Feb 2006 Financial News

Fallen from Grace

Feb 16, 2006

GraceKennedy Limited
Year ended December 31, 2005
All figures quoted in Jamaican Dollars unless otherwise stated

GraceKennedy Limited (GK) reported an EPS (diluted) of $6.23, down 4.89% from the adjusted EPS of $6.55 of 2004. The comparative 2004 period has been adjusted in order to reflect the Group’s adoption of the International Financial Reporting Standard which governs Share Based Payments (IFRS 2).

Though GK achieved growth in Revenues of 7.5% from $30.7 billion in 2004 to $33.0 billion in 2005, the Group failed to translate this into growth in Profits Attributable to Shareholders (PAS). GK reported a fall in PAS from $2.171 billion to $2.075 billion which represents a decline of 4.4%.

The share price of GraceKennedy Limited has demonstrated volatility in both the Trinidad and Tobago and Jamaican stock markets since the first quarter of 2005, declining significantly from June 2005 (TT$12.50, JA$115) to present (TT$7.20, JA$71.99). In December 2005, GK issued a statement which indicated their expectation of profits for the FY 2005 being 5% down, which further compounded the share price decline. At the current share price of TT$7.20 in the local market, and the diluted EPS TT$0.608 (translated to TT$ using an exchange rate of JA$10.24: TT$1.00), the share is trading at a P/E multiple of 11.84 times. Given the soft conditions of the Jamaican and Trinidad and Tobago equity markets, we expect that the poor results may put further downward pressures on the share price.

Please look out for our detailed analysis of GraceKennedy Limited’s performance.


WISE Research Team