GK to invest up to $5b in projects, expand distribution centre as business grows
GraceKennedy Limited will spend $4 billion to $5 billion on capital projects this year, says Group CEO Don Wehby, the majority of which will flow to the company's headquarters project and additional distribution capacity.
The food and financial services conglomerate's current capex budget outpaces investments in additions to fixed assets in previous annual periods, including last year's $2.6 billion, as a result of those projects.
Wehby said the company will focus its expenditures on new financial services and improving distribution in the food division. GraceKennedy aims to wrap up construction of its $3-billion headquarters, on which it has already spent over $1 billion to date; invest in technology; retool its factories; and continue the reimaging of the stores in the Hi-Lo supermarket chain, with Cross Roads being the next branch in the line-up.
"In financial services, we will continue the roll-out of agency banking as part of our strategy to reach customers who are currently underserved by the formal banking system," said the GK chief.
"This is also part of our financial inclusion strategy to create locations where customers can conduct a number of financial transactions including banking, insurance and money transfers. We also intend to expand the options for mobile and digital solutions in our money services businesses."
On the food trading side of the operation, GraceKennedy - which added Procter & Gamble products to its distribution portfolio last August through the billion-dollar acquisition of a local company - will be expanding its distribution centre, located in St Catherine, by 50 per cent to facilitate the growing business and improve the supply of products to the market, Wehby said.
The expansion project will grow the centre from more than 230,000 square feet to over 320,000 square feet "to facilitate our growth strategy, including future acquisitions," Wehby added.
The retooling plan is targeted at the conglomerate's factories in Jamaica, United States and the United Kingdom. It aims to "improve efficiency as well as invest in product development equipment," he said.
The headquarters project qualified for tax credits under the Urban Renewal (Tax Relief) Act, the full benefits of which were expected to be booked by year end, when the project is also slated to wrap up construction, Wehby indicated last week at an investor's briefing.
For the company, which netted a profit of $4.77 billion on revenue of $92 billion in 2017, the project delivered $416 million of tax credits for that period.
Wehby says the new headquarters - which is being built close to the conglomerate's current corporate offices at Harbour Street on the Kingston waterfront - will allow it to bring some financial, services subsidiary operations under one roof, and in so doing, save on the rental costs that they now incur in the expensive New Kingston business district.
As for the 73 Harbour Street building, the GK chief executive said it would become the base for the food trading division.