May 2010 Financial News

GK posts 11% decline in 1Q profit

May 26, 2010

GRACEKENNEDY Limited has posted a 11 per cent decline in first quarter net profit, hurt by a regional consumer market weakened by the ongoing recession.

Over the first quarter ending March 31 2010, the conglomerate produced net profits of $834.9 million compared to $933.9 million over the corresponding period last year. Revenues for the period were $14.4 billion, a marginal decline from the $14.6 billion 2009 first quarter.

The firm's flagship Food Trading division, which includes the merchandising, processing and distribution of food products, saw a marginal decline in first quarter profits before taxation to $330.6 million over the period under review. The divison's total revenues were $9.1 billion over the period, a five per cent increase over the 2009 first quarter.

"GK Foods had another challenging quarter with revenues and profits almost in line with the previous year," said a report to stockholders accompanying the financials.

"The domestic as well as some of the Caribbean markets are still feeling the impact of the recession while our North American markets are performing above 2009," said the report, which added that Grace Foods UK was hurt by weather conditions in January but is now showing signs of recovery.

The Retail and Trading division, which comprises the merchandising of agricultural supplies, hardware and lumber, continues to bleed red ink. The divison recorded total revenues of $1.4 billion, a 19 per cent decline compared to the corresponding period last year; and posted loss before taxation of $6.9 million, albeit an improvement over the $56 million loss before taxation during the 2009 first-quarter.

The performance of the GraceKennedy Financial Group, the report said, continued to be impacted by a sluggish economy, reduced revenue streams, and, in the latter part of the first quarter, the effects of the Jamaica Debt Exchange programme — Government's swap of 99 per cent of its domestic debt for new bonds at lower rates and longer maturities. The Banking and Investment division, of which it is apart, posted a 10 per cent decline in revenues to $1.7 billion and a 22 per cent dip in profits before taxation to $225.9 million.

"Despite limited revenue opportunities in the Banking and Investments segment, First Global Bank Limited achieved growth in its loan portfolio," said the report.

GraceKennedy's Insurance division, which includes the firm's general insurance and insurance brokerages, also had dissapointing results. Revenues of $1.2 billion represented a marginal increase over last year while the division saw profit before taxation decline by 12 per cent to $167.4 million over the period under review.

The Money Services segment posted total revenues of just over $1 billion, marginally increasing over the 2009 first quarter. Profit before taxation declined by 11 per cent to $336.2 million over the period under review. The division includes the operation of money transfer services; cambio and bill payment services.


Source:
Jamaica Observer
Wednesday, May 26, 2010

http://www.jamaicaobserver.com/business/GK-posts-11--decline-in-1Q-profit_7648036