July 31, 2020
Grace Kennedy Limited (GK), for the six months ended June 30, 2020, recorded revenue of $56.53 billion for period (2019: $51.49 billion), a year over year increase of 10%. Revenue for the second quarter of 2020 improved 8% to $27.68 billion (2019: $25.56 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 $44.94 billion (2019: $41.03 billion), an increase of 10% relative to the prior year’s corresponding period. The other segments contributing to revenue are as follows:
- ‘Banking & Investments’ climbed 1% year over year to total $3.08 billion (2019: $3.04 billion). The Group mentioned that, “First Global Bank sustained growth in its loan and deposit portfolios and, in collaboration with GKMS, successfully established several thousand accounts for beneficiaries of the CARE program. The Bank also continues to partner with its retail and commercial clients to provide support during the pandemic.”
- “Revenue from ‘Insurance’ amounted to $4.58 billion, a year over year increase of 19% over last year’s corresponding period of $3.84 billion. Management highlighted that, “Canopy Insurance continues to record increased business since commencing operations in late 2019, attributed to the market’s positive reaction to a modernized and seamless interface. Key Insurance Company Limited appointed a new Board of Directors on 31 March 2020 which has, since 1 April 2020 been guiding the business by supporting the development and implementation of strategic initiatives designed to increase shareholder value”
- ‘Money Services’ brought in $4.09 billion, 10% greater than the $3.73 billion reported in June 2019. GK noted that, “We continue to leverage opportunities to drive the adoption of digital channels and are seeing significant growth in transaction volumes. The business is currently focused on the relaunch of WU.com to further drive digitalization and provide our customers with other convenient offerings. Across the region, the GKMS Group participated in national COVID-19 response efforts. Over 110,000 transactions relating to the collection of government stimulus packages, were paid out across the GKMS network, representing a majority of beneficiaries under the Government’s CARE program. This program was designed to help cushion the economic impact of the COVID-19 pandemic on individuals, and businesses.”
GK noted that, “In addition to increased revenue and improved margin management, this strong operating performance is attributed to increased focus on operational efficiency and cost containment. These measures will continue for the remainder of the year given the magnitude of the spread of the COVID-19 virus and its continued impact on the economies in which we operate, and our consumers.”
In addition, Management stated, “Our results reflect strong performance for the half year. The outlook for the remainder of 2020 is unclear, however, given the uncertainty created by the unprecedented COVID-19 virus, globally. Spikes in the number of confirmed cases in certain markets, particularly the USA, and the ongoing impact on the international supply chain , contribute to that uncertainty. Jamaica has been lauded internationally for the country’s management of the COVID-19 pandemic and we have seen the cautious re-opening of the island’s borders and gradual lifting of business restrictions.”
Direct and operating Expenses amounted to $52.96 billion relative to $49.64 billion booked for the previous period, indicating a 6% increase. As for the quarter, Direct and operating expenses amounted to $25.64 billion, up from $24.65 billion for the second quarter of 2019. The company booked a net impairment losses on financial assets of $501.99 million (2019: $199.90 million) and $254.48 million (2019: $140.72 million) for the six months period and second quarter, respectively.
As such, gross profit for the six months climbed 86% to $3.07 billion relative to $1.65 billion booked for the similar period of 2019. While, gross profit for the second quarter went up 133% to $1.79 billion compared to $768.15 million reported for the second quarter of 2019.
Other Income during the first six months ended June 30, 2020, rose 26% to total $1.50 billion (2019: $1.19 billion). While, other income for the quarter closed at $855.12 million (2019: $876.46 million).
Consequently, profit from operations closed the six months period at $4.56 billion (2019: $2.84 billion) and the second quarter at $2.64 billion (2019: $1.64 billion).
Interest income from non-financial services grew 6% to total $223.46 million compared to $211.41 million reported in the prior year’s corresponding period. Interest expenses from non-financial services amounted to $553.44 million versus $473.30 million a year earlier, a 66% increase. Additionally, share of results of associated companies declined by 22% amounting to $286.93 million, versus $368.26 million reported for June 2019.
As such, pre-tax profits increased 53% to approximately $4.52 billion, compared to pre-tax profit of $2.95 billion documented for the first six months of 2019. Additionally, GK incurred taxation expenses amounting to approximately $1.47 billion compared to $678.58 million in June 2019. However, the second quarter pre-tax profit closed at $2.53 billion (2019: $1.63 billion) and tax charged was $933.45 million (2019: $374.76 million).
Consequently, net profit climbed 34% to $3.05 billion from $2.27 billion booked for the first six months of 2019. Net profit for the second quarter improved 27% to $1.60 billion (2019: $1.25 billion).
Net Profits attributable to shareholders amounted to $2.75 billion compared to $2.01 billion in the previous year’s corresponding period, showing a 37% increase. Net profit attributable to shareholders for the second quarter amounted to $1.43 billion, up from the $1.11 billion booked for the same quarter of 2019.
Earnings per share for six months amounted to $2.76 (2019: $2.02), while for the second quarter, GK booked an EPS of $1.44 (2019: $1.12). GK’s tailing EPS amounted to $5.25. The number of shares used in our calculations is 995,004,356 units. GK’s stock price close the trading period on July 30, 2020 at $56.84.
Additionally, GK noted that, “GraceKennedy remains a premier provider of essential services through our financial institutions in the Caribbean region, our supermarkets in Jamaica and global food and beverages distribution. It is anticipated that the second half of the year could see reduced consumer spending as the effect of diminished disposable incomes becomes more acute. GraceKennedy prides itself on embodying our “We Care” tenet and as business activities cautiously resume, our priority remains the safety and well-being of our staff and customers. We remain proactive in our operations as we continue to execute initiatives under our COVID-19 action plan and Business Continuity protocols, and inventory and liquidity management. Providing broader access to our customers through digital platforms locally and in our overseas markets remains a priority and we are seeing positive results from this effort.”
However, despite the pandemic GK continue to focus on corporate governance, the company stated, “We increased our support for communities wherever we are located globally. In collaboration with our Grace and Staff Foundation, we donated J$5 million towards the purchase of 200 tablets and several laptops for students and teachers in need in Jamaica, to enable access to remote learning platforms while schools have been closed.”
Furthermore, “GraceKennedy Limited remains both pro-active and responsive in dealing with the challenges of the COVID-19 virus and its impact on our lines of business, the countries in which we operate, and our employers and consumers. Our efforts continue to be directed towards achieving our strategic objectives by focusing on digital channels and ease of doing business.”
Balance Sheet Highlights:
As at June 30, 2020, the company’s assets totalled $163.63 billion versus $150.25 billion booked a year ago. The improvement resulted in part from a growth in ‘Cash and Deposits’ and ‘Fixed assets’ which closed at $17.71 billion (2019: $10.95 billion) and $23.99 billion (2019: $21.33 billion), respectively. Also, ‘Receivables’ and ‘Loan Receivables’ contributed to the growth closing at $21.03 billion (2019: $18.58 billion) and $31.04 billion (2019: $28.70 billion), respectively.
Shareholders’ equity amounted to $54.92 billion which compares to equity of $50.77 billion as at June 30, 2019. As a result, book value per share amounted to $55.19 (2019: $51.03).
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