Company profits ahead of planned but behind prior year
KINGSTON, JAMAICA – In releasing unaudited results, the GraceKennedy Group is reporting revenues of $ $21.1 billion, a $2.9 billion or 16% increase over the corresponding period of 2014. The Company is however reporting a decline in net profit by 25% compared to the corresponding period last year, moving from $941 million to $703 million.
The Company’s performance was impacted by the transition of GraceKennedy’s new US Food operations, recognition of the total asset tax liability in the first quarter, lower foreign exchange gains and higher finance costs. Group CEO Don Wehby says that the Group’s performance was however better than planned, and added that there is an expectation that there will be improved profitability in 2015.
GK Foods recorded strong revenue growth both in the Jamaican and overseas markets.
With regard to the Jamaican business, the Company has disclosed that it will be making significant capital investments in its manufacturing plants to ensure that it can compete effectively in both the Jamaican and international markets. Mr Wehby has also said that the Company is looking at possible acquisitions of foods businesses in Jamaica.
The Canadian and UK Foods businesses continued to perform well and further growth is expected. As was anticipated, GraceKennedy Foods USA LLC’s profits were impacted by the process of integrating the Grace and Grace owned brands previously distributed by a third party, as well as the streamlining of the operations of La Fe for growth and greater efficiency. According to Mr Wehby, the company is expected to report profits for its first full year of operation.
With regard to the Financial segment, transaction volumes for the remittance business continued to grow, contributing to higher revenues for GraceKennedy’s Money Services segment. Profits for that segment however declined over prior year, due to investments in technology and efficiency reviews during the period, which are expected to yield benefits in the future. The Insurance segment also recorded revenue growth. However, the recognition of the total asset tax liability in the first quarter and lower foreign exchange gains impacted the segment’s profits.
First Global Bank Limited had a good quarter, with higher revenues and profits, which were attributable to strong growth in net interest income and non-interest income. The results of the Banking and Investments segment were however impacted by a higher asset tax charge in the first quarter.
Group CFO Frank James disclosed that on February 27, 2015 the Board of Directors approved an interim dividend of 75 cents per stock unit to be paid on May 18, 2015, an increase of 7% over the corresponding period in 2014.
In order to position itself to compete effectively and on a global scale, the Group embarked on a reorganization exercise with its senior leadership placed strategically within its core businesses, for greater focus on the implementation of the Group strategy of becoming a Global Consumer Group and Regional Financial Services Group.
In speaking to the results, the Group CEO said, “Our strategy has been clearly outlined, and is being systematically executed. We have started to see the positive impact on revenue growth and are confident that this will be translated into profit growth in the future. We are very positive about delivering our targeted revenue and profits for 2015.”
Mr Wehby thanked all stakeholders for their continued support as the company continues its transition. “We are investing for the future to ensure we deliver on our promise to you, and assure you that we continue to guard and be guided by our values of honesty, integrity and trust,” he said.