Net profit cut by more than 200% to J$16.08 million

Durrant Pate/Contributor

Sterling Investments Limited has been hit hard by unrealised foreign exchange (FX) losses during the March quarter, resulting in its profitability being cut short by more than 200% to J$16.08 million.

Revenues performed equally poorly, moving down by more than twofold from $68.7 million in March 2025 to J$23.2 million in the first three months of 2026. This was primarily the result of the Jamaican dollar (JMD) appreciation in the first three months of 2026 versus the 1.29% depreciation that occurred in the same period of 2025. 

Sterling holds significant investments in US$ so when the local currency appreciates, the value of those investments depreciates. As such, the JMD’s appreciation led to unrealized FX losses in Q1 2026 totalling (J$13.29) million compared with unrealized gains of the Q1 of the previous year of J$22.7 million respectively.

The management has acknowledged that short-term currency movements will create volatility in top-line revenue. The news was also bad regarding gains on sale of investments, which totalled J$3.43 million for the March quarter, down from J$11.47 million a year ago.

Profitability went south

During the quarter, net profit went down to J$16.08 million, coming from J$46.93 million in2025, despite a significant reduction in total expenses, which went from J$21.9 million in March 2025 to J$7.1 million in March 2026. This decline was driven by unrealised FX losses and lower gains on the sale of investment some of patience in deploying additional capital, amidst the expectation that markets could fall further and assets could become cheaper. 

However, the management remains focused on medium to long-term performance and is keenly managing duration while observing inflation and interest rate expectations. The management has emphasised that short-term local currency movements should not alter the long-term value for shareholders or the US$ dividend payments that are made from cash flow each year. 

The investment company reports that it has a high-quality portfolio of US$ securities, which generates steady income. Also, there is liquidity on hand to take advantage of market volatility.

Balance sheet highlights

Sterling recorded total assets as at March 31, 2026, of J$1.89 billion, roughly 3.8% more than the J$1.82 billion as at March 31, 2025. This partially covers some positions and to wait to redeploy the proceeds. 

Total liabilities increased by 3.78% to J$285.03 million as at March 31, 2026, from J$274.64 million as at March 31, 2025. This was primarily the result of increases in the margin loan payable. 

Total equity increased to J$1.6 billion as at March 31st 2026, from J$1.55 billion at March 31st, 2025