• For the first quarter ending March 2021, Caribbean Cement (CCC) reported a net profit of $1.53Bn (EPS: $1.79), which translates to a 215.9% increase over the $483.10Mn (EPS: $0.57) earned over the same period in 2020. This was due to a 31.2% (or $1.42Bn) increase in revenues, which management attributed to an increase in the demand for cement during the period. The company was able to achieve record production of more than 100,000 metric tonnes of cement in March.
• The sector was already showing momentum during the latter half of 2020, with two consecutive quarters of growth (Q3: 7.2% & Q4: 6.2%), when most of the sectors in the goods-producing industry contracted consistently due to the impact of the pandemic.
• The government has expressed plans to ramp up expenditure on infrastructure during the 2021/22 fiscal year, and there are various residential, commercial, and hotel expansion projects planned for this year, which should help to sustain demand for CCC’s products.
• The improvement in the company’s operating performance was also influenced by its cost-containment measures, which resulted in operating expenses declining by $69.37Mn (or 10.6%) to $582.01Mn.
• Caribbean Cement’s stock price has appreciated by 40.7% since the start of the year, and currently trades at a P/E of 17.7x earnings, which is below the main market industrials and materials sector average of 18.5x earnings.

(Source: Caribbean Cement Company Financials)

• Fitch Solutions believes the surge in COVID-19 cases in Q1 2021, and the resulting lockdowns, will weaken Jamaica’s economic recovery and undermine support for the ruling Jamaica Labour Party government.
• The length of the lockdown is expected to pare back some of the gains made in the Jamaican labour market during the second half of 2020. The country’s unemployment rate fell to 8.9% in Q4 2020 from 12.6% in Q2 2020, but will likely return to double digits amid the months-long lockdown.
• The country’s slow vaccination programme will likely extend the economic impact of the pandemic, as only 4.5% of Jamaica’s population had received at least one dose of the COVID-19 vaccine, and the government’s supply agreements would vaccinate only 16.0% of the population. As a result, Fitch Solutions believes Jamaica will fail to reach herd immunity until 2022.
• It also believes that an increase in violent crime, on top of Jamaica’s regional leading homicide rate, will also weigh on public approval for the JLP. The country’s homicide rate was 3.5% higher year-over-year (YoY), despite the restrictions on mobility seen in Q1 2021. In response to the uptick in violence, the Private Sector Organization of Jamaica (PIOJ) publicly called for the government to pass additional security legislation. This pressure could push the government to increase spending on policing, potentially limiting its ability to maintain higher social spending in the quarters ahead.
• Despite a potential decline in public support, the agency believes the JLP government will be able to pursue significant fiscal consolidation in the medium term due to its large parliamentary majority.

(Source: Fitch Solutions)

• Brazil’s Treasury on Thursday slashed its 2021 debt forecast although it said debt will still continue to creep higher in the coming years, the same day it reported a surprise government surplus for the month of March.
• Treasury now sees total government debt ending this year at 87.2% of gross domestic product, significantly down from a previous estimate of 96.7% in its last long-term outlook published in October.
• Nominal GDP growth and cash transfers to the Treasury brought forward from state-owned banks will improve the short-term outlook, but will not outweigh rising interest rates and sustained primary deficits over the longer term.
• If accurate, the new forecasts would mean last year’s debt of 88.8% of GDP would be the record high for Brazil’s debt. In the first quarter of the year the government ran a surplus of 24.4Bn reais, compared with a 2.9Bn reais deficit in the same period last year. The swing was due to a 7.6% increase in revenue, in real terms.

(Source: Reuters)

• Mexico's public finances could handle higher interest rates, a senior finance ministry official said on Thursday as the country faces an uptick in price pressures that have taken inflation significantly above the central bank's target rate.
• "There's scope to support, were it to occur, increases in interest rates without pressuring public finances," said Ivan Cajeme Villarreal, head of economic planning at the ministry. Villarreal was speaking at a news conference on public finances in which Deputy Finance Minister Gabriel Yorio said the recent rise in inflation did not appear permanent.
• Inflation accelerated faster than expected in the first half of April to 6.05%, up from 3.15% in 2020, the highest level in more than three years. The central bank targets a rate of 3% and has a one-percentage point tolerance range above or below that, so the jump in inflation has encouraged speculation that the bank may have to raise interest rates above its current level of 4%.
• However, a rise in interest rates could slow the country’s pace of recovery as higher rates disincentivize borrowing for consumption or investment purposes.

(Source: Reuters & NCBCM Research)

• U.S economic growth accelerated in the first quarter as the government gave money to mostly lower-income households, fueling consumer spending and setting the course for what is expected to be the strongest performance this year in nearly four decades.
• The government largesse also extended to businesses, especially in the high-contact services industry. The massive fiscal stimulus and easing anxiety over COVID-19, with all adult Americans now eligible for a vaccination against the virus, have resulted in a faster economic rebound in the United States compared to its global rivals.
• The second-fastest gross domestic product growth since the third quarter of 2003, reported by the Commerce Department on Thursday, left output just 0.9% shy of its level at the end of 2019. Economists expect a full recovery from the pandemic recession, which started in February 2020, in late 2023.
• GDP increased at a 6.4% annualized rate last quarter, the government said in its advance estimate for the first three months of the year. That followed a 4.3% growth rate in the fourth quarter. It was the biggest first-quarter increase in growth since 1984. Economists polled by Reuters had forecast GDP growth would increase at a 6.1% pace in the January-March period.

