The GraceKennedy Group reported improved performance for the third quarter of 2019, with revenue of J$25.54 billion and net profit of J$1.44 billion, relative to the corresponding period of 2018.  Profit before tax for the three month period was J$277.0 million or 17.0% higher than the corresponding period of 2018.

GraceKennedy Limited positioned itself for future growth and the on-going implementation of transformational structural and process improvement initiatives is producing positive results and improving stockholder value. The Group expects to meet its financial targets for 2019 while achieving improved operating performance.

For the nine months ended September 30, 2019, the GraceKennedy Group achieved revenues of J$77.03 billion, representing an increase of 4.3% or J$3.20 billion over the corresponding period of 2018.  Net profit after tax for the nine month period was J$3.71 billion, representing a marginal increase of 0.1% or J$2.04 million relative to the corresponding period of 2018.   Net profit attributable to stockholders for the nine month period was J$3.27 billion, 1.7% or J$54.2 million higher than that of the corresponding period of 2018.

Our results were impacted by increases in non-operating expenses as a consequence of the adoption of the new accounting standard on leases, IFRS 16 and the previously adopted IAS 19 post-employment benefit expenses, resulting in a combined negative impact of J$489.0 million.   Profit before other income for the nine month period was J$2.88 billion, 30.2% or J$668.1 million higher than that of the corresponding period of 2018, indicating an improved operating margin. Earnings per stock unit for the period was J$3.30 (2018: J$3.24).

Stockholders will recall that the GraceKennedy Group is a net earner of foreign exchange and has net foreign assets, whose values are subject to movements in foreign currency exchange rates.  During the period January to September 2019, the volatility in the Jamaican foreign exchange market, particularly in the US Dollar exchange rate had a significant negative effect on the Group’s results when compared to the corresponding period of 2018.

Over the nine month period, stockholders’ equity increased by J$7.65 billion to J$52.26 billion.  On the adoption of IFRS 16 on January 1, 2019, the Group recognized a right-of-use asset of approximately J$6.4B shown in fixed assets, with a corresponding amount being recognized as a lease liability shown in bank and other loans.

The Food Trading segment recorded improved revenue and profitability for the reporting period when compared to the corresponding period of 2018 due mainly to the performance of our Jamaican and USA food businesses.

Our Jamaican foods distribution business experienced growth in both revenue and pre-tax profits coupled with improved operating margins.  All core products reported higher sales when compared to the corresponding period of 2018 with Grace Corned Beef showing double digit growth.    Our chain of Jamaican supermarkets, Hi-Lo Foods Stores, showed improved operating performance when compared to the corresponding period of 2018. Customer count for the chain for the nine month period increased by six percent (6%) when compared to the corresponding period of 2018.  Our investments in the Catherine’s Peak brand of pure spring water and Consumer Brands Limited continue to perform well. Our manufacturing companies, Grace Agro Processors (GAP) and GAP Denbigh continue to broaden their supplier base for raw materials. This is expected to improve production yields, reduce shortages and improve quality control for our raw materials while strengthening our network of farmers. GAP Denbigh commenced its export of Grace Canned Ackee, Grace Canned Callaloo and Grace Jerked Seasoning to the USA, UK and Canada.

GraceKennedy Foods (USA) LLC continues to show improved performance for the nine month period when compared to the corresponding period of 2018.  Revenue for the Grace brand grew double digits primarily driven by improved sales of Grace Frozen Patties, Grace Corned Beef, Grace Sardines and Grace Mackerel.

On October 7, GraceKennedy opened its new Grace/La Fe distribution facility in Woodbridge, New Jersey.  GraceKennedy invested US$5 million in outfitting the new facility, which boasts a state of the art layout, fully compliant with all health and safety standards.  This investment is expected to drive increased operating efficiencies and improve staff and customer satisfaction.  We continue to invest in brand building activities for the La Fe brand and re-launched the La Fe brand in May with the brand being promoted as fresh, healthy and convenient.    Grace Foods UK’s performance was impacted by the decline in sales of its Nurishment brand.  We are currently in the process of rolling out the Nurishment re-launch plans which include a new label design for the can and a new advertising campaign.  Additionally, a new format, Nurishment in a PET bottle, will be launched in the first quarter of 2020.

Grace Foods Canada Inc. has strengthened its distribution presence in Western Canada with additional listings of Grace Jerked Chicken Wings and other frozen products in Sobeys, the second largest supermarket chain in Canada.  Earlier this year the company secured numerous listings with Federated and Calgary Co-op, a regional chain in Western Canada.

The GraceKennedy Financial Group (GKFG) reported growth in revenues and pre-tax profit for the nine month period over the corresponding period in 2018.

The Banking and Investments segment reported an increase in revenue and pre-tax profit for the nine month period compared to the corresponding period in 2018.  First Global Bank Limited (FGB)’s focus on financial inclusion has driven further growth in loans disbursed to Small and Medium Enterprises. FGB opened four (4) bank agents in the quarter in Buff Bay in Portland, Junction in St. Elizabeth, Morant Bay in St. Thomas and New Kingston in St. Andrew under the FGB Money Link Brand in keeping with its Financial Inclusion Strategy.  This brings the total number of Money Link agents across Jamaica to eight (8).

The Insurance segment reported an increase in revenue and pre-tax profit for the nine month period compared to the corresponding period in 2018.  The segment continues to perform well with existing operations achieving growth and various new initiatives forming a base for future growth.  GK General Insurance Company Limited (GKGI) reported revenue growth in its motor, engineering and property portfolios. Motor claims continued to perform within expected levels and this resulted in improved core business results. GKGI continues to play a major role in the insurance sector, providing insurance products for many of the large infrastructure projects across Jamaica.   The Money Services segment reported a marginal decline in both revenue and pre-tax profit for the nine month period compared to the corresponding period of 2018. The business continues to enhance customer convenience through digital offerings which have showed increasing adoption by customers since introduction.

These offerings include WU.com, a digital money transfer platform which allows customers 24/7 access to send funds electronically to over 200 countries, and Direct to Bank where customers can receive money through Western Union for deposit to their bank accounts. Our strategic focus on growth is being supported by our network expansion increasing our presence in Jamaica and regionally through a combination of traditional and digital channels.

The Group’s continued investment in enhanced compliance measures has positioned the business for growth as we solidify our market leadership. Our overseas operations in this segment delivered strong performance with Guyana, British Virgin Islands, Cayman and the Bahamas showing growth over the corresponding period of 2018.

Donald  G. Wehby, Group Chief Executive Officer