May 2012 Financial News

GK wants more Western Union turf

May 16, 2012

GRACEKENNEDY is holding talks to expand its partnership with Western Union into several overseas markets, it said as it posted strong group net profits of $723.7 million for the first quarter ending March 31, 2012.

GraceKennedy CEO Don Wehby said the move represents a major part of a strategy to expand the Jamaican conglomerate's profitability outside of the island. The company aims to earn 50 per cent of its profit outside of Jamaica, instead of the current 26 per cent, by 2020.

"We are looking at leveraging our relationship with our international partners and our joint venture with Western Union is at the top of the list in terms of that objective," said Wehby via an online investor briefing.

"We currently represent Western Union in eight countries and we are having discussions with them to expand into additional countries in the short term."

GraceKennedy has been the exclusive agent of Western Union in Jamaica since 1990, with the success of the alliance already leading to prior expansion into countries such as Trinidad & Tobago and Guyana.

GraceKennedy's plan in the short term is to set up more Western Union outlets in Caribbean territories, including non English-speaking nations, while focusing outside of the Caribbean in the medium to long term, Wehby said.

The chain of Western Union outlets is part of the group's Money Services Division — consisting of money transfer, cambio and bill payments operations — which was the company's star performer over the first quarter with profits before taxation of $380.2 million, a 15 per cent increase over the comparative period last year, on revenues of $1.1 billion or 14 per cent more than the 2011 March quarter.

"One of the reasons for our success has been the excellent customer service provided by our frontline associates in all the outlets of Western Union," said Courtney Campbell, CEO of GraceKennedy Financial Group, addressing the division's solid performance.

"Bill Express had a really good quarter — their transaction volume continues to grow — and the cambio, FX Trader, has been doing well in all the markets in which we operate," he added.

The results of the Money Services Division came against the background of a strong overall performance by GraceKennedy, which recorded revenue growth in all five major segments. Group revenues for the first quarter increased by $1.2 billion over the corresponding quarter of 2011, totalling $15.6 billion, an increase of 8.6 per cent. The group's net profit of $723.7 million was six per cent higher than the comparative period last year.

The Food Trading Division had a good first quarter, with revenues up by 9.3 per cent to $10.6 billion and profit before tax 18.8 per cent higher at $404.6 million. The performance was driven largely by strong domestic market sales of products such as cheese (particularly over Easter), coconut milk, cock soup and corned beef, the company said.

GraceKennedy also continued to aggressively push its food brands into international markets.

"Internationally, we continue to expand through new partnerships and personnel," said GK Foods CEO Mike Ranglin.

New partnerships on the west coast of the USA, a new range of cooking sauces and marinades in Canada, revenue growth in Belize, strong performance in the United Kingdom, and further growth in continental Europe were some of the highlights overseas during the quarter, said GraceKennedy.

But the company is especially bullish about its thrust in the African continent; The company's Tropical Rhythms juice drink is now being exported to Ghana.

"We are very excited about the opportunities presented to us in Africa generally and Ghana specifically," said Ranglin. "It is important for us to link with the right people in the right way."

Despite a three per cent revenue growth to $1.5 billion from retail and trading, the division saw its profit before taxation drop from $26.2 million in the 2011 first quarter to $5.3 million over the period under review, impacted by loss-making subsidiary Hardware and Lumber (H&L).

GraceKennedy's two remaining divisions — Banking and Investments, and Insurance — also posted revenue growth amid declines in profit before taxation.

Banking and Investment revenues improved by 3.7 per cent to $1.3 billion, but profits declined by 2.2 per cent to 426.8 million. The Insurance Division posted $1 billion in revenues, 5.8 per cent more than the 2011 first quarter, but profit before tax of $39.3 million was 20 per cent less than the comparative period last year.


Source:
BY JULIAN RICHARDSON Assistant Business Co-ordinator richardsonj@jamaicaobserver.com
Jamaica Observer
Wednesday May 16, 2012

http://www.jamaicaobserver.com/business/GK-wants-more-Western-Union-turf_11464319#ixzz1v2jUCE3t