PAN-Jamaican Investment Trust Limited (Pan-Jam) is reporting a 23 per cent reduction in profit for the March 31, 2010 quarter as a result of foreign exchange losses, a general reduction in earnings from related companies and inflationary pressures on the group.

The Group, which comprises of Pan-Jam and related companies, First Jamaica Investments Limited (FJIL), Sagicor Life Jamaica (SLJ) and Jamaica Property Company (JPC), recorded a first-quarter fall in profits from J$408 million to J$313 million over corresponding periods of March 2009 and 2010. In the report to stockholders, Pan-Jam Chairman Maurice Facey indicated that the performance was most notably impacted by the first-quarter decrease in earnings of FJIL, which had a J$112 million gain on US dollar-denominated investments in the first quarter of 2009. That gain now absent as a result of the stability of the Jamaican dollar relative to the US dollar in the March 2010 quarter, has caused the group’s investments income to decline 60 per cent from $197.8 million to $78.4 million.

Additionally, income from associated company SLJ declined by $100 million or 28 per cent to 253 million as at end March 2010, also as a result of no foreign exchange gains. A first-quarter 2009 release of actuarial reserves as a result of higher interest rates at that time, was also not realised at the end March 2010 consequent on the Jamaica Debt Exchange (JDX) which effectively caused the reduction of interest rates on investments. The JDX was concluded by the Government of Jamaica (GOJ) in February this year and saw the exchange of high interest GOJ bonds for instruments with lower yields and longer maturities.

Said Facey: “the group participated fully in the Jamaica Debt Exchange (JDX) concluded in February, 2010, as did First Jamaica’s associated company Sagicor. Lower interest rates and a compressed economic environment have affected both the group and Sagicor this year, and are likely to continue to do so for the next 12 months.”

However, Pan-Jam’s income from its property segment, comprised principally of JPC, also increased 16.5 per cent while income from commissions improved 9.3 per cent. Facey disclosed that JPC’s contribution to group operating profit was $12 million better than that for the corresponding quarter of 2009. But these increases were not enough to offset the foreign exchange losses and a 15 per cent increase in operating expenses, which resulted in an overall decline of 29 per cent or $95 million in operating profit quarter on quarter. Earnings per share declined 23 per cent over corresponding quarters from $2.38 to $1.83.

Facey said the group would nonetheless concentrate on effectively managing the capital to generate “superior returns for stockholders while maintaining a conservative capital structure”.

“We will continue to manage our risks prudently, retaining appropriate levels of liquidity while keeping operating expenses in line with our revenues, and we are prepared for an extended recessionary period and to take advantage of opportunities as they arise,” he concluded.