Apr 2015 Financial News

Grace USA targets US$130m in sales to break even

Apr 20, 2015

GraceKennedy (Grace) USA will aim for US$130 million (J$14.9 b) in annual sales for its first full year of entry by acquisition into the US.

Hitting that target would allow the company to post a profit but it requires growing sales by 70 per cent at that business -- formerly LaFe prior to acquisition.

"Its an ambitious target but we have a great team of people that are really pushing for it," said Michael Ranglin, CEO of GraceKennedy Foods - North America and president of Grace USA in a phone interview with the Jamaica Observer on Friday.

Grace USA is a subsidiary of Jamaica-based food and finance conglomerate GraceKennedy group.

Ranglin indicated that the staff complement remained largely stable at 340 which includes mostly legacy workers from LaFe but also Grace staff.

Grace Foods' presence in the US market began over 20 years ago, utilising distributors and retailers to sell its products. But last July, Grace acquired LaFe for some US$26 million as a method to control its route to market in the US. LaFe sells its own branded frozen products, fruit and vegetables but also distributes other brands. It operates four distribution centres and one factory in the US with a strong presence in Florida, North Carolina, Georgia and the New York City/Tri-state area.

"We have now bolted on [to that operation] the Grace brand so that US$70-75 million has the potential within a year to be just under US$130 million in terms of sales into the market," he told Sunday Finance.

Latino market

Ranglin said that the acquisition provided Grace access to the Latino market -- one of the fastest-growing segments in food and beverage -- and that it would give Grace Foods the ability to export more products from Jamaica to the US.

"We have a return on equity target of 20 per cent on these types of businesses. So we see this business as having the potential to give us that," he reasoned. "So within five to six years we should be at that point."

Grace aims to remain within the US for the long-term as part of its global growth strategy.

"We are building out a food business across the world and it is a situation where we will make it stable first and then build profits. Its not a situation where we will make profits and then we are out. We are in that market for the long-term," he said.

Source:
BY STEVEN JACKSON
Business reporter
jacksons@jamaicaobserver.com
Jamaica Observer
Sunday April 19, 2015

http://www.jamaicaobserver.com/business/Grace-USA-targets-US-130m-in-sales-to-break-even-_18776457