GK reports 9% decline in nine months net profits

November 10, 2022

Grace Kennedy Limited (GK) recorded total revenue of $107.44 billion for period (2021: $95.78  billion), a year over year increase of 12%. Of this, Revenue from products and services amounted to $103.99 billion (2021: $92.36 billion) and interest revenue totalled $3.45 billion (2021: $3.42 billion).

The biggest contributor to the Group’s overall revenue for the nine-month period came from the ‘Food Trading’ segment which contributed a total of $85.66 billion (2021: $75.15 billion), an increase of 14% relative to the prior year’s corresponding period. The other segments contributing to revenue are as follows:

‘Banking & Investments’ went up 19% year over year to total $5.91 billion (2021: $4.96 billion).

Revenue from ‘Insurance’ amounted to $10.34 billion, a year over year increase of 22% over last year’s corresponding period of $8.45 billion.

‘Money Services’ brought in $6.65 billion, 8% less than the $7.22 billion reported in September 2021.

Direct and operating expenses amounted to $101.89 billion relative to $89.50 billion booked in 2021, indicating a 14% growth compared to twelve months earlier. Net impairment losses on financial assets totalled $213.14 million (2021: $392.40 million). Whereas direct and operating expenses for the third quarter amounted to $33.23 billion, up from $30.25 billion for the same quarter of 2021.

As such, gross profit for the nine months amounted to $5.33 billion relative to $5.88 billion booked for the similar period of 2021, a 9% decrease. Gross profit for the third quarter decreased by 24% to $1.52 billion compared to $2.01 billion reported for the third quarter of 2021.

Other Income during the nine-month period, fell 13% to total $2.36 billion (2021: $2.71 billion).

Interest income from non-financial services declined 2% to total $423.93 million compared to $433.58 million reported in the prior year’s corresponding period. Interest expenses from non-financial services amounted to $919.27 million versus $858.26 million a year earlier, a 7% increase.

Share of results of associated companies rose by 46% amounting to $539.24 million, versus $368.29 million reported for September 2021.

Pre-tax profits decreased 9% to $7.74 billion, compared to pre-tax profit of $8.54 billion documented for the nine-month ended September 2021.  Additionally, GK incurred taxation expenses amounting to $2.09 billion compared to $2.31 billion in September 2021.

Consequently, net profit declined 9% to $5.65 billion from $6.23 billion booked for the corresponding period of 2021. Net profit for the third quarter fell 26% to $1.66 billion (2021: $2.26 billion).

Net profit attributable to shareholders amounted to $5.22 billion compared to $5.68 billion in the previous year’s corresponding period, showing an 8% decrease. Net profit attributable to shareholders for the third quarter amounted to $1.52 billion, down from the $2.09 billion booked for the same quarter of 2021.

Total comprehensive income closed the nine months at $3.27 billion (2021: $7.08 billion). Total comprehensive income for the quarter amounted to $601.25 million (2021: $2.18 billion).

Earnings per share for the third quarter amounted to $1.53 (2021: $2.10), while for the nine months GK booked an EPS of $5.25 (2021: $5.71). GK’s trailing EPS amounted to $8.05. The number of shares used in our calculations is 995,128,505 units. GK’s stock price close the trading period on November 10, 2022 at $85.85 with a corresponding P/E of 10.66 times.

Balance Sheet Highlights:

 As at September 30, 2022, the Group’s assets totalled $200.75 billion, 6% or $10.65 billion more than the $190.10 billion a year ago.  The improvement resulted in part from a growth in ‘Inventories and ‘Cash and Deposits’ which closed at $20.08 billion (2021: $15.22 billion) and $34.10 billion (2021: $27.13 billion), respectively.

Shareholders’ equity amounted to $69.13 billion which compares to equity of $65.07 billion as at September 30, 2021.  As a result, book value per share amounted to $69.46 (2021: $65.39)


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