March 1, 2021
GraceKennedy Limited (GK) recorded revenue of $115.44 billion for the period (2019: $103.09 billion), a year over year increase of 12%. Revenue is broken down into Revenue from products and services and interest revenue which amounted to $111.06 billion (2019: $98.91 billion) and $4.37 billion (2019: $4.18 billion), respectively.
Revenue for the quarter of 2020 improved by 12% to $29.31 billion (2019: $26.06 billion).
Segment report is as followed:
- The Food Trading segment reported revenues of $91.04 billion, up 12% relative to the $81.64 billion reported in 2019, due “mainly to the outstanding performance of our international food business,” as per GK.
- Banking & Investments produced revenues of $6.39 billion compared to $6.20 billion reported in 2019. According to Management, “the Banking and Investments segment experienced challenges due to the decline in Jamaica’s economic performance as a result of COVID-19. First Global Bank Limited (“FGB”) realized growth in revenue but increased provisioning affected the growth in profitability. Focus was placed on strengthening the bank’s e-commerce platform and rolling out products to specifically address the needs of its clients to foster loyalty. The opening of over 7,000 accounts for previously unbanked Jamaicans in partnership with GKMS, as part of its Financial Inclusion strategy, marked a special achievement for the bank in 2020. Towards the end of 2020, FGB finalized plans for the launch of Global Access Plus, an upgrade of its online banking system, to provide greater reliability and convenience and which includes new features such as biometric scans for improved data security. FGB was proactive in its communication with its customers, and successfully hosted a virtual town hall discussion engaging a large number of clients. Other efforts to enhance our customer relationships included the granting of payment holidays and restructuring of loan facilities.”
- The Insurance segment posted a 23% growth in revenue year over year to close at $9.94 billion relative to $8.07 billion documented in 2019. According to GK, “GK General Insurance Company Limited (“GKGI”) reported double-digit growth in both revenue and profit before tax, achieved through the combination of commendable claim performance, diligent expense and investment management. The commercial portfolio also exceeded expectations as a result of keen relationship management with strategic partners. GKGI continues to expand its digital footprint with the addition of the “My Portal” feature to the website, creating an opportunity for an improved client experience. Canopy Insurance continues to show growth in its health portfolio member base and closed the year ahead of its targets. The newest member of the GKFG, Key Insurance Company Limited, reported encouraging results under the leadership of its new management team. Portfolio growth will remain its key strategic objective, and a marketing campaign to reconnect with its clients has been successfully launched.”
- The Money Services segment managed to grow revenues by 13% to $8.96 billion (2019: $7.91 billion). According to GK, “the Remittance business delivered impressive results, particularly in the inbound market, highlighting the commitment of the Jamaican diaspora to their friends and families back home. GraceKennedy Money Services Limited (“GKMS”) continued its innovation initiatives which saw an increase of over 400% in Western Union digital transactions.”
Total expenses amounted to $108.63 billion relative to $99.35 billion booked in 2019, indicating a 9% growth compared to twelve months earlier. Expenses for the quarter amounted to $27.73 billion, up from $25.07 billion for the same quarter in 2019. As such, profit before other income for the year end amounted to $6.80 billion relative to $3.74 billion booked for the comparative period of 2019. Profit before other income for the quarter closed at $1.68 billion compared to $858.43 million reported for the quarter of 2019.
Other income for the year-end period rose by 20% to total $3.02 billion (2019: $2.52 billion). While for the quarter, other income closed at $755.55 million relative to $593.14 million in the prior corresponding period.
Operating profit amounted to $9.83 billion relative to $6.26 billion for the year ended December 31, 2019. Whilst for the fourth quarter ended December 31, 2020, operating profit totalled $2.44 billion relative to $1.45 billion in 2019.
Interest income from non-financial services rose 7% to total $467.87 million compared to $437.40 million reported in the prior year’s corresponding period. Interest expenses from non-financial services amounted to $1.13 billion versus $1.09 billion a year earlier, a 4% increase.
Share of results of associated companies totalled $543.53 million, compared to $518.89 million reported for December 2019.
Pretax profits increased by 58% to approximately $9.71 billion compared to pre-tax profit of $6.13 billion documented for the year ended December 2019. Additionally, GK incurred taxation expenses amounting to $2.85 billion compared to $1.03 billion in the prior corresponding quarter.
Moreover, GK noted that the, “2020 financial results do not reflect any one-off gains, Group CEO Don Wehby attributed the remarkable performance to the Company’s improved agility and the successful execution of its strategic initiatives, notwithstanding the challenges presented by the COVID-19 pandemic. At the centre of GK’s strategy in 2020 was securing a reliable global supply chain, improving efficiency to better manage costs, as well as providing new delivery channels and innovative solutions for its customers.”
Consequently, net profit increased by 34% to $6.86 billion from $5.10 billion booked for the corresponding period of 2019. For the quarter, net profit closed at $1.92 billion (2019: $1.39 billion).
Net Profits attributable to shareholders amounted to $6.22 billion compared to $4.49 billion in the previous year’s corresponding period. Net profit attributable to shareholders for the quarter amounted to $1.79 billion, up from $1.22 billion booked for the same quarter of 2019.
Total comprehensive income for the year amounted to $9.94 billion (2019: $9.91 billion).
Earnings per share for the period amounted to $6.25 (2019: $4.51), while for the quarter, GK booked an EPS of $1.80 (2019: $1.22). The number of shares used in our calculations is 995,004,356 units. GK’s stock price closed the trading period on February 26, 2021 at $81.99 corresponding to a P/E of 13.12 times.
GK noted that, “Following the establishment of our Digital Transformation and Mergers and Acquisitions teams, we are pleased to report progress in both areas, as the setup of our first Digital Factory is well underway and we are actively exploring a number of potential targets for acquisition.”
Balance Sheet Highlights:
As at December 31, 2020, the company’s assets totalled $171.70 billion, 11% more than the $154.71 billion booked a year ago. The improvement resulted from growth in ‘Cash and Deposits’ and ‘Pension Plant Asset’ which closed at $24.33 billion (2019: $14.63 billion) and $6.84 billion (2019: $5.82 billion), respectively.
Total Shareholders’ equity amounted to $59.91 billion which compares to equity of $52.33 billion as at December 2019. As a result, book value per share amounted to $60.21 (2019: $52.59)
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