamaica made Goodyear a $5 million more in losses during the review quarter.

International cargo passing through Jamaica's port at Kingston Wharves increased from 480,673 tonnes to 543,607 tonnes, translating into a 28 per cent increase in revenue for the cargo handling firm which made net profit of $103 million during the March 2008 quarter, up from $71 million during the comparative period last year.

Hardware and Lumber, of which GK owns 42 per cent, reported a $4 million reduction in pre-tax profit, so most of the decline in its retail trading division would have been experienced by its HiLo Food Stores.

H&L managers' attributed to decline to "Operating expenses (increasing) disproportionately to revenue growth due in part to certain non-recurring costs", but believed the performance reflected "stability in the business and generally in the construction industry".

Indeed, Caribbean Cement Company (CCC) saw a $33 million increase in net profit to $163 million during the review period when compared to the corresponding quarter last year.

The profit improvement for the island's sole manufacturer of cement, in part reflected price increases. Having sold 10,000 tonnes or five per cent less during the quarter under review than the comparative quarter the year before, CCC's revenue jumped $465 million of 25 per cent to $$2.3 billion.

Berger Paints, which also relies on construction home improvement sector, was unable to turn a profit, and essentially repeated its performance from the year before when it incurred a $3-million loss during the quarter.


Source:
The Jamaica Observer
Wednesday June 4, 2008

http://www.jamaicaobserver.com/magazines/Business/html/20080603T230000-0500_136364_OBS_CORPORATE_JAMAICA_PERFORMED_IN_MARCH_QUARTER.asp