GraceKennedy Limited is pleased to present financial results for the six months ended June 30, 2020. The Group realized revenues of J$56.5 billion, representing an increase of J$5.0 billion or 9.8% over the corresponding period of the prior year. Profit before tax was J$4.5 billion, reflecting a 53.2% improvement over the same period in 2019.
Net Profit after tax of J$3.1 billion was recorded, a commendable 34.3% increase over the comparable period of 2019. Net profit attributable to stockholders also reflected a double-digit increase of 36.5% over the prior year.
Earnings per stock unit for the period was J$2.77 (2019: J$2.03).
The Group registered Profit before other income of J$3.1 billion, an increase of 85.6% over the preceding year’s reporting period, and Profit from Operations reflected an increase of 60.5% to J$4.56 billion over the prior year. In addition to increased revenue and improved margin management, this strong operating performance is attributed to an increased focus on operational efficiency and cost containment. These measures will continue for the remainder of the year given the magnitude of the spread of the COVID-19 virus and its continued impact on the economies in which we operate and our consumers.
Our results reflect strong performance for the half-year. The outlook for the remainder of 2020 is unclear, however, given the uncertainty created by the unprecedented COVID-19 virus, globally. Spikes in the number of confirmed cases in certain markets, particularly the USA, and the ongoing impact on the international supply chain , contribute to that uncertainty. Jamaica has been lauded internationally for the country’s management of the COVID-19 pandemic and we have seen the cautious re-opening of the island’s borders and gradual lifting of business restrictions.
GraceKennedy remains a premier provider of essential services through our financial institutions in the Caribbean region, our supermarkets in Jamaica and global food and beverage distribution. It is anticipated that the second half of the year could see reduced consumer spending as the effect of diminished disposable incomes becomes more acute
GraceKennedy prides itself on embodying our “We Care” tenet and as business activities cautiously resume, our priority remains the safety and well-being of our staff and customers. We remain proactive in our operations aswe continue to execute initiatives under our COVID-19 action plan and Business Continuity protocols, and inventory and liquidity management. Providing broader access to our customers through digital platforms locally and in our overseas markets remains a priority and we are seeing positive results from this effort.
Performance of Business Segments
The Food Trading segment recorded increased revenue and improved profitability for the reporting period when compared to the corresponding period of 2019. Both the local and international food businesses reported noteworthy results for the first half of 2020.
Our Jamaican food distribution company continues to realize positive results from a strong product mix and improved margins, evidenced by noted growth in both revenue and pre-tax profits. During the reporting period, our core products delivered significant growth over the prior-year period.
Our chain of retail supermarkets in Jamaica, Hi-Lo Foods Stores, recorded improved performance over the corresponding period of 2019 and continues to provide a premier shopping experience for its patrons, including its curbside and home delivery options.
Our factories continued to deliver results influenced by strong demand for key products. This performance was further supported by a bolstered supplier base for raw materials such as pepper and escallions, as the first crop from our Agro Park was harvested. We also made strides in operational efficiency as we commissioned our first onsite liquified natural gas plant at our meat processing factory in Westmoreland, which will reduce our heavy fuel dependency and produce environmental benefits.
GraceKennedy Foods (USA) LLC had a strong half-year performance with significant improvement over the same period in the prior year. Our Grace Brand continues to record encouraging growth when compared with the same period in 2019, buoyed by the sales of Grace Jamaican Patties, among other key products. Grace Foods Canada remains a reliable performer in the GraceKennedy Group with improved performance. GraceFoods UK achieved better margins from the successful implementation of strategic initiatives including improved revenue performance of Nurishment.
The GraceKennedy Financial Group realized growth in revenues and profit compared to the corresponding period in 2019. This performance was achieved in spite of being impacted by additional impairment provisions in relation to loans receivable under IFRS 9, due to credit risk associated with COVID-19. The decline in the value of the local stock market has also perpetuated depressed market prices of equity instruments classified at fair value, reflected through the income statement.
In line with our digital expansion strategy, we launched our first GKONE e-store on Harbour Street in Downtown Kingston, Jamaica in July 2020. The new GKONE location provides cashless financial services including Banking, Remittances, Bill Payments, and F/X trading.
The Money Services segment registered an increase in both revenue and pre-tax profit when compared to the corresponding half-year of 2019. We continue to leverage opportunities to drive the adoption of digital channels and are seeing significant growth in transaction volumes. The business is currently focused on the relaunch of WU.com to further drive digitalization and provide our customers with other convenient offerings. Across the region, the GKMS Group participated in national COVID-19 response efforts. Over 110,000 transactions relating to the collection of government stimulus packages, were paid out across the GKMS network, representing a majority of beneficiaries under the Government’s CARE program. This program was designed to help cushion the economic impact of the COVID-19 pandemic on individuals, and businesses.
The Banking and Investments segment reported growth in revenue in the first half of 2020 over the comparative period. First Global Bank sustained growth in its loan and deposit portfolios and, in collaboration with GKMS, successfully established several thousand accounts for beneficiaries of the CARE program. The Bank also continues to partner with its retail and commercial clients to provide support during the pandemic.
The Insurance segment saw an increase in revenue for the 6-month period under review and continues to achieve favourable operating performance. Canopy Insurance continues to record increased business since commencing operations in late 2019, attributed to the market’s positive reaction to a modernized and seamless interface. Key Insurance Company Limited appointed a new Board of Directors on 31 March 2020 which has, since 1 April 2020 been guiding the business by supporting the development and implementation of strategic initiatives designed to increase shareholder value.
GraceKennedy Limited remains both pro-active and responsive in dealing with the challenges of the COVID-19 virus and its impact on our lines of business, the countries in which we operate, and our employers and consumers. Our efforts continue to be directed towards achieving our strategic objectives by focusing on digital channels and ease of doing business.
Donald G. Wehby, CD Group Chief Executive Officer Interim Report To Stockholders for the six months ended June 30, 2020.