Grace performance slips in Q2

Grace Kennedy HQ

Grace Kennedy reported revenues of $48.4 billion, an increase of 4.3 percent or $2 billion over the corresponding period of 2017 for the half year to June, “driven largely by growth in its Food Trading and Insurance segments.” Don Wehby stated in a release following the release of the interim results.
Net profit for the period was $2.5 billion, an increase of $266 million or 12.2 percent compared with 2017. After minority interest net profit rose by 14 percent to $2.15 billion but by just 9 percent in the second quarter to $959 million from $881 million in 2017.
Second quarter sales revenue grew just 3.85 percent to $22.44 billion, a slower pace than the first quarter’s 6 percent. Other income rose a strong 60 percent to $718 million in the quarter over the prior year, and 61 percent for the half year, to $1.45 billion. Interest income was slightly down to $1.13 billion and $2.25 billion in the quarter and half year period respectively, over the similar periods in 2017.
Total comprehensive income a better measure of managements stewardship, more than doubled in the second quarter to $1.338 billion from $625 million in 2017 but slipped slightly to $2.39 billion for the half year.
The Group reported that its Food Trading segment experienced growth in revenue and pre-tax profits over the corresponding period of 2017. This was due to improved performance in the domestic foods business as the local economy picks up and now showing stronger growth. While showing an increase in revenue over prior year, the Company’s international foods business experienced a decline in pre-tax profits compared to the corresponding period of 2017, primarily due to the performance of Grace Foods UK.

Grace Kennedy products

Financial Group experienced mixed fortunes during the period, as the Money Services and Banking and Investments segments both experienced decline in revenue and pre-tax profits, while the Insurance segment grew revenue and pre-tax profits over the corresponding period of 2017. The performance of the Money Services segment was due to a reduction in transaction volumes in the remittance business in Jamaica stemming from the implementation of enhanced compliance measures.
Grace’s financial position remains strong with Shareholders equities of $46.35 billion and the company’s stock traded at $58.50 on Friday with a PE of 11 based on IC’s earnings estimate for 2018 of $5.40. The PE is lower than the market’s average of 13.5 and with IC forecasting average PE to reach 17 by late this year or early next year, the stock has room for growth.
Grace approved the payment of an interim dividend of 45 cents per stock unit, payable on September 26, an increase of 18 percent from the 38 cents per stock unit paid to stockholders in September last year. Group CFO Frank James said, “This brings the dividends declared to date to approximately $844 million, an increase of 25 percent or $169 million over the corresponding period in 2017.”

Management reshuffle at Grace

Grace Kennedy Head Office

Group Chief Executive Officer, Don Wehby.

Grace Kennedy senior management undergoes major changes at the start of 2018, a report from the Group stated.
Andrea Coy will be appointed CEO of GK Foods International Business a position previously held by Ryan Mack. Grace Kennedy’s manufacturing and distribution operations in the USA, Canada and the UK will fall under Coy’s remit as well as the Company’s continued expansion into West Africa and Europe. Andrea will also have responsibility for Grace Kennedy’s distribution operations in Latin America and the Caribbean.
“Andrea has had a series of achievements during her career at Grace Kennedy and has successfully led the transformation and growth of several companies within the Group. I am confident that she will do a tremendous job in ensuring Grace Kennedy continues to deliver on its mission to become a Global Consumer Group,” Wehby said.
Ryan Mack will take up the role of CEO of GK Foods Domestic Business and will be responsible for the Hi Lo Food Stores, GK’s Manufacturing Operations in Jamaica, GK’s local Distribution Operations which comprises of Grace Foods & Services, World Brands Services and Consumer Brands Limited. Ryan has held several senior roles across the Group and will bring key learnings gained from his years in the UK and the USA.

Andrea Coy

In making the announcements, Wehby indicated that “Ryan Mack is well respected internationally in the foods business and we are extremely happy to have him back in Jamaica to build on the significant growth that we have been experiencing in these core areas. I am very confident that these changes will improve efficiencies and further streamline the organisation allowing us to achieve the stated growth objectives for 2018 and beyond.”
Derrick Reckord will be appointed to act as President and CEO of Grace Kennedy Foods. During his time with the Company Reckord has been instrumental in developing and growing GK’s business in the US. Prior to his appointment in his current role as Senior Vice President of the US operations in 2014, Derrick led the Company’s development of its US and Caribbean export markets.
Margaret Campbell, currently Chief Financial Officer of GKMS, will be appointed Country Manager for the Jamaican operations. GKMS is the exclusive agent for Western Union in Jamaica and several Caribbean countries.
Steven Whittingham, will be appointed to the Company’s Executive Committee. The Executive Committee, which is chaired by the Group CEO, has executive leadership responsibility for overseeing the Group’s operations.
Whittingham will continue in his roles as Chief Investment Officer for the Grace Kennedy Group and Managing Director of GK Capital Management and GK Investments. Whittingham has significant experience in investments, mergers and acquisition and entrepreneurial management in the USA, Europe and the Caribbean.

