GraceKennedy Q1 profit before tax up 50 per cent


GraceKennedy Q1 profit before tax up 50 per cent

Company reports $2.93 billion increase in revenues over prior year period

Friday, May 15, 2020

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While classifying the first quarter of this year as a period of great uncertainty, GraceKennedy (GK) Group yesterday reported that results for the period have been the highest in recent times.

“For the three months ended March 31, 2020, the group achieved revenues of $28.85 billion, an 11.3 per cent increase or $2.93 billion over the corresponding period of 2019,” the group said in a news release.

“Profit before tax for the period was $1.99 billion, a 50.6 per cent increase over the corresponding period of 2019. Net profit after tax for the period was $1.45 billion, an increase of 42.8 per cent or $435 million over the prior year period, while net profit attributable to stockholders was $1.32 billion, 46.9 per cent, or $421 million higher.

“Profit before other income was $1.28 billion, 44.7 per cent or $396 million higher than that of the 2019 corresponding period, indicating an improved operating margin. Earnings per stock unit for the period was $1.33,” the group added.

Group Chief Financial Officer Andrew Messado announced a dividend of $0.25 per share or approximately $248 million payable on June 15, 2020, the release said.

While highlighting the company's financial performance, GraceKennedy Group CEO Don Wehby spoke to the company's focus on its corporate social responsibility over the last couple of months in light of the COVID-19 pandemic.

“Our financial performance is important, but so is GK's 'we care' ethos. There is great need as a result of this pandemic, and where we can we have been playing our part in assisting in the countries and communities in which GK operates,” he said.

In Jamaica, contributions have included a donation of $10 million towards the Private Sector Organisation of Jamaica's initiative to purchase ventilators for the island's hospitals, and the provision of a 3-D printer from the GK Group's STEM Centre to assist with the production of face shields for the protection of the nation's health care workers.

“Through the GraceKennedy Foundation's 'Feed the Future Initiative', the group has also been providing food packages to students who have not been able to leave The University of the West Indies, Mona, and the University of Technology, Jamaica campuses. The group and its Grace and Staff Foundation have also increased support of those in under-resourced communities with the provision of food products and toiletries. We are committed to continuing our support for our communities,” the company stated.

Its overseas subsidiaries are also providing support to their local communities. Grace Foods Canada has donated cases of Grace Coconut Water to first responders and front line health care providers. In the USA, displaced hospital workers have been given meals and products by the Grace Foods team, while in Belize and UK products have been donated to the Belize Mental Health Association, the Brixton Soup Kitchen, and the National Health Service.

In terms of the company's financial performance for the quarter, Wehby acknowledged that while GraceKennedy and other companies will be heavily impacted by COVID-19, “GraceKennedy, being a diversified group, has so far been able to manage the impact of the system-wide risk of the COVID-19 pandemic on our group's performance. As we navigate this period of great uncertainty we continue to adjust our structure to be nimble and agile.”

He added that GraceKennedy's status as a provider of essential services manufacturing, distribution, retailing of food products, remittance, banking and other financial services has enabled the group to keep its operations open.

The company also reported that its domestic foods distribution business has experienced growth in both revenue and pre-tax profits, coupled with improved margins.

“Hi-Lo Foods Stores reported improved performance, while there was improvement in the growth and volumes of Catherine's Peak Spring Water,” the release stated, adding that the company was also pleased to note its support of local farmers during this time of great difficulty by building on the relationship with the Jamaican farming community, and delivering on a commitment made to the Ministry of Agriculture to assist the industry.

Additionally, the company reported that GraceKennedy Foods (USA) LLC, Grace Foods UK, and Grace Foods Canada all reported increased revenue for the three-month period, when compared to the corresponding period of 2019.

“For the Financial Services Division, First Global Bank (FGB) experienced strong growth in its loan and deposit portfolios, while the insurance segment reported an increase in revenue and strong operating performance. In March, GraceKennedy completed its acquisition of 65 per cent of the issued shares of Key Insurance Company Limited, as a strategic driver for growth,” the company reported.

“The Money Services segment reported an increase in both revenue and pre-tax profit, seeing an increase of over 100 per cent in the use of its digital remittance channels. To further expand its digital capabilities, GraceKennedy Money Services (GKMS) began the implementation of an electronic registration system for Jamaica, Guyana and Trinidad, and significantly advanced the implementation of the Bill Express Online service for Trinidad,” the company said.

The group advised that its annual general meeting on May 27 will not be held in the usual manner, as shareholders will not be able to attend physically, given the restrictions placed on public gatherings.

“This decision was taken in the interest of health and safety and to comply with the Government's orders,” GK said. “Shareholders are encouraged to complete and submit their proxy forms to vote on the various resolutions, as well as send in any questions they would like answered at the meeting which will be streamed live via the Internet.”

The company said it looks forward to hosting shareholders in person at the next annual general meeting, provided it is safe to do so.

“It is a very challenging time for GK, but I am proud to say that our great team has pulled even more closely together to face the challenge head on. I thank them for their commitment and hard work in the true spirit of 'we care',” the release quoted Wehby.

“Despite the uncertainties that exist, we are confident that we will emerge stronger together from this crisis. We would like to take this opportunity to thank all our stakeholders for their continued support as we navigate this journey guided by our core principles of honesty, integrity and trust. We wish everyone the best, and encourage all to take the necessary precautions to keep themselves and their families safe,” Wehby said.

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