• Electrical, lighting and solar products distributor Fosrich Limited recorded a net profit of $40.77Mn for the quarter that ended June 30, 2023. This represents a 70.7% yoy decrease in profitability. Similarly, profit for the six months ending June 2023 decreased by 45.5% to $162.50Mn.
• Revenue for the quarter was up by 4.7% yoy to $940.85Mn. On the other hand, revenues for the six months increased by 12.5% yoy $2.02Bn and was driven by increased sales in eight of its twelve product groups.
• Cost of Sales for the quarter amounted to $569.00Mn in the quarter ending June 2023, a 14.3% increase relative to last year’s. For the six months ending June, the cost of sales was up by 19.4% to $1.21Bn. This was driven by higher copper and PVC ingredient prices on the international market. Consequently, gross margin fell to 39.5% (from 44.6%) and 40.4% (from 43.8%) respectively, over three months and six months period ending June as increases in costs outpaced revenue growth.
• For the quarter, administrative expenses were 26.9% higher yoy at $266.52Mn, while for the six months, administrative expenses were up by 30.0%. The increases were driven primarily by increased staff-related costs for salary adjustments, increased sales commission due to improved sales performance, and improvements in staff benefits, among other expenses.
• FosRich’s stock price has decreased by 46.3% since the start of the calendar year. The stock closed Tuesday’s trading session at $2.10 and currently trades at a P/E of 72.3x which is above the Junior Market Distribution Sector Average of 15.2x.
• The company has announced that construction of its new Superstore & Corporate Offices at 76 Molynes Road has commenced. The completion date is projected to be Q2, 2024.  Additionally, the company recently announced that it was at the stage where it is ready to commence the production of transformers, which is expected to strengthen the partnership between the company and JPS while providing value for shareholders.

(Source: JSE)

• A bill has been presented to modify the nation’s general budget for the 2023 financial year. The proposal includes reallocating funds among different public entities, resulting in a reduction of 9.12Bn pesos for seven ministries and the chapter on the Administration of Public Debt and Financial Assets.
• The ministries most affected by the budget adjustments are Industry, Commerce and MSMEs with a decrease of 3.89Bn pesos, and Debt Administration with 3.01Bn pesos. Other ministries facing budget reductions include Tourism, Education, Energy and Mines, Labour, and Youth.
• On the other hand, the transferred funds will be distributed by the Ministry of Finance to various entities.
• The Presidency of the Republic will receive 5.58Bn pesos, followed by the Ministries of the Interior and Police, and Public Works and Communications. Other ministries benefiting from the funds include Foreign Relations, Defense, Agriculture, Culture, Finance, Economy, Higher Education, and the Ministry of Women.
• The bill aims to increase capital spending and current spending, with a focus on investments and projects with a high social impact. The Ministry of Finance also intends to rethink tax revenue goals and lower the debt limit approved by Congress.

 (Source: CariCris)

• Fitch Solutions expects the Bermudan economy will grow more slowly than the Caribbean's average of 3.1% over the next decade.
• Net exports will fuel the Bermudan economy's 2.0% average expansion in the 10 years ahead. Through 2032, net exports will contribute an average of 1.0 percentage points (pp)  to real GDP. Private consumption, investment and government consumption increases over the same period will also support overall economic activity.
• Notably, the increase in all GDP components will fuel the market’s 2.3% real GDP expansion in 2023, from an estimated 3.0% expansion in 2022. Net exports will add 1.2pp to GDP in 2023 after adding an estimated 1.8pp in 2022. Additionally, economic output in Bermuda will increase by 2.0% in 2024.
• Bermuda's fiscal accounts have remained in deficit in recent years, however, Fitch forecasts that this solid economic growth will narrow the fiscal deficit to 0.6% of GDP in 2023, from 1.0% in 2022. Revenues are expected to increase by 3.5% in 2023 after 11.3% growth in 2022. Expenditure will rise by 0.8% in 2023.
• In 2024, the fiscal deficit will narrow further to 0.2% of GDP, below its historical average of 2.7% from 2013 to 2022. The improved economic and fiscal performance will allow total government debt levels to fall to 26.2% of GDP by 2032, from 42.2% of GDP in 2023, as growth in revenues outpaces the rise in expenditure.

