March 9, 2018
Grace Kennedy reported on its year end result via a live video stream March 8, 2018. Group Chief Executive Officer (CEO) Donald Wehby started off by outlining a myriad of challenges the company faced for the 2017 period, before moving on to unveil future plans for the Group in 2018 and beyond.
The slew of hurricanes to hit the Caribbean in 2017 has impacted the operation of the Company but mainly through it insurance service business. Despite this, all business segments experienced growth in profit with the exception of insurance which contracted year over year. Food Trading profit was up 17% for the year ended 2017, while Banking and Investment profit when up 79%. Mr. Wehby summed up his address with additional highlights throughout the year:
- The ban on corn beef was said to have also impacted the operation of Grace Kennedy for the financial year ending 2017. According to Frank James- Group Chief Financial Officer- “ the ban on corn beef impacted the Jamaican revenue by $500 million.”
- For the latter half of 2017, the Jamaican dollar appreciate against its main counter-part- the USD- by approximately 5%. “As an international company, earning 44% of our profit outside of Jamaica the re-evaluation of the dollar in the latter part of 2017 has affected our revenue and by extension our profitability”, according to Don Wheby.
- During 2017, GK in agreement with Western- union suspended the operation of 10 Western union locations across the island in August 2017. However, stricter compliance measures and increase due diligent throughout the Western Union network resulted in the reopening of 8 outlets in December and currently all ten outlets are now in full operation. This has negatively impacted GK 2017 results.
- On September 1, 2017 GK finalized a deal to acquire 100% of Consumer Brands, a large player in the local distribution sector. Even-though it is early days yet the move has been baring fruits as “Consumer brands has being out performing throughout the year. Revenue is up and contributing to GK bottom line is up” Don Wheby stated. Grace Kennedy at this time is actively looking at potential acquisitions within the financial and the food business both locally and overseas. GK is interesting in expanding it banking and insurance business regionally. “For Financial services the focus will be on Trinidad and Guyana to expand both Insurance and Banking services” according to the CEO.
On the brighter side of things, CEO Don Wehby alluded to a range of innovative products to be launched in the coming financial year, along with information on the progress GK has made on delivering on its goal of becoming more efficient and more profitable.
According to the CEO, by incorporating innovation along with sales strategy, Grace Kennedy Ltd was able to bolster revenue through acquisition and by adding new products and services. As such, revenue for the Group surpassed the $90 billion mark, closing 2017 year end at $92.5 billion.
Despite the revenue growth achievement, pre-tax profit was down approximately 5% for the financial year ended December 2017. Frank James attributed this lowering of pre-tax profit to a Non-recurring gain that occurred in 2016. The Group Chief Financial Officer noted, “Non-recurring gains were more significant on a pre-tax basis than the gain that derived from acquisition in 2017.” GK after tax net profit was up around 5% due to the tax credit which is expected to continue into 2018 financial year.
Additionally, GK has budgeted $3 billion to construct its new head quarter in Downtown Kingston. Under the Urban renewal tax relief act, GK is allowed to recover 1/3 of its capital investment in the form of tax credit. The project is 50% complete and is scheduled to be finish in late 2018.
GKG online continues to grow, while GKMK started off slower than expected but GK is anticipating the launch of a new product on the platform, including a companion card to be launch in the second half of 2018 financial year.
Mr. Wehby announced the HiLo supermarket chain as the “game changer” of retail. The HiLo Super market chain is promised to be an online e-commerce platform where customers can order their groceries from the comfort of their home or office and have them delivered. In passing the CEO mention that GK products are also now available on Amazon.
In addition to the disruption to come to the retail sector, GK has its plans set on “revolutionalizing” the financial service sector also. Expected to launch this August, GK will offer potential customers the option of carrying out a wide range of financial transaction- from banking, to insurance to money service- via a mobile phone.
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