GraceKennedy books $150 million in redundancies
Food and financial services conglomerate GraceKennedy Limited expects to book $150 million as redundancy costs relating to job cuts that have already begun.
Under programme to drive up revenue and returns, the company announced the elimination of 70 positions and redeployment of an unidentified number of staff.
Group CEO Don Wehby told the Financial Gleaner that the cuts included staff and managers in Jamaica and overseas.
The disclosure of the cost of the exercise was made in the company's newly released second quarter earnings report as a 'subsequent event'.
"In July 2018 the group commenced implementation of a restructuring exercise as part of a multiyear transformation process to achieve sustainable efficiency and improve performance. Part of the restructuring process will result in some positions being made redundant during the third quarter 2018," the report stated.
It also noted that the $150 million was a preliminary estimate and that the costs would be booked in a later period to be booked.
"Since the beginning of the year the group has been taking a closer look at overall organisational design, cost structure, greater agility and revenue growth," the conglomerate said.
In the June quarter, profit grew 9.2 per cent. GraceKenendy made $1.14 billion in net profit from revenue of $23.5 billion compared to $1.04 billion on revenues of $22.7 billion a year earlier.Over six months, net profit hit $2.45 billion on revenues of $48.3 billion compared to $2.18 billion on revenues of $46.4 billion in 2017.
GraceKennedy's return on equity now trends at 10 per cent, based on annualised profit of $4.9 billion and equity of $48.5 billion.
The company is profitable but Wehby is concerned that the business does not generate enough cash and that the returns don't match the company's size. The organisational review is being done by outside experts, the London Consulting Group, and is meant to position the company for its 100th jubilee in 2022.