(Source: Reuters)

• The Bank of England is likely to ease its foot off the stimulus pedal and reduce its pace of bond purchases next week as Britain's economy appears to be bouncing back sharply from its COVID pandemic slump.
• Retailers and restaurants are reopening, retail sales exceeded pre-pandemic volumes in March and purchasing managers' indexes in April hit their highest since 2013 as a rapid vaccination program helped reduce a devastating flood of COVID-19 cases at the start of the year to a trickle.
• Just over three months ago, financial markets saw a roughly 50% chance that the BoE would need to cut interest rates below zero for the first time later this year. Now speculation has turned to whether its Monetary Policy Committee will begin to raise rates from their current 0.1% towards the end of 2022.
• A first step is likely to come next week if the BoE slows its government bond purchases from the current pace of 4.4 billion pounds ($6.14 billion) a week, according to economist Phillip Shaw and several other economists.

(Source: Reuters)

• Despite the continued local and global impacts of the coronavirus, Portland JSX Ltd. achieved a 57.3% increase in net profit for the year ended February 2021 to US$2.12Mn (EPS: US$0.68).
• The improvement in the bottom-line was driven by a 12.8% (or $294.45K) increase in net fair value gains on financial instruments, a $312.31K rise in foreign exchange gains, and a 27.0% (or $223.83K) reduction in operating expenses.
• The increase in fair value gains reflects the recovery in financial markets from the effects of the pandemic, while expenses fell due to significant reductions in management, legal, audit, general and other operation fees.
• The company recently refinanced its $520Mn debt with a $600Mn issue. According to management, this refinancing increased the company’s financial flexibility and better positions it to manage potential risks as well as seize opportunities as they arise.
• After increasing by 31.9% during 2020 to $9.50, the company’s stock price has fallen by 15.8% since the start of 2021, closing Wednesday’s trading session at $8.00.

(Source: Portland JSX Financials)

• For the year ended December 2020, Consolidated Bakeries (Purity) reported a net loss of -$14.42Mn, a deterioration from the net loss of -$12.49Mn reported for the same period in 2019.
• The higher losses reflect a 3.2% (or $33.29Mn) reduction in revenues and a 5.6% (or $11.53Mn) rise in admin expenses. The company’s revenues were impacted by the government-imposed restrictions to stem the spread of the virus such as school closures, and the fall in employment which impacted consumers’ purchasing power.
• However the falloff in the revenues and rise in indirect expenses were largely tempered by a 6.3% (or $40.48Mn) drop in the cost of sales, which was fueled by reductions in salaries and related expenses, purchases, repairs, and maintenance and transportation costs.
• Purity was reporting a net loss before the onset of the pandemic. Therefore, although the company should realize a gradual improvement in its revenues as further inoculation of citizens and containment of the virus influence a relaxation of restrictions especially the re-opening of schools, and greater tourism activity, without implementation of cost reduction strategies, the company is unlikely to return to a positive outturn in the near term.
• Following an 18.7% decline during 2020 to $1.35, the company’s stock price has risen by 25.9% since the start of 2021, closing Wednesday’s trading session at $1.70.

(Source: Consolidated Bakeries Financial Statements)

• Colombia’s government has lowered the amount of money it hopes to raise from proposed tax reform in an effort to win enough support to push the legislation through Congress, Vice Finance Minister Juan Alberto Londono said on Wednesday.
• The government is now looking to raise between 18 trillion and 20 trillion pesos ($4.84 billion to $5.38 billion), Londono said. He added that it was open to negotiating other parts of the proposal, which includes measures to reduce sales tax exemptions and change income taxes.
• The original plan presented to lawmakers last week sought to raise an additional 23.4 trillion pesos ($6.29 billion) - equivalent to 2% of Colombia's gross domestic product (GDP) - by eliminating many deductions and increasing duties on individuals and business.
• The government is looking for consensus and for ways to cover the gap so that the country can pay its debt while protecting the vulnerable population from a reduction in expenditure on social programs.
• The proposed reform has met stiff resistance in Congress, including from a coalition of parties that supports President Ivan Duque's government. Opponents argue the changes would unnecessarily burden taxpayers already stretched by the economic crisis caused by the coronavirus pandemic.

(Source: Reuters)

• Mexican President Andres Manuel Lopez Obrador said on Wednesday he plans to send initiatives to Congress aimed at carrying out administrative reforms of autonomous bodies, which he has criticized as unnecessary or lacking impartiality.
• "We're going to continue transforming so that the government serves everyone, that it's a government of the people, for the people, with the people ... not a factional government only at the service of a minority," Lopez Obrador told a regular news conference as he set out his reform plan.
• Lopez Obrador argues government watchdogs and regulators created under his predecessors are biased and cost money that would be better spent on social programs. He has suggested that some be absorbed by government agencies or ministries.
• If enacted, these reforms will help to reduce government expenditure on public services and open up funds available for investment or growth purposes.

(Source: Reuters & NCBCM Research)