(Source: Fitch Solutions)

• British employers reduced the number of new permanent staff they hired through recruitment agencies by the most since mid-2020 last month due to concerns about the economic outlook, adding to signs that the market is becoming tougher for job seekers.
• A gauge of permanent staff hiring by the Recruitment and Employment Confederation and Accountants KPMG fell to 42.4, the lowest since the 34.3 reading in June 2020 when the country was in lockdown due to the COVID-19 pandemic.
• The survey's measure of temporary staff hiring, which often rises when employers are cautious about the outlook, in July showed the weakest growth in nine months - partly because more workers were looking for the security of permanent roles. Neil Carberry, chief executive of REC, said the jobs market remained "fairly robust" despite the slowdown in permanent placements."To some extend this is normalisation as the post-pandemic boom abates, but it is also driven by uncertainty," he said.
• While starting pay for new permanent staff rose sharply by pre-pandemic standards, the rate of wage growth was the lowest since April 2021, REC said. Claire Warnes, partner of skills and productivity at KPMG UK, said competition for skilled workers and cost of living pressures were keeping starting salaries high.

(Source: Reuters)

• China's promised "basket of measures" to defuse local government debt risks is likely to include special bond issuance, debt swaps, loan rollovers, and something Beijing loathes: dipping into the central budget.
• Local governments are fundamental to China's economy with Beijing tasking provincial and city officials with meeting ambitious growth targets. With that being said, after years of over-investment in infrastructure, plummeting returns from land sales and soaring COVID costs, economists say debt-laden municipalities now represent a major risk to China's economy.
• Chinese leaders last month pledged, without detailing, to help ease their debts, signalling worries over a potential chain of municipal debt defaults destabilising the financial sector. Economists took that message as being more constructive than in April when Communist Party leaders demanded "strict control" of local debts. The implication, they say, is that Beijing has realised it needs to urgently throw cash at the problem.
• That could represent a major breakthrough in finding a way out of China's municipal debt crisis, with Beijing having for years demanded that local administrations sort themselves out. "The local debt problem is complex so you cannot simply say you don’t want to take responsibility," said Guo Tianyong, professor at the Central University of Finance and Economics in Beijing, explaining the politburo's directions.
• The extent of any central government involvement, and any conditions attached to it, are still subject to debate, two policy advisers told Reuters. Whether the package of measures will be a short-term or multi-year plan also remains unknown.

(Source: Reuters)

• Brazil has resisted gathering momentum in the BRICS group of major emerging economies to add more member countries, but the debate over admission criteria seems inevitable at this month's summit, three Brazilian government officials told Reuters.
• The group including Russia, India, China and South Africa, has been hailed by some as a counterweight to traditional diplomatic forums like the G7. BRICS makes decisions by consensus, so Brazil's assent will be key to any expansion.
• The BRICS group accounts for more than 40% of the world population and about 26% of the global economy and offers an alternative forum for countries outside diplomatic channels seen as dominated by traditional Western powers. Its influence and economic heft have more nations eager to join.
• China, looking to increase its political clout at a time of trade tensions with the United States, has long pushed to expand BRICS membership. Russia, isolated diplomatically over its war in Ukraine, is also embracing the chance to court allies.
• South Africa, which chairs the group this year, held a "Friends of BRICS" meeting in June with several countries eager to join. Even India, which was wary of rapid expansion, may have come around to the idea in principle, sources said.
• However, Brazil is concerned the group will lose its stature if other nations are let in. Some 30 countries have said they are interested and 22 of them have formally applied, as Algeria did last month.
• "An expansion could transform the bloc into something else," said a Brazilian official, who asked not to be named. "Brazil's position has been concerned with the cohesion of the group and preservation of our space in a group of important countries."
• Diplomats were told to go back to the drawing board and design a process for admitting new members acceptable to the entire group. Without an agreement, the matter is not expected to be settled at this month's summit.

(Source: Reuters)

• Colombia's central bank unanimously held the benchmark interest rate at 13.25% for the second time in a row on Monday, July 31, amid slowing inflation which has removed pressure for further hikes but remains too high for borrowing cost cuts.
• Inflation remains at high levels compared to the bank's long-term 3% target, the board said in a statement, and the economic slowdown in the second quarter may have been larger than predicted.
• "We expect to continue to monitor the behaviour of inflation, given we still have an increase in fuel prices that is still having an effect, and we hope there won't be any reversal in the inflation rate, so we can consolidate the downward tendency," said Finance Minister Ricardo Bonilla, who represents the government on the board.
• All 26 analysts consulted in a recent Reuters poll expected the bank to hold the rate after 12-month inflation through June slowed to 12.13%, the lowest level since last September.
• The bank's technical team may update its growth and inflation predictions for this year and 2024 in its quarterly monetary policy report due by the end of this week. Most analysts expect the board will start cutting the rate in September or October to avoid a greater impact on growth. The bank's technical team currently predicts growth could slow to 1% this year, far below the 7.3% expansion in 2022.
• The board hiked its benchmark rate by 1,150 basis points between September 2021 and this April, mirroring positions taken by monetary policy authorities around the world, to try to contain inflationary pressures. The board is expected to reduce the rate to 11.75% by the end of this year, before lowering it further to 7.25% at the end of 2024, those polled by Reuters have said.

