On September 19^th, S&P Ratings Services affirmed its 'B-' long-term foreign and local currency and 'B' short-term foreign and local currency sovereign credit ratings on Jamaica. At the same time, the outlook on the long-term sovereign credit ratings was revised to positive from stable as the government continues to make progress in relation to the IMF quarterly metrics as well as on the economic front. Net foreign exchange reserves have more than doubled in the last 12 months to exceed $2.1Bn. At the same time, Central Government managed to keep the fiscal deficit target below $18.0Bn or 22.2% below the budget. Economic growth for the first half of the year was 1.4% and is expected to remain positive for the rest of the year (barring external shocks). For the March 2014 quarter, the current account deficit narrowed by US$300.6Mn to US$100.6Mn relative to the same period last year, given significant decline imports .The outturn for the review quarter was the second lowest current account deficit recorded since 2007.These factors, along with the implementation of key structural benchmarks have allowed the government to pass its 5^th quarterly test under the current IMF program. As such, the outlook reflects the fact that the Jamaican economy has stabilized thanks to improved external liquidity, a return to economic growth, and the government's success in meeting its fiscal targets. The revision reflects the possibility of an upgrade in the next six to eighteen months if the country sustains the improvement in its external liquidity position, if GDP continues to grow, and if the government achieves greater fiscal credibility as a result of reaching budget targets.  We are of the opinion that the economic growth will continue in the remaining quarters of the calendar year, given continued strengthening in most industries such as bauxite, tourism and construction. However mitigants to growth could come from adverse weather conditions on domestic production (drought and hurricane conditions) as well as the relatively tight fiscal stance as the country continues to implement reforms to stabilize the macro-environment.

Despite these positives, there a challenges which lie ahead, particularly in the fiscal account. There is the continued struggle to keep tax revenues on track and as such the focus has been on keeping expenses under budget in order to meet fiscal targets.  We believe that is unsustainable. Moreover, with elections to be called in the next two years it is likely that expenses could start ramping up late next year.

In August, inflation rose by 1.1%, the second fastest pace since the start of the fiscal year. This inflation rate was chiefly the result of a 2.7% upward movement in the index for the division ‘Food and Non-Alcoholic Beverages’. The index for the group ‘Food’ increased by 2.8% as production levels of some agricultural crops declined due to the continued drought conditions across the island. This resulted in higher prices for ‘Vegetables and Starchy Foods’ and ‘Fruit’ which rose by 9.8% and 2.6% respectively. Moderating the impact of these increases were the 1.3% decline in the index for the division ‘Housing, Water, Electricity, Gas and Other Fuels’, due to a fall in the cost of electricity and the 0.2% fall in the cost of ‘Transport’. The division ‘Transport’ was influenced by lower petrol prices. The other divisions that recorded increases were: Alcoholic Beverages and Tobacco (+0.5%), Clothing and Footwear (+0.3%), ‘Recreation and Culture (1.0%) and Restaurants and Accommodation Services (+ 0.1%). The year to August inflation rate stood at 5% while the fiscal year to date inflation stood at 3.3% and point to point at 9.8%.

The BOJ projects that that most of the impact from the drought will be seen in the September quarter, and will be reversed by year-end. This view is underpinned by the assessment that most of the crops that were affected by the drought were short-term, and as replanting resumes when the weather normalizes, agricultural prices will go back down. However we believe that the upside risks to BOJ’s 7.0%-9.0% inflation projection lie in the fact that geopolitical risks are at fever pitch levels and this could have negative pass-through effect on oil prices. While factors specific to Jamaica such as the possible increase in the tariff rate for electricity as requested by the JPS as well as the recent increase in bus fares will likely push inflation for the fiscal year to the upper bound of BOJ’s target.

Jamaica Broilers Group (JBG) started the 2014/15 financial year grappling with excessive losses from its Ethanol Division. As a result of this, net profits for the first quarter period was $113.6Mn (EPS: $9.47), an 18.9% decline in earnings when compared to the corresponding period in 2013. On the revenue front, robust performance from both the company’s Best Dressed Foods Division and US Operations resulted in JBG registering an impressive 12.3% growth in sales to $7.9Bn. Most notably, the company’s gross profit margin improved from 18.8% in the first quarter of FY2013/14 to 22%. However an increase in expenses eroded gross margins. The expansion of distribution channels and various undertakings in JBG’s US operations pushed overall distribution costs to $226.4Mn, up 57.2% while administrative costs increased by 32.4% to $1.29BnMn.

Though the company’s top-line and operating income performance were able to benefit from the solid results from its Best Dressed Foods and US Operations segments, the revenue underperformance of its HIPRO-ACE Division and its Ethanol Divisions relative the same period last year weighed on the company’s overall earnings outturn. The HIPRO-ACE Division was able to turn over a meager 5.2% increase in segment results in spite of lower revenues, but the Ethanol Division saw a 93.6% decline in revenues and then reported an $88.8Mn operating loss. Consequently, JBG’s net profit margin moved down from 1.9% in Q1 2013 to 1.4% in Q1 2014.

The Boards of Directors of SGJ and SIJL have approved interim dividend of $0.40 and $0.45 per share respectively. Both are payable on October 16, 2014 to shareholders on record as at September 25, 2014.The ex-dividend date is September 23, 2014.

Caribbean Producers Jamaica Limited has advised that Ms. Kesha-Ann Harper has been appointed to the post of Director of Finance as of September 1, 2014. Ms. Harper will be responsible for the company`s finance division, reporting to the Chief Financial Officer, Ms. Jan Polack.

Caribbean Cement Company Limited (CCC) has advised that Dr. Rollin Bertrand has resigned as a director from the board of CCC effective August 22, 2014.

Cable & Wireless Jamaica Limited trading as LIME has advised that Senator Kamina Johnson Smith will demit office as Company Secretary on September 30, 2014. The board has accordingly appointed Ms Rochelle Cameron as Corporate Secretary with effect on October 1, 2014.

The Annual General Meeting of Jamaica Broilers Group Limited will be held at the Jamaica Conference Centre, Ocean Boulevard, Kingston Mall, Kingston on Saturday, November 1, 2014 at 10:00 a.m.

LASCO Financial Services Limited (LASF) has advised that due to increased professional responsibilities, Mr. Gary Peart has resigned from the Board of Directors of LASF effective September 2, 2014.

Desnoes & Geddes Limited has advised of the appointments of Mr. Dwaine Williams and Mrs. Blandine JnPaul-Reid to the posts of Head of Commercial and Head of Marketing with effect from September 8, 2014 and October 1, 2014 respectively.