THE profit performance of Pan-Jam in 2002 continues to be impressive. For nine months ended September 30, 2002, Pan-Jam produced net profits of $301 million, an increase of 36 per cent compared to the same period last year.
"These results follow on five consecutive years of profit growth averaging 41 per cent per annum and underscore the success of the Group's restructuring programme pursued since 1997," remarks Richard Byles, president and CEO of Pan-Jam.
In the Insurance Division where Pan-Jam holds a 73 per cent stake in First Life, profits rose a healthy 25 per cent, on a revenue increase of only 7 per cent. To sustain this level of profit efficiency, the Company has been working to implement the previously announced "back-office" merger with Life of Jamaica's (LoJ) group life, health and pension operations. When complete by year-end, First Life, LoJ and their customers will enjoy the benefits of the best technology and the most efficient operation in the business. This co-operative effort by the two companies has now been extended to include a co-insurance treaty whereby both companies will share equally in the risks and rewards of their two portfolios. It is expected that the benefits of these arrangements will become apparent in 2003.
Jamaica Property Company, 100 per cent owned by First Life and which itself owns $1.6 billion of commercial property, continued its steady and valuable contribution, maintaining occupancy rates of 95 per cent for 2002 to date.
Pan-Jam's 87 per cent owned Trading Division, Hardware & Lumber, recovered from a disappointing 2001, to produce profits of $33.6 million up 60 per cent over last year. Improvements were due largely to the performance of the retail True Value business that continues to see record sales increases, particularly in its plaza stores. On the other hand, margins continue to be under intense downward pressure in the wholesale hardware operations and the agri-chemical business under-performed as the June and September floods took their toll on farming. Compensating somewhat for these circumstances, the little known office janitorial business, Office Services Ltd. produced a healthy contribution to profits as it did last year.
Neither Richard Byles Chairman of H&L, nor Tony Holness the Managing Director would comment on last year's attempted merger of H&L with Grace Kennedy's Rapid Sheffield, except to say "it still makes good sense". A combination of the two chains would create the largest network of retail hardware and home improvement stores in Jamaica.
In the Banking Division, Trafalgar Development Bank (TDB) and Pan Caribbean Merchant Bank (PCMB) produced considerably better results, with profits up 35 per cent for the first nine months of 2002 compared to 2001. Capital in the Banking Division now stands at $977 million. TDB, taken over by First Life in 2001, had a substantial portfolio of non-performing "development bank" loans. Aggressive provisions for loan losses of $41 million in 2002 plus $91 million last year, improved loan loss reserves to adequate levels. The Banking Division is in the final stage of implementing a new software platform. Completion is expected in December and will allow for more efficient transaction processing, a broader range of products and a better focus on customers' relationship to the bank.
Donovan Perkins, President of TDB indicated there is some discussion about rationalising the TDB and PCMB brands to coincide with the new software and new offices at 60 Knutsford Boulevard and that it would probably be aimed to coincide with Pan Caribbean's 20th anniversary next year.
Pan-Jam's strategy of concentrating on core businesses, strengthening subsidiaries' capital and enlarging their market share by acquisitions and mergers, continues to pay dividends in an increasingly competitive economy. "Yes, I am pleased with our performance this year", says Byles "...but it is the profits of next year and the year after that we are now focused on".
