Grace turns the corner on Melissa

GraceKennedy’s recovery from the disruption caused by Hurricane Melissa gathered momentum in the second quarter, helping to lift profits as its food operations rebounded and its financial services businesses delivered strong growth.

The conglomerate reported net profit of $2.5 billion for the June second quarter, up from $2.1 billion a year earlier. Year to date, profit grew 11.8 per cent to $4.75 billion from $4.25 billion. Revenue climbed 4.6 per cent to $93.1 billion.

The results signal a continuing turnaround from the damage inflicted by Hurricane Melissa, which disrupted portions of the company’s food manufacturing and retail operations last year.

Frank James, group CEO of GraceKennedy, said management was encouraged by the pace of recovery.

“We’re seeing good signs of a recovery with previously damaged sections back on stream and performing above expectations,” James said.

The food division earned $4.8 billion, or two-thirds of group profit. The segment benefited from stronger international operations, particularly in the United Kingdom, United States and Canada, where revenue and profits expanded through stronger sales of Grace-branded products and disciplined execution. Jamaica’s manufacturing operations also gained from sustained demand for beverages and strong export demand for jerk products.

A key contributor to the food segment’s improved performance was the ongoing recovery of the Grace Foods Processors meats facility in Westmoreland, which suffered extensive hurricane damage.

“Recall that both our meat plant and our Hi-Lo store in Fairview, Montego Bay, were badly damaged. We closed Fairview, but the meat plant has been in operation since the beginning of the year. We’re glad to see that there has been increased output and this has become even better in the second quarter,” James said.

The company noted that the meat-processing facility continued its recovery during the review period, while Unibev Limited also delivered solid results, aided by improved efficiencies and sustained post-hurricane demand for its spring water brands.

Financial services operations delivered another boost to group earnings.

Banking and Investments recorded profit before tax of $995 million, compared with $600 million a year earlier, driven by double-digit increases in revenue and profit at First Global Bank, stronger investment income and growth in asset management activities. The Insurance segment produced profit before tax of $1.28 billion, up from $1.12 billion, supported by strong performances in general insurance and group life and health operations.

The Money Services segment remained profitable despite lower revenues. Profit before tax edged up to $1.08 billion as higher investment income and operational efficiencies offset changing market conditions. GraceKennedy said GK One continued to expand its regional footprint, adding the Cayman Islands to earlier launches in Guyana, while BillExpress substantially restored its network following hurricane-related disruptions.

Beyond operational improvements, GraceKennedy strengthened its food portfolio during the period by acquiring the remaining 50 per cent stake in Dairy Industries (Jamaica) Limited, owner of the Tastee cheese brand, bringing the business fully under its control.

James credited the company’s employees for the stronger performance.

“The performance is a testament to the dedication of the team at GraceKennedy despite the challenges that may affect output,” he said. “We’re very pleased with the results and we’re very mindful of the environment. We had the team working and giving their all in every major aspect of the business.”

neville.graham@gleanerjm.com