GraceKennedy Limited’s (GK) Investor Briefing held on March 7, 2017
Mr. Frank James, Group Chief Financial Officer, reported on the company’s audited financials for the year ended December 31, 2015 while Mr. Don Wehby, GK’s Group Chief Executive Officer provided an overview of the company’s strategic plans for the future.
Mr. James noted that, revenues in 2016 totaled $88.3 billion compared to $79.7 billion in 2015, adding that, “all business segments reported increases in revenue.” The biggest of which was the income from the ‘Food Trading’ segment which contributed a total of $69 billion, an increase of 10% relative to the comparable period in 2015. Within this food segment, ”Grace saw a 25% of revenue in North America, 15% in Europe and 1% in Africa. Mr. James stated that there is still large potential in the African market and Grace will be looking to make further inroads in the African market.
Among the other segments contributing to revenue, ‘Banking & Investments’ grew 12% to total $5.62 billion mainly due to an increase in both loans and deposits. Profitability for the division however declined 29% due to the expansion of the Liguanea and Ocho Rios branch. Revenue from ‘Insurance’ amounted to $6.37 billion an increase of 16%. According to Mr. James “This was primarily driven by our underwriter GK General Insurance company which managed to double its revenue through innovation….. We have also seen a regional expansion as our underwriter in St. Lucia EC Global Insurance Company Limited now operates in St. Vincent, Antigua and Grenada.” Money Services’ brought in $ 7.85 billion, a 19% increase relative to the comparative 2015 period. It was noted however that the company is planning to expand its money services division to the Cayman Islands as well as grow GK MPAY. GK MPAY according to Wehby “has gotten great feedback and has seen amazing growth in one month it has been in operations.” MPAY is also expected to be expanded to Trinidad and Guyana in the short term according to Wehby.
Mr. Frank James indicated that “Our debt to equity ratio has reduced to 32% from 37% the year prior which is still low showing that GK has room for improved growth.” The company expects to continue growing for the coming year and has also stated that it will look to expand its La Fe brands to Belize, Canada and Cuban markets as they are currently doing some research on same.
Both Mr. Wehby and Mr. James assured investors that 2017 is going to be a very positive year for GK, especially in a context where the company has a number of expansions in its market as well as reaping the results of the technological expansion done in its banking and financial services division. GK has also stated that it is looking to increase its Western union products as well as to increase its digital platform on WU.com. Grace will be trying to ensure that 60% of its profits are made outside of Jamaica as both a risk management and growth strategy. GK has seen 60% growth in GK Online with over 11 different countries doing transactions on the platform. This is a major part of their mobility/expansion into the region as persons have the access of the online platform from anywhere in the world.
GK maintains that for 2017 it will continue to increase dividend payments as the company paid over 1 billion in dividends for 2016, Mr James stated that “the dividend to be paid May 18 is already an increase to the amount approved this time last year.” Mr. Wehby closed by adding that GK will continue to work to increase its dividend and shareholder value. He stated that prices on the market increased by 49% mainly due to the increased trading activity following the stock split done last year.
