Margins squeezed Grace’s profit

Grace HQGrace Kennedy reported flat profits for the 2014 year although revenues grew 20 percent for the year to reach $83.5 billion. Grace ended with net profits of $3.29 billion compared with $3.22 billion due to shareholders of the group.
Not even lower taxes that delivered savings of $200 million could push the performance that saw lower pretax profit of $4.85 billion versus $5 billion in 2013.
Gross profit climbed from $64 billion to $74.9 billion but profit margin declined to 4.13 percent from 5.23 percent in 2013. Frank James Group Chief Financial Officer attributed some of the decline to one off cost associated with the acquisition of the Le Fe subsidiary during the year and tightness in the local economy that placed pressure on the margin as the devaluation to the local currency pushed up cost which they were not able to pass on in full. But there is more to it than that. Grace’s segment results showed no growth in segment profits between the September and December quarters, in food trading and insurance, two important profit areas of the group. Profit in the last quarter was make primarily by Hardware and Lumber and money transfer.
Results for segments were mixed with money transfer ending with $2.39 billion up from $1.9 billion, Insurance rose from $122 million to $454 million. Food retailing ended at $875 million from $1.145 billion in 2013 and hardware & Lumber reported $284 million versus $343 million in 2013.
The group reported earnings of $9.90 per share and announced an interim dividend of 75 cents per share payable on May 18, 2015 to shareholders on record as at April 28 with the ex-dividend date being April 24. Return on equity for the group is only 9.5 percent a relatively low rate in a country where Treasury bill rates were close to that level during the year.

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  1. […] Equity Partners Inc. along with its affiliates and associates a release from Grace Kennedy said. Grace Kennedy Group CEO, Don Wehby, stated “As previously indicated GraceKennedy’s decision to sell our shares […]

  2. […] 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 […]

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  11. […] Grace 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. Greystone 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. […]

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  18. […] 4 dominant trades, with Caribbean Cement accounting for $14,785,112 of the total value of trades, Grace Kennedy $13,881,820, National Commercial Bank $107,075,098 and Scotia Group with $30,890,865. Although there […]

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  25. […] selling prices and 4 with offers that were lower. Carreras traded 1,300,000 at $42 for a $1 fall, Grace Kennedy with 47,691 shares closed trading at $63 for a $2 fall, Jamaica Money Market Brokers 7.50% […]

  26. […] $22.05 for a loss of 45 cents and Proven Investments finished with 201,102 shares at 18 US cents. Grace Kennedy traded 3,850 shares at $65 for new 52 weeks’ highs and Supreme Ventures with 20,435 traded as high […]

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  28. […] main market are, Carreras finishing with 853 units trading, to close with a gain of $1.05 at $41, Grace Kennedy closing with 2,390 shares, trading with a gain of 50 cents to $61.50. Jamaica Money Market Brokers […]

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