GK reports 15% increase in revenues for the six months ended June 2022

July 28, 2022

Grace Kennedy Limited (GK), for the six months ended June 30, 2022, recorded revenue of $72.59 billion for period (2021: $63.35 billion), a year over year increase of 15%. Revenue for the second quarter of 2022 improved 14% to $36.33 billion (2021: $31.96 billion). The biggest contributor to the group’s overall revenue for the six-month period came from the ‘Food Trading’ segment which contributed a total of $57.89 billion (2021: $49.64 billion), an increase of 17% relative to the prior year’s corresponding period. The other segments contributing to revenue are as follows:
‘Banking & Investments’ climbed 14% year over year to total $3.73 billion (2021: $3.28 billion). The Group mentioned that, “Our Banking and Investments segment yielded positive results, led by GK Capital Management Limited (GK Capital), the investment and advisory arm of GKFG. GK Capital sustained its growth momentum into the second quarter of 2022, with revenues growing significantly compared to the same period last year. This positive performance was largely buoyed by the two successful initial public offerings of Spur Tree Spices Jamaica Limited and Jamaica Fibreglass Products Limited and GK Capital’s increased non-interest revenue streams. GK Capital has signed an agreement with the largest operator and manager of mutual funds in the Caribbean, the Trinidad and Tobago Unit Trust Corporation (TTUTC). The new venture, which remains subject to the requisite regulatory approvals, will allow GK Capital and TTUTC to partner in the distribution of mutual funds in Jamaica.”

Revenue from ‘Insurance’ amounted to $6.49 billion, a year over year increase of 16% over last year’s corresponding period of $5.61 billion. Management highlighted that, “Our Banking and Investments segment yielded positive results, led by GK Capital Management Limited (GK Capital), the investment and advisory arm of GKFG. GK Capital sustained its growth momentum into the second quarter of 2022, with revenues growing significantly compared to the same period last year. This positive performance was largely buoyed by the two successful initial public offerings of Spur Tree Spices Jamaica Limited and Jamaica Fibreglass Products Limited and GK Capital’s increased non-interest revenue streams. GK Capital has signed an agreement with the largest operator and manager of mutual funds in the Caribbean, the Trinidad and Tobago Unit Trust Corporation (TTUTC). The new venture, which remains subject to the requisite regulatory approvals, will allow GK Capital and TTUTC to partner in the distribution of mutual funds in Jamaica.”

‘Money Services’ brought in $4.48 billion, 7% less than the $4.83 billion reported in June 2021. GK noted that, “GraceKennedy Money Services (GKMS) reported a decline in revenue and PBT for the period, primarily attributed to lower remittance flows and the volatility of the Jamaican dollar against the US dollar. The Bank of Jamaica has reported a decline in remittance inflows since the start of the year, and we have put strategies in place to address this which are focused on marketing, pricing, agents, compliance, and our customers. Bill Express and FX Trader continue to perform well, and recorded growth in both revenues and PBT. GKMS remains focused on improving and expanding its digital channels and service levels.”

Direct and operating Expenses amounted to $68.66 billion relative to $59.25 billion booked for the previous period, indicating a 16% increase. As for the quarter, direct and operating expenses amounted to $34.01 billion, up from $29.49 billion for the second quarter of 2021. The Company booked a net impairment losses on financial assets of $117.40 million compared to 2021’s $229.92 million.

As such, gross profit for the six months slipped 1% to $3.81 billion relative to $3.87 billion booked for the similar period of 2021. While, gross profit for the second quarter fell 4% to $2.26 billion compared to $2.34 billion reported for the second quarter of 2021.

Other Income during the first six months ended June 30, 2022, rose 5% to total $1.61 billion (2021: $1.53 billion). While, other income for the quarter closed at $708.53 million (2021: $686.21 million).

Consequently, profit from operations closed the six months period at $5.42 billion (2021: $5.40 billion) and the second quarter at $2.97 billion (2021: $3.03 billion).

Interest income from non-financial services fell 8% to total $255.30 million compared to $276.09 million reported in the prior year’s corresponding period. Interest expenses from non-financial services amounted to $643.59 million versus $557.85 million a year earlier, a 15% increase. Additionally, share of results of associated companies rose by 29% amounting to $425.71 million, versus $329.58 million reported for June 2021.

As such, pre-tax profits increased marginally to approximately $5.46 billion, compared to pre-tax profit of $5.45 billion documented for the first six months of 2021. Additionally, GK incurred taxation expenses amounting to approximately $1.47 billion compared to a similar $1.47 billion in June 2021. However, the second quarter pre-tax profit closed at $2.89 billion (2021: $2.93 billion) and tax charged was $779.02 million (2021: $790.16 million).

Consequently, net profit inched up to $3.98 billion from $3.97 billion booked for the first six months of 2021. Net profit for the second quarter slipped 1% to $2.11 billion (2021: $2.14 billion).

Net Profits attributable to shareholders amounted to $3.70 billion compared to $3.59 billion in the previous year’s corresponding period, showing a 3% increase. Net profit attributable to shareholders for the second quarter amounted to $1.96 billion, up from the $1.93 billion booked for the same quarter of 2021.

Total comprehensive income amounted to $2.67 billion relative to $4.90 billion in the previous year’s corresponding period. Total comprehensive income for the second quarter amounted to $1.61 billion (2021: $2 billion).

Earnings per share for six months amounted to $3.72 (2020: $3.61), while for the second quarter, GK booked an EPS of $1.97 (2021: $1.94). GK’s trailing EPS amounted to $8.34.  The number of shares used in our calculations is 995,004,356 units. GK’s stock price close the trading period on July 28, 2022 at $97.20 at a corresponding P/E of 11.65 times.

GK noted that, “The GK One mobile app was released in the Google Play and Apple App stores in March with the Bill Payment feature enabled. Customers can now also receive a Western Union remittance via the app, directly to their mobile wallet. The Visa prepaid card associated with the app has been dubbed the “Shelly” card as it features an image of our outstanding Jamaican sprinter and GK Ambassador Shelly-Ann Fraser-Pryce. Customers have expressed excitement upon receiving their “Shelly” card and are responding positively to the ease of use of the GK One app and card. Additional money services are on target to be rolled out via the app in the coming months.”

Balance Sheet Highlights:

As at June 30, 2022, the company’s assets totalled $200.15 billion versus $185.28 billion booked a year ago.  The improvement resulted in part from a growth in ‘Cash and Deposits’ and ‘Investment securities’ which closed at $31.73 billion (2021: $27.75 billion) and $38.03 billion (2021: $36.71 billion), respectively.
Shareholders’ equity amounted to $69.19 billion which compares to shareholder’s equity of $63.51 billion as at June 30, 2021.  As a result, book value per share amounted to $69.53 (2021: $63.82).

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2022-07-28T21:04:53-05:00