Crime has plagued Jamaica at a higher level since the start of 2018. As a means to combat this issue, the government has implemented a State of Emergency in areas that recorded the highest murder rates, causing a ripple effect throughout the economy as different sectors were significantly affected by the crime surge and increased security presence across the island. News of the state of public emergency in St James resulted in fewer tourist arrivals, according to Jamaica Tourist Board for February 2018. While the new security detail was welcomed by residents, the current state of affairs has proven to be wrong for businesses in and around the affected parishes. Specifically, Knutsford Express [JSE: KEX], whose earnings declined for the third quarter of their fiscal year. Managing, Director Oliver Townsend, reported that this could be attributed to the lockdown that the parish of St. James has been under for the past four months. The company has been recording remarkable growth but ended with an increase of only 14% in revenue for the three-month period ending February 28, as opposed to the rise of 18% that they saw in the previous quarter.
Regardless of this decrease, Knutsford Express [JSE: KEX] has tried to mitigate any further loss in value to their share price that could be induced by decline in investor confidence, by showing significant effort in the expansion of the business through new investments.
For the quarter in question, the company reported a 24 percent increase in total assets, through the acquisition of additional buses that will take on new/ other routes across the island. They also established a depot at the Donald Sangster International Airport which added to passenger growth. Furthermore, they are set to expand their Kingston terminal to include a new entity, “Knutsford Connect”, which will provide airport transfers to have a car rental for passengers and a high-end, luxury transfer service for corporate clients.
Publicly traded companies can highly benefit from benchmarking aspects of Knutsford’s business strategy. Businesses underestimate the power of market sentiment and how it can seriously affect share value. Regardless of the loss incurred by an external factor that they have no control over, the company sought to reassure their shareholders by displaying why their confidence should not be swayed due to a reduction in revenues. Both existing and potential shareholders need to see evidence of how their capital can gain value in times to come, and Knutsford Express has shown the potential to generate massive growth in months to come, owing to their present investments.
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