Cayman could be lucrative for Grace

Grace HSt Grace Kennedy Money Services will be expanding operations into the Cayman Islands through GraceKennedy Money Services (Cayman) Limited (GKMS Cayman), a member of the GraceKennedy Group and authorized agent of Western Union, CEO Don Wehby announced recently.
With this new market, Grace Kennedy through its money services subsidiaries now represents Western Union in ten countries across the Caribbean, the other nine being . Jamaica, Trinidad and Tobago, Guyana, St. Vincent and the Grenadines, St. Kitts and Nevis, Antigua and Barbuda, Anguilla and Montserrat and the British Virgin Islands. The market should be quite lucrative for the Grace Kennedy group, as it is the fourth largest country from remittances into Jamaica with US$124 million entering the island from the tiny group of island, according to Bank of Jamaica data, but the market could be a challenging the going forward with concern about money laundering within the region.
Scotiabank will be partnering with Grace Kennedy and Western Union to deliver money transfer services to the residents of the Cayman Islands.
GKMS Cayman will initially have a total of four locations in Grand Cayman and one in Cayman Brac, all opening Monday to Saturday. “There is a vibrant community in the Cayman Islands and we look forward to not only welcoming our new customers into the GKMS family, but working with all stakeholders and contributing to the development of their communities,” Allen added.

Grace grows Q3 profit 7%

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Grace HStRevenues for Grace Kennedy rose a strong 14.4 percent in the nine months to September, this year, to $59.7 billion from $52.2 billion generated in the corresponding period of 2014. Profit attributable to owners of the group for the third quarter of 2015 was 7 percent higher than for the similar period last year, reaching $754 million.
Profit declined by $338 million or 14.2 percent for the year to date, compared with the similar period of 2014, moving from $2.38 billion to $2.05 billion.
The earnings per stock unit to September amount to $6.19, down from $7.21 in 2014, for the full year should end around $3.4 billion or $10.30 per share.
“The Group’s performance was in part impacted by the costs associated with the integration of our expanded US Food operations through GraceKennedy Foods (USA), recognition of the total asset tax liability in the first quarter, lower foreign exchange gains and higher finance costs”, Group Chief Executive Officer, Don Wehby and chairman Gordon Shirley said in his report to shareholders.

Group Chief Executive Officer, Don Wehby

Group Chief Executive Officer, Don Wehby

Segments|The Food Trading segment reported revenue growth of 17 percent over the corresponding period last year but with falling profit of $754 million compared with $1.02 billion in 2014. The distribution businesses in Jamaica, UK, Canada and Belize reported higher profits when compared to prior year, the report stated. “The Banking and Investments segment reported higher profits when compared to the prior period due to growth in First Global Bank’s net interest income and non-interest income. The growth in net interest income was bolstered by year over year growth in loans and deposits of 28 percent and 21 percent respectively. The Insurance segment delivered higher revenue and profits due to the improved underwriting performance of GK General”, the report to shareholders further stated.
“The Money Services segment recorded higher revenues and profits due to higher remittance transactions and increased market share in Jamaica, higher revenues from our cambio operations in Trinidad, and cost containment initiatives implemented by the segment”, Wehby and Shirley stated.
Shareholders’ equity stands at $37.2 billion with book value per share of $112.47. The company will pay a third interim dividend of 90 cents per stock unit on 16th December.
Grace’s shares are listed on the Stock Exchanges of Jamaica and Trinidad and last traded at J$68.11 and TT$3.60 giving it a PE of 6.7 times 2015 earnings leaving room for quite some growth.

$18.50 per share max price for H&L

True Value FairfieldGrace Kennedy is advising that the terms to dispose of their holdings in Hardware and Lumber (H&L) include a maximum price of J$18.50 per ordinary share subject to conditions and with completion anticipated by the end of July.
The above price is just around book value at the end of March this year and would give Grace Kennedy who owns 58.1 percent of the 80.842 million shares in issue, $845 million.
Don Wehby CEO of Grace indicated that the agreement is conditional and stated that “GraceKennedy is looking forward to the conclusion of the transaction in a timely manner and will communicate further as soon as it is finalized.” He reiterated that Grace Kennedy’s decision to sell its shares in H&L was a strategic one, having regard to its core strategy of expansion in the foods and financial services sectors. He added, “We feel very positive about the continued growth of H&L under the prospective new owners who have signalled that they are excited about the possibilities for the future”.
H&L currently comprises two separate divisions – Rapid True Value local supplier of hardware and home improvement products, and the Agro Grace business, local wholesaler and retailer of agricultural products.
There are currently 10 Rapid True Value outlets across Jamaica, along with six Agro Grace Retail Centres. The company is headquartered at 697 Spanish Town Road in Kingston.
Grace HStGreystone Equity Partners Inc. the proposed purchaser is a Caribbean based and Caribbean focused private equity firm with a stated strong commitment to the Caribbean.
H&L reported profit in 2014 of $217 million or $2.69 per share. Profit after tax for the three-month ended March, 2015 was $34.5 million, 14.5 percent less than the $40.4 million for the same period last year and earnings of 43 cents per stock unit, compared to 50 cents for the comparative period in 2014 after revenues fell 4.5 percent to $1.73 billion.