Nov 2011 Financial News

GraceKennedy more than doubles profit

Nov 16, 2011

GraceKennedy Limited posted a 123 per cent rise in net profit during the end September 2011 quarter when compared to the corresponding period last year.

The growth in net profit, which totaled $786.4 million during the three-month period and which represented improved profit performance across all of the conglomerate's business segments, outpaced that of revenue growth, which moved 10.4 per cent from $13.4 billion in the three months ended September 30, 2010 to $14.8 billion during the period under review.

GraceKennedy group CEO Don Wehby said the performance during the quarter reflected strategic measures aimed at improving operational efficiencies while building on human resources capacity and focusing on entering new markets and anticipating the needs of consumers a lot more.

Wehby said that the quarter was categorised by turnaround in profitability of underperforming companies, such as Hardware and Lumber (H&L) and GK Foods (UK).

H&L returned a pre-tax profit of $10.3 million during the three months ending September 30, 2011 compared to a loss of $11.2million in the same period of the prior year, but GraceKennedy's retail and trading business segment returned $52.7 million in profit before tax during the review quarter, up from $3.8 million a year earlier.

The conglomerate's food business turned around from a $92 million loss a year ago to post $154.5 million in pre-tax profit.

GK Foods (UK) is seeing profitability, and according to GraceKennedy's chairman, Douglas Orane, is benefitting from strong brands that it bought in the European market.

The group's banking and investments arm improved pre-tax profit by 160 per cent to $287.6 million, which according to GK Investments CEO Courtney Campbell reflects improvement in interest margins at the bank operating under the First Global brand and better loan performance amid loan growth — non-performing loans to total loans fell from 6.3 per cent at the end of September 2010 to 5.1 per cent while the bank's loan portfolio grew.

GraceKennedy's insurance arm, which oversees the operations of Jamaica International Insurance Company (JIIC) and Allied Insurance Brokers, posted pre-tax profit of $184.8 million, up from $49.7 million, as JIIC's core insurance business saw an increase.

JIIC and Jamaica's largest credit union, COK Sodality,formed a strategic partnership that will "achieve JIIC's future strategic objectives of increasing premium income and brand awareness", according to the stockholders' report signed by Wehby and Orane.

The money services division posted a 63 per cent increase in profit before tax, from $225.3 million in same quarter last year to $367.2 million during the review quarter.

Campbell said that transaction volumes at Western Union increased by five per cent but the value of remittances passing through the company increased by nine per cent.


Source:
Jamaica Observer
By Camilo Thame
thamec@jamaicaobserver.com
Business Co-ordinator
Wednesday November 16, 2011

http://www.jamaicaobserver.com/business/GraceKennedy-more-than-doubles-profit_10174592#ixzz1dzrtJUFJ