Second-quarter profits decline despite revenues growth at Grace
Food and Financial conglomerate GraceKennedy (GK) took an expected hit to its bottom line, posting a second quarter of 19.1 per cent decrease in profitability.
Net profit for the period ending June 2017 stood at $2.2 billion, representing a decrease of $516.4 million compared with the corresponding period of 2016. GraceKennedy says this was mostly due to the effect of a non-recurring gain of $423.5 million in 2016.
The conglomerate previously reported that the non-recurring gain was realised on the liquidation of some non-operating subsidiaries. Without this, net profit for the current period would have been lower than the corresponding period of 2016 by 5.5 per cent, the company said.
GraceKenedy reported $46.4 billion in revenues, an increase of $2.3 billion, or 5.1 per cent, over the corresponding period of 2016. This was driven by growth in both its food trading and financial segments.
The food trading segment showed growth in revenue and a decline in pre-tax profits compared to the corresponding period in 2016. Total revenue stood at $36.39 billion compared to $34.76 billion for the corresponding period in 2016, while profit before taxation was $908.56 million compared to $1.03 billion in 2016. The financial segments (banking and investments, insurance and money services) all showed increases in revenue, with only insurance showing decreased profits.
Group CEO Don Wehby says the results were expected and were in line with projections since planned expansion presented costs.
"We are satisfied with the profits of $2.2 billion, which, while below prior year, are ahead of plan, as factors such as costs associated with expansion were taken into account in our 2017 planning process. The group is on track for improved operating performance over prior year," Wehby said.
On July 27, the board of directors approved an interim dividend of 38 cents per stock unit to be paid on September 26, representing a 12 per cent increase over the dividends paid in September 2016.
Earlier in July, GK announced that it was entering into an agreement to acquire Consumer Brands Limited, a large player in the Jamaican distribution market. The company currently distributes the Proctor and Gamble line of products, among other international brands.