May 12, 2022
GraceKennedy Limited (GK) recorded revenues of $36.26 billion for the period under review (2021: $31.39 billion), a year over year increase of 15%. Of this, revenue from products and services amounted to $35.06 billion (2021: $30.28 billion), while interest revenue totalled $1.19 billion (2021: $1.11 billion).
Segment report is as follows:
- The Food Trading Business reported revenue of $29.57 billion (2021: $25.04 billion). GK noted, “Our Jamaican food distribution business maintained its momentum from 2021, recording growth in both revenues and pre-tax profits. Core products, including Tropical Rhythms beverages, Grace Ketchup, Grace Coconut Milk Powder, Grace Vienna Sausages and Grace Frankfurters, demonstrated notable growth. This was coupled with the very strong performance of our Caribbean Choice brand, Spring Time laundry products, and Grace Sardines.”
- Furthermore, “GraceKennedy Foods (USA) LLC (GK Foods USA) exceeded prior year’s revenues, however due to shipping logistics costs, profits for the period were negatively impacted. Measures have been implemented to mitigate a recurrence of this going forward. GK Foods USA has benefitted from the growth of the La Fe brand, and the Grace brand also continues to resonate with shoppers, particularly our canned fish and meats. New products such as Tropical Rhythms in the tetra pack and Grace Peanut Punch exceeded expectations.”
- Banking and Investments booked revenue of $1.83 billion (2021: $1.65 billion). GK noted, “GK Capital acted as the principal broker for two successful Initial Public Offerings (IPOs) – Spur Tree Spices Jamaica Limited and Jamaica Fibreglass Products Limited in January and March, respectively. The company also sustained its focus on expense management during the period and realised noteworthy growth in both revenues and PBT as a result.” Also, “. In February, approval was received from the Financial Services Commission in Jamaica for our mutual fund offering from GK Mutual Funds Limited, which is expected to launch to the public by the third quarter of 2022. SigniaGlobe Financial Group Inc., GK’s jointly owned merchant banking business in Barbados, reported encouraging results evidenced by double digit growth in revenue and PBT.”
- Insurance revenue closed at $2.85 billion (2021: $2.47 billion). GK noted, “Key Insurance Company Limited also continues to produce positive results, recording growth in revenues and PBT. Canopy Insurance Limited (Canopy) generated revenue growth over prior year in all business segments. The Canopy team remains focused on revenue diversification and continues to actively pursue strategic partnerships. GKFG’s most recent acquisition, GK Life Insurance Eastern Caribbean Limited reported double-digit top-line growth and will continue implementing its strategy to maximize the performance of its portfolio while establishing itself as a major pan-Caribbean insurer. Allied Insurance Brokers Limited remains one of the leading insurance brokers evidenced by the award of two new tenders in the first quarter. The team is focused on strengthening and growing client relationships and leveraging partnerships.”
- Money Services amounted to $2.14 billion (2021: $2.34 billion). GK noted the decline in revenue was due to, “lower remittance flows and foreign currency volatility during the first quarter of 2022. Other GKMS products, such as “Bill Express” and “FX Trader” however, saw growth in both revenues and PBT. GKMS continued to advance its digital agenda during the period, which was reflected in the positive performance of its online offerings, such as direct-to-bank transactions and “Bill Express Online.”
Total direct and operating expenses amounted to $34.65 billion relative to $29.76 billion booked in 2021, indicating a 16% growth compared to twelve months earlier. In addition, Net impairment losses on financial assets amounted to $55.86 million for the three months ended March 31, 2022 relative to loss of $104.48 million for the corresponding period last year. As such, profit before other income for the three months ended March 31, 2022 amounted to $1.55 billion versus $1.53 billion booked for the comparative period of 2021.
Other income for the period rose by 7% to total $898.96 million (2021: $841.07 million). Moreover, profit from operations amounted to $2.45 billion for the three months ended March 31, 2022 relative to $2.37 billion for the comparable period last year.
Interest income from non-financial services decline by 10% to total $117.41 million compared to $130.17 million reported in the prior corresponding period. Interest expenses from non-financial services closed at $321.15 million versus $264.60 million twelve months earlier, reflecting a 21% increase year over year.
Share of results of associated companies totalled $324.35 million compared to $285.61 million reported for the three months ended March 2021.
Pretax profits rose by 2% to approximately $2.57 billion compared to pretax profit of $2.52 billion documented for the period ended March 2021. Additionally, GK incurred taxation expenses amounting to $694.59 million compared to $680.03 million in the prior corresponding period.
Consequently, net profit increased by 2% to $1.88 billion from $1.84 billion booked for the corresponding period of 2021. Net profits attributable to shareholders for the first quarter ended March 31, 2022 amounted to $1.74 billion compared to $1.65 billion in the previous corresponding period in 2021.
Total comprehensive income closed the three months at $1.06 billion (2021: $2.90 billion).
Earnings per share for the period amounted to $1.75 (2021: $1.66). GK’s trailing EPS amounted to $8.31. The number of shares used in our calculations is 995,012,431 units. GK’s stock price closed the trading period on May 13, 2022, at $111.44 with a corresponding P/E of 13.40 times.
Gk stated, “these results reflect our continued efforts to successfully navigate the myriad challenges we face in the various jurisdictions where we operate around the world, including global inflationary pressures, rising interest rates and supply chain and logistic challenges. Our revenue remains robust and profits for three of our four business segments increased when compared to the corresponding period of the prior year. Given the current geopolitical climate and ongoing COVID-19 pandemic, our outlook for the remainder of 2022 remains cautious; however we are resolute in the execution of our strategic initiatives, while remaining agile in order to mitigate the impact of any headwinds on our business.”
Furthermore, “GK continues to advance its Mergers & Acquisitions (M&A) strategy in 2022. In April, GK entered into an agreement with entrepreneur and information technologist Larren Peart to make a private equity investment in Bluedot. The business was founded by Peart in 2016, and is a full-service research and data intelligence consultancy, which uses data collection and analytics to inform business insights and decisionmaking. The private equity investment sees GK becoming the majority shareholder and the remaining interest held by Larren Peart. Peart will be the Managing Director responsible for its day-to-day operations and developing and implementing its strategy.”
Balance Sheet Highlights:
As at March 31, 2022, the Group’s total assets totalled $202 billion, 13% more than its value of $178.64 billion a year ago. The improvement resulted from growth in ‘Inventories’ and ‘Pledged Assets’ which closed at $19.66 billion (2021: $13.59 billion) and $9.50 billion (2021: $5.67 billion), respectively. ‘Loans Receivables’ and ‘Investment Securities’ also contributed to the growth in the asset base by amounting to $34.75 billion (2021: $31.07 billion) and $38.59 billion (2021: $35.40 billion), respectively.
Total Shareholders’ equity amounted to $68.48 billion which compares to equity of $62.57 billion as at March 2021. As a result, book value per share amounted to $68.82 (2021: $62.88).
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