By Dennise Williams, Staff ReporterGRACE, KENNEDY & Co. Ltd (Grace) held their investor briefing on April 14 at their Harbour Street headquarters. Douglas Orane, Chairman & Chief Operating Officer, and Don Wehby, Chief Financial Officer, were the main presenters.
The briefing consisted of a review of Grace's 2003 performance and the outlook for 2004. And with the stellar performance of 2003 behind them, Mr. Orane could, with confidence state, "The 2004 profit forecast will be 15 per cent over 2003." That is, the company expects to earn $2.28 billion in 2004.
YEAR IN REVIEW
Looking back at the year passed, Mr. Orane stated, "In 2003, your company achieved several financial successes, which included:
Revenue growth of 26 per cent to post sales of $24.8 billion
Operating income of $1.99 billion, an increase of 55.3 per cent
Net profit attributable to stockholders rising to $1.98 billion, an increase of 23.5 per cent
Return on equity of 18.8 per cent, up from 18.6 per cent
Earnings per stock unit of $6.12 compared with $4.96 for 2002.
Dividend payments increasing by 26.1 per cent to $210.1 million."
This performance was not based on luck but as a result of a focused corporate strategy. A big part of the Grace modus operandi is reinvesting in itself. Mr. Orane highlighted some of the capital investments made for 2003.
"The acquisition of majority ownership in Hardware & Lumber Limited was the single largest capital investment for 2003. It involved a US$3 million cash purchase of shares and the merger with our subsidiaries Rapid & Sheffield Co. Limited and AgroGrace Limited. Grace also invested J$170 million in First Global Bank to facilitate the continued growth of its operations, and J$80 million was invested in Hi-Lo Food Stores to fund its expansion and purchase of five additional stores.
CONTINUOUS UPGRADE
Grace Food Processors (Canning) Limited spent a total of J$21 million on equipment and machinery during the year.
This is in keeping with our commitment to continuously upgrade our factories. Additionally, a further J$41 million was used to fund the expansion of Grace, Kennedy Remittance Services' IT network."
Another key aspect in Grace's strategy is to continually innovate. Currently, the conglomerate has a US$1.85 million 'Innovation Fund' to, as described by Mr. Orane, "encourage innovation without pressure from operational constraints." That is, this fund is separate and apart from the funds used to fuel the daily operations of Grace. Some of the innovations of 2003 were:
The launch of Grace Readi Meals, Diet Tropical Rhythms and the Family-size Tropical Rhythms Sorrel Ginger
Acquiring a 40 per cent stake in a merchant bank in Barbados, renaming it Signia Financial Group Limited
Bill Express was launched in Grenada, Dominica and St. Lucia along with an on-line bill payment feature.
Opening of two new Rapid & Sheffield stores in Mandeville and Montego Bay.
SHARE PRICE GROWTH
The Caribbean stock markets rewarded Grace for its diligence. Stated Mr. Orane, "On the Jamaica Stock Exchange, the share price of Grace appreciated by 42 per cent over the year to close at J$53.95. The stock also performed well on the Trinidad & Tobago and Barbados exchanges, registering increases of 16 per cent and 33 per cent respectively."
As at the date of the presentation, the Grace stock performed regionally in the following manner.
Stock April 13,
| Exchange | 2004 | 2003 | 2002 |
| Jamaica | J$80.00 | J$53.95 | J$38.00 |
| Trinidad | TT$8.50 | TT$5.80 | TT$5.00 |
| Barbados | BD$1.85 | BD$1.60 | BD$1.20 |
20/20 VISION
But despite the excellent performance in 2003, Mr. Orane stated that Grace realised that it could not reach its target of having 50 percent of its profits earned in economies outside of Jamaica by the year 2020 at a rate of growth in Jamaica of 12 per cent and 16 per cent growth overseas. This is due to the fact that, "our profits increased in Jamaica faster than we affected." In 2003, 69 per cent of profits were earned from Jamaica with 31 per cent earned overseas. Therefore, the company readjusted its growth projections. With growth of 10 per cent in Jamaica and 20 per cent outside Jamaica, the goal would be reached by 2012. And so, in 2004, Grace is going full steam ahead with its objective of "strategic focus resulting in world-class performance."
So far, Grace has:
Merged First Global Bank with George & Branday Merchant Bank to form First Global Bank Limited and First Global Financial Services Limited.
Officially launched the Grace Caribbean Fixed Income Fund in Jamaica. Funds under management have grown to approximately US$11 million with an annualised yield of about 7.6 per cent.
Opened its second local branch of the Jamaica International Insurance Company Limited (JIICL).
Received a licence for JIICL to operate an insurance agency in the Turks & Caicos Islands, under the name First Global Insurance Limited.
Formed a new company in their Maritime Division, named Grace, Kennedy Logistics Limited.
Through Grace, Kennedy (Ontario) Inc. acquired the assets of Elvico Sales Inc., a beverage wholesaler in Toronto. This acquisition is expected to more than double the number of customers served by the company.
Appointed Mrs. Audrey Hinchliffe and Mr. Raymond Chang to the Grace Board of Directors.
