GraceKennedy records flat nine-month profit:
CONGLOMERATE GRACEKENNEDY Limited saw total revenues rising to $69.3 billion for the nine months ended September 30, a four per cent increase over the $66.65 billion for the corresponding period in 2016.
Net profit remained flat, increasing by 1.4 per cent to $3.75 billion, compared with $3.7 billion at the end of September 2016. Profit would have been weaker were it not for nonrecurring gains of $455 million in relation to the acquisition of Consumer Brands and the liquidation of non-operating subsidiaries, according to the report accompanying the financials.
“Without these gains, net profit for the current period would have been higher than the corresponding period of 2016 by 0.7 per cent,” the company said.
The report for the three-month period ended September showed revenues up by $567.85 million or 56.9 per cent to $1.56 billion over the corresponding period in 2016. Group CEO Don Wehby attributes the company’s performance to focus and discipline in executing the company’s strategy. The group’s initiatives included the acquisition of Consumer Brands.
“We are quite optimistic about Consumer Brands and its capacity to add value to our shareholders. We have made, at the outset, a non-recurring gain of $418.5 million on the acquisition. We expect the business to continue to do well, given its knowledgeable and competent team and the Proctor and Gamble portfolio of products,” Wehby said.
The impact of one-off gains have figured largely at Grace over the last two years. Group Chief Financial Officer Frank James explained the impact of nonrecurring gains on the net profit as he co-hosted an investors briefing via live stream audio earlier this week
“In 2016, a non-recurring gain was attributable to the liquidation of non-operating subsidiaries. In 2017, we recorded $455 million in non-recurring gains due to liquidation of non-operating subsidiaries and an acquisition. Without these gains, net profit would have been higher than the corresponding period of 2016 by 0.7 per cent. For Q3 2017, without the one-off gains, net profit for the three months ended September 2017 would have increased by 14.6 per cent over prior year,” James said.
Profits from all segments
Shareholders will receive a dividend of 45 cents per stock unit, bringing dividends year-todate to $1.13, an 11 per cent increase over the corresponding period last year, according to James.
All segments of the group posted gains, except the insurance arm. The Food Trading segment, which includes operations in Jamaica, Canada, the United States, United Kingdom, and Ghana posted increases. Wehby highlighted growth in the Florida and Georgia markets for GraceKennedy Foods (USA) LLC and expanded relationships with Costco Wholesale and other retailers in western Canada for Grace Foods Canada.
Grace Foods Latin America and the Caribbean, according to Wehby, continues to be affected by the slow recovery of corned beef sales following a ban on the sale and distribution in several markets in March 2017. Hurricanes Irma and Maria disrupted operations on St Maarten, British Virgin Islands and Dominica, Wehby told the briefing.
He said the impact was also felt in the insurance arm. That segment, he said, declined in both revenue and pre-tax profit when compared to the corresponding period of 2016. This outcome was influenced by reduced investment returns and increased claims activity from Caribbean territories that were affected by hurricanes in September.
Meanwhile, First Global Bank (FGB) experienced growth, driven mainly by net interest income and higher gains on securities sold when compared to the same period in 2016. Wehby said lower provisions against loan losses also contributed to the favourable performance as the bank continues to focus on delinquency management. FGB’s new direction includes branch expansion through FGB Money Link.
The Money Services segment, through GraceKennedy Money Services, reported growth in both revenue and pre-tax profit over the corresponding period of 2016. This was due to increased transaction volumes in the remittance business, most notably in Trinidad and Tobago, Cayman and Guyana.