Kingston, March 16—GraceKennedy Limited. announced its financial and operating results for the year ended December 31, 2004 showing better than expected performance. “Last October the company lowered its forecast for 2004 profits attributable to shareholders to a range between 3% and 5% increase over 2003. This was based on the consideration of certain factors, which we took into account at the time, but our actual results show a 12.4% increase,” said Douglas Orane, Chairman and Chief Executive Officer.

