Grace, Kennedy walking tall

Stockholders of Grace, Kennedy and Co are singing the dividend song all the way to the bank. Dividends paid to stockholders during 2003 totalled J$210.1 million, a 26.1 percent increase over the J$166.6 million which was paid out in 2002. Speaking at the company’s Investor Briefing at the Trinidad Hilton last Thursday, company Chairman and Chief Executive Officer, Douglas Orane, said last year’s success was an indication of the company’s growth. Orane said the company had experienced yearly revenues for 2003 of J$24.77 billion, up $5.11 billion from the previous year’s J$19.66 billion,  an increase of 26 percent. The net profit attributable to stockholders had increased from J$376.9 million over the corresponding period of 2002, moving from J$1,603.3 million to J$1980.2 million -  an increase of 23.5 percent.

This, he explained was responsible for earnings per stock  to move from J$4.96 in 2002, to J$6.12 in 2003, while operating profits totalled J$1,986. 3 million -  an increase of 55.3 percent in comparison to the previous year’s results of J$1,279.1 million. Grace, Kennedy’s accounting reporting standards were changed in 2003 with the adoption of the International Financial Reporting Standards (IFRS), which was formerly the International Accounting Standards (IAS). As a result, the market value of the company increased from J$12.28 billion at the end of 2002, to J$17.45 billion at the end of 2003! Saying that this company was not only about profits, he said a stock options plan was approved in May 2003. It  was offered to 127 managers and other key personnel within the group to encourage them to invest in their careers by becoming stakeholders, not only as employees but also as shareholders.

New products taking the market by storm include the Grace Readi Meals, Diet Tropical Rhythms, and the family size Tropical Rhythms Sorrel Ginger. Also stealing awards on the international circuit, the Grace Tropical Rhythms was adjudged the 2002-2003 winner of the Canadian Grand Prix New Product Award. The Grace-owned brands have done well on the international market with overall sales of US$33 million, an increase of seven percent, financial figures said. The brand is now sold in 33 countries in the world. The Grace Caribbean Fixed Income Fund which was officially launched in Jamaica in February 2004 following its previous registrations in the Cayman Islands, Barbados and TT, has grown to approximately US$11 million with an annualised yield of 7.6 percent.

Orane also said the bill payment service, Bill Express, was launched during the year in Grenada, Dominica and St Lucia, joining other regional partners such as TT, Jamaica and Guyana. Seeking to strengthen relationships worldwide which not only extends directly to consumers, but to the families of these consumers, the company had embarked on yet another initiative — the Grace, Kennedy Jamaican Birthright Programme. This programme seeks to reconnect second and third generation Jamaicans living overseas with their homeland. In 2004, six young Jamaican university students will be chosen to work for the summer within subsidiaries in Jamaica, and they will reside with Grace, Kennedy host families. Holding fast in the belief that, “if you want to make money, you have to spend money,” Orane said 77 frontline managers recently participated in a supervisory management course to enhance their  leadership skills.

Grace Kennedy’s Chief Financial Officer, Don Wehby said the  group has posted strong, consistent financial results in a year marked by challenges in the business and economic environments. Echoing Orane’s presentation lauding the list of accomplishments of the company throughout 2003, Wehby said the adoption of the IFRS brought significant changes to deferred taxation; employee benefits and fair value recognition of financial instruments. The group continues to make improvements in the areas of cost management and operational efficiency with operating income having increased by J$1,279.1 million in 2003, and which represents a return on revenue of eight percent compared with 6.5 percent for 2002.

The financial services division was the leading business segment for contribution to pre-tax profit, with profits of J$991.3 million. Information Services contributed 22.5 percent of profits with J$510.7 million, followed by Food and Trading (21.9 percent), Retail and Trading (6.3 percent), and Maritime Divisions (5.7 percent). Wehby said a  gain of J$150 million on the exchange of shares and restructuring cost for the expanded Hardware and Lumber Group was made following a merger between Grace, Kennedy subsidiary,  Rapid and Sheffield Co. Ltd and AgroGrace Ltd, with Hardware & Lumber Ltd.

On the Jamaica Stock Exchange, the share price of Grace, Kennedy appreciated over the year to close at J$53.95, with the market capitalization increasing by a corresponding 42 percent or J$5.2 billion to J$17.5 billion at the end of 2003. The stock also performed well on the local (TT) Stock Exchange, as well as the Barbados Stock Exchange, registering increases of 16 percent and 33 percent respectively. Wehby said  2004 promised to be both exciting and challenging.  “We are filled with high expectations having equipped ourselves with the right policies, personnel and attitude to capitalise on the momentum generated in 2003.”