GraceKennedy Posts Better
Than Expected First Quarter Results
Company Reports 16% Increase in Net Profit

Kingston, May 12- GraceKennedy Limited. reported a 16% increase in Net Profit Attributable to Equity Holders as profit moved from $476.5 million to $552.6 million in the first quarter ended March 31, 2005. This represents earnings per stock unit of $1.69 (2004: $1.47). This was disclosed in the Company's interim report to its stockholders which also reported Revenues for the period of 8,126.1 million (2004:$7,338.1 million), an increase of $788.0 million or 10.7%.

Commenting on the results, Chairman and CEO Douglas Orane expressed satisfaction at what he termed "the better than expected outcome". "We think our strategic direction which points us to move closer to the final consumer and to drive for significant growth in services are proving successful," he said.

Shareholders will receive an interim dividend payment of $147.0 million on May 27, 2005, representing 45 cents per stock unit based on the existing 327 million shares issued. Mr Orane noted that this payment shows a 13% increase over dividends paid for the comparative period in 2004 of $130.0 million.

The Company has adopted IFRS 2 - Share-based payment with effect from January 1, 2005. This standard requires that share options granted to employees after November 7, 2002 must be fair valued, based on the date the options are granted and expensed through the profit & loss account over the period that the options vest. The amount expensed in the first quarter of 2005 was $12.6 million.

Divisional Performance

The Food Trading Division performed well in the first quarter with sales and profit exceeding targets, and sales of Grace-owned brands increasing in both domestic and international markets. The Division has commenced the implementation of the SAP software system, which will lead to faster decision-making and improved efficiency levels.

Despite the adverse impact of the drought on agricultural business, the Hardware & Lumber Group showed satisfactory results. The roll out of a new computer system commenced during March, with the conversion of all 20 stores and the distribution centre expected to be completed in the fourth quarter. The refurbishing of the Hi Lo Manor Park store has been completed. First Global Bank has collaborated with Hi Lo Food Stores Jamaica Limited to open a branch within this store to serve the needs of its customers in the Constant Spring Area.

The Financial Services Division also registered success in the first quarter. In March, Jamaica International Insurance Company Limited (JIIC) assumed the complete portfolio of Jamaican policies held by Dyoll Insurance Company Limited at a cost of $585 million, of which $113 million is payable in cash and $472 million is attributed to the cost of unearned premium reserve that will result from JIIC's issuance of new policies.

For the Information Services Division, remittance growth through Grace, Kennedy Remittance Services Limited was favourable due to pricing initiatives in the United Kingdom and the USA markets and Grace, Kennedy (Trinidad & Tobago) Limited launched its FX Trader Cash Card in March in Trinidad & Tobago. A joint initiative between GraceKennedy & Republic Bank, the FX Trader Cash Card is an internationally accepted, pre-paid re-loadable Visa card.

Outlook

At recent investors briefings in Jamaica and Trinidad, the Company advised shareholders of its intention to invest $1 billion in capital expenditures in order to provide greater operational efficiency to the Group. "The strategic vision of building sustainable businesses requires that every centre of operation functions at the optimal level," said Mr Orane. "The capital expenditure is matched by a deep commitment to giving our people the tools and training that will give them the capacity and motivation to perform at their best."

With its official listing on the Eastern Caribbean Stock Exchange in St. Kitts in April, GraceKennedy became the first company whose stocks are traded on the four major Caribbean stock exchanges.

Posted: May 12, 2005