(Source: Reuters)

• The United States and its Western allies are looking to China to help resolve the calamitous domino effect of Russia’s exit from a crucial U.N.-backed agriculture deal.
• Beijing, one of Moscow’s most strategic allies and the world’s second-largest economy, was the indisputable top recipient of Ukrainian agricultural products under the landmark agreement known as the Black Sea Grain Initiative. After nearly a year in place, Russia ditched the agreement last month, citing frustrations that the deal only benefited Ukraine.
• The agreement eased Russia’s naval blockade in the Black Sea and established a maritime humanitarian corridor which saw the passage of more than 1,000 ships carrying nearly 33 million metric tons of Ukrainian wheat, barley, corn and sunflower meal.
• Since the inception of the July 2022 deal, which was brokered nearly six months into Russia’s full-scale war, Chinese ports have welcomed 8 million metric tons of Ukrainian agricultural products, the lion’s share according to data provided by the United Nations.
• “China is the biggest buyer of Ukrainian grain and so with the breakdown of the Black Sea Grain Initiative, the pressures on Beijing are going to be extreme in terms of food price inflation,” David Riedel, founder of Riedel Research Group, said in an interview with CNBC.
• “They may have been stockpiling a little bit ahead of the breakdown in that agreement but that’s a stockpile of weeks not months,” he said. “I would be very concerned about food price inflation in China,” Riedel added.
• U.S. Ambassador to the U.N. Linda Thomas-Greenfield told reporters on Tuesday that the Biden administration will prioritize the world’s mounting food crisis triggered in part, by the collapse of the Black Sea Grain Initiative. The U.S. will have an opportunity to do so at the helm of the United Nations Security Council, a scheduled, one-month-long rotating presidency.
• “We know food security is national security,” Thomas-Greenfield said, adding that “Russia has launched a full-scale assault on the world’s bread basket and it is dead set on depriving the world of Ukraine’s grains.”

(Source: CNBC)

• Supreme Ventures has begun to build out its gaming infrastructure in Ghana. The company says its partner, Game Park Limited, has commissioned its state-of-the-art draw studio, dubbed the "Black Star Studio".
• With the studio's opening, the company has started offering its "Pick 4" game to Ghanaians. SVL is the technical service provider for Game Park Limited and the provider of the games being offered by the company
• Game Park Games utilises SVL's certified proprietary software as the gaming platform and is set to launch additional SVL products over the next six months.
• This expansion bodes well for SVL as Game Park has plans to introduce additional SVL games to its market which comprises about 33 million people.

(Source: RJR News)

• GraceKennedy Limited (GK) has announced that it has come to an agreement to acquire UNIBEV Limited, a privately owned Jamaican manufacturing company which specializes in fully integrated beverage solutions. The transaction, which remains subject to customary closing conditions, will place GK in an even stronger strategic position within the Jamaican spring water market.
• UNIBEV is involved in all aspects of the beverage manufacturing process, including, sourcing raw materials, and packaging. Its manufacturing facility, located in Spring Garden, Portland, includes a Blue Mountain spring water source and is International Bottled Water Association (IBWA) certified.  This will be GK’s sixth manufacturing facility in Jamaica, once completed.
• Group CEO Don Wehby explained that the acquisition is critical for GK as the company advances its position in the growing spring water market in Jamaica. The company is strategically building on its recent investment in the space, following the acquisition of 876 spring water and an increased stake in Catherine’s Peak.
• GK acquired the 876 spring water brand from UNIBEV and Bliss Limited in 2021. GK also became the majority owner of the Catherine’s Peak Spring Water brand in February this year, after increasing its stake in Catherine’s Peak Bottling Company Limited, from 35% to 70%.
• GK continues to seize opportunities to grow its beverage brands by expanding its manufacturing segment. In addition to the opportunities presented for its spring water business, the acquisition of UNIBEV fits in perfectly with its manufacturing transformation strategic plan, which aims to bolster its competitive advantage, and firmly establish GK as a regional powerhouse in food and beverage manufacturing.

(Source: JSE)