GraceKennedy’s blowout quarter

GraceKennedy reported its best performance in years with substantial gains in revenues and profits for the first quarter ending March this year compared to the similar period in 2019. Still, not all segments of the group perform well in delivering increased profit.

Grace Kennedy new headquarters in downtown Kingston

Group revenues rose 11.3 percent to $28.85 billion, over $25.93 billion over the 2019 period. Profit before tax, jumped an astounding 50.6% for the period to $1.99 billion, while profit after tax attributable to shareholders of the group, rose 47 percent to $1.32 billion. Profit got a boost of $184 million goodwill gained on the acquisition of the majority shares in Key Insurance that was more than offset by impairment losses on financial assets amounting to $248 million.
Earnings per stock unit for the period was $1.33, up from 90 cents in 2019.
Revenues for the Food Trading segment rose 12 percent to $23.45 billion, while profit jumped a robust 60 percent to $1.2 billion from $752 million in 2019.  The improvement came from Jamaica and international sales, Grace indicated.
“Our Jamaican food distribution business experienced growth in both revenue and pre-tax profits, coupled with improved margins. GraceKennedy Foods (USA) LLC continues to show significantly improved performance for the three months when compared to the corresponding period of 2019. For the March quarter, sales for Grace Frozen Patties showed triple-digit growth, closing the first quarter of 2020 with a 68 percent increase in volumes compared to the corresponding period of 2019. Grace Foods UK and Grace Foods Canada also reported increased revenue for the three months when compared to the corresponding period of 2019.”
The banking and Investments segment reported modest growth in revenues to $1.54 billion from $1.49 billion in 2019 with profit falling from $163 million to just $48 million and the
The insurance segment reported an increase in revenue from $1.74 billion to $1.844 billion, with profit evaporating from $125 million to a loss of $858,000. GraceKennedy completed its acquisition of 65% of the issued shares of Key Insurance.
Money Services division saw profit rising 31 percent to $842 million from $644 million.
The company’s stock is trading on the Jamaica Stock Exchange at $58 at a PE ratio of 9.4 times 2020 earnings based on IC Insider.com forecast of $6.20 and well below the average PE of market of 13.6 times 2020 earnings. Grace declared a dividend of 25 cents per share payable 15th June 2020, down from 40 cents in 2019.

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