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JM | Nov 23, 2021

Earnings season heats up on Jamaican stock market

/ Our Today

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Five listed companies reported increased earnings for the September quarter last week while three saw a fall off in earnings

Jamaica Stock Exchange in downtown Kingston.

Last week, eight companies on the Jamaica Stock Market released financial results with five reporting increased earnings and three – namely Jamaican Teas, Lasco Financial and Jamaica Producers – all seeing a fall off in earnings for the September quarter.

It is estimated that Jamaica Producers actually saw an increase in core earnings when adjustments are made for the gain on disposal of associate recorded in September 2020. While the September 2021 quarter was marred by surging COVID-19 cases and a flurry of measures including 12 no-movement days to contain the spread of the virus, local public company earnings for the most part were resilient.

Junior market companies Lasco Financial, General Accident Insurance and Jamaican Teas, during the September quarter, reported poor financial returns.

Lasco Financial reported net profit of $58.61 million for the quarter ended September 30, 2021, down 56.9 per cent on the back of higher general and finance expenses of 6.1 per cent and 0.6 per cent, respectively, and a fall-off in revenues of 15.4 per cent.

Tetley Tea, a product of Jamaican Teas.

This performance was due to business disruption from the lockdown measures and reduced operating hours caused by the no-movement days.

Similarly, Jamaican Teas also experienced a contraction of its bottom line due to a decline in revenues of minus 33.3 per cent or down $262.03 million, as well as an increase in finance costs of 29.6 per cent.

The offices of General Accident Insurance in St Andrew. (Photo: genac.com)

General Accident Insurance, however, reported robust growth in its bottom-line of over a thousand per cent for the September quarter, on the back of higher gross premiums written and net premiums earned. Gross premiums written and net premiums earned grew by 23.4 per cent and 10.3 per cent respectively, which resulted in a turnaround from the underwriting loss in the September 2020 period to an underwriting profit in this period.

Main market companies reported positive financial returns

Main market companies, Sygnus Credit Investments, Kingston Wharves, Carreras and Stanley Motto Limited all experienced growth in their bottom lines for the quarter ended September 2021. A 67.5 per cent or US$915,000 improvement in the topline saw Sygnus Credit Investments reporting an 88.9 per cent increase in earnings.

Similarly, improvements in Kingston Wharves Limited’s and Carreras’  bottom lines of 38.4 per cent and 14.3 per cent respectively were bolstered by revenue growth of 26.6 per cent and 8.8 per cent respectively, as well as a 38.8 per cent decline in finance costs for Kingston Wharves. Stanley Motta Limited’s net profit performance for the quarter went up 50.2 per cent or $27.69 million, reflecting a combination of higher revenues of 3.0 per cent and lower admin expenses  of minus 37.7 per cent.

The corporate offices of Jamaica Producers Group in Jamaica. (Photo: Jamaica Producers Group)

In contrast, for the September quarter, Jamaica Producers’ net profit fell to $937.84 million or minus 57.9 per cent year on year. However, when the financials were adjusted for the $1.76-billion gain on disposal of associate seen in the third quarter of 2020, the estimate of core performance revealed a 61.8 improvement, owing to a 41.7 per cent increase in total operating revenue and a 30.9 per cent decline in finance costs.

While the initial expectation was that corporate earnings would take a hit from the restrictions that were implemented by the government in the September quarter, the current earnings story shows resilience from many companies. The COVID-19 caseload has declined significantly since the measures were implemented in September quarter and the restrictions on movement have been relaxed once more.

This, coupled with the busy holiday season, is expected to spell good news for corporate earning especially for those companies involved in manufacturing, distribution, and finance in Q4. Furthermore, it is anticipated that companies will continue to prioritise cost mitigating strategies and investments to improve the efficiency and resilience of their operations.

These factors should buttress corporate earnings for the December quarter.

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