Grace reports robust 2009 growth
Listed conglomerate GraceKennedy is reporting brisk profit growth for the 12 months ending December 2009, finishing the period with a net profit of $2.7 billion, $709.5 million of which was garnered in the fourth quarter. By comparison, GraceKennedy made net profit of $1.78 billion for 2008, which means the profits were up more then 50 per cent last year.
Chairman Douglas Orane attributed the improvement in the bottom line of the highly diversified group to stronger performances by its core businesses.
"Every core business in GraceKennedy did better in 2009 than in 2008,
which is good news and
means that the group is solid and strong," Orane told investors and journalists at a teleconference and online briefing this week.
The profit rise was on the back of a $3.9 billion or seven per cent improvement in revenues, which rounded out at 57.4 billion for the year and $13.9 billion for the fourth quarter.
According to Orane, the positive out-turn, despite the losses of $1.7 billion suffered from undisclosed trading
in US Government treasury bonds at its commercial bank, First Global, between 2008 and 2009, reflected the strength of the group's underlying core businesses.
"The group's cash flow continues to be very strong. This is very encouraging in a market where, globally, we continue to face uncertainties from the global financial crisis," said Orane.
He said GraceKennedy's businesses have been adjusting to the challenging times by offering new products and services.
Turnover and profitability
For example, Erwin Burton, the deputy chief executive officer of Grace Kennedy and CEO of
GK Foods, explained that in that segment alone, 36 new products were launched last year, strengthening turnover and profitability with the full positive effect of some new launches to be felt in 2010. This, despite the statement in the results published last Friday that "the severity of the global recession had an adverse effect on the demand for our products and services".
Meanwhile, Group Chief Financial Officer Fay McIntosh underscored a 47 per cent rise in pre-tax profit to $3.6 billion from $2.4 billion the year before. The performance pushed up profit attributable to stockholders 54 per cent to $2.574 billion.
Favourable interest rate
Alluding to a recent $1.875-billion loan deal inked with Scotiabank to finance the company's new 250,000-square foot consolidated warehouse in Spanish Town, St Catherine, McIntosh said GraceKennedy benefited from "a very rate favourable rate of interest". The rate was fixed at 13.5 per cent over seven years.
Losses arising from the government-imposed Jamaica Debt Exchange, which the group reported amounted to two per cent of its equity, would be short term and should not impact on profitability nor "materially affect the financial position of group".
Earnings per share ended the year at $7.82, 53 per cent above the $5.10 recorded in 2008. GraceKennedy shares last traded at $42 per unit.