Apr 2015 Financial News

GK set to earn half its revenues overseas

Apr 22, 2015

THE international expansion of the GraceKennedy (GK) group puts it on an imminent path to earn half of its revenues outside the island with one-third of its staff based overseas.

GK now earns 43 per cent of total revenue outside Jamaica compared to 36 per cent in 2013, stated GK in its management discussion accompanying its just released annual report 2014. Its expansion in 2014 was driven by the much discussed acquisition of LaFe Foods in the US, but also organic growth in Europe and Africa.

"The international side of the business is poised to grow significantly in all our business lines and operating markets. The primary focus for our food business in the USA will be the integration of LaFe with our existing Grace businesses, in order to realise and leverage synergies within our international and Jamaican operations," stated management in its discussion. "This acquisition will give the company access to the rapidly expanding Hispanic market which is significantly larger than the existing Caribbean market."

For 2015, growth in Africa is expected to be led by GK's newly established distribution company. It's set to give the company better control of its route to market. GK will also seek to increase brand and product penetration in the UK, Europe and Canada.

Growth in Africa

Diversifying its revenue stream outside the island remains a key strategy for the GK group. It wants to earn at least 15 per cent of revenue from each trading region which includes North America, Europe and Africa.

"The acquisition of LaFe Foods in the USA has taken us closer to our goal, with North America now representing 18.2 per cent of our revenue. Europe remains slightly ahead with 18.3 per cent of sales. Africa continued its exponential growth to represent 0.2 per cent of revenue or $182.9 million," stated management in its discussion about the group which made $3.79 billion in net profit from $77.9 billion in total revenue.

In 2014 Jamaica's revenues totalled $44.6 billion, up from $44 billion in 2013; Europe $14.28 billion from $11.16 billion in 2013; North America $14.2 billion from $9 billion in 2013; Caribbean and other $4.6 billion from $3.9 billion in 2013, and Africa more than doubling to $183 million from $79 million in 2013.

"Prior to the acquisition in the UK and USA along with our west Africa expansion, our employees outside of Jamaica represented approximately 10 per cent of the total staff complement. Today our employee count outside of Jamaica represents approximately 32 per cent of our total staff complement," stated GK which has more than 2,600 staff.

Last July, Grace acquired LaFe Foods 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.

Source:
BY STEVEN JACKSON
jacksons@jamaicaobserver.com
Business reporter
Jamaica Observer
Wednesday April 22, 2015    

http://www.jamaicaobserver.com/business/GK-set-to-earn-half-its-revenues-overseas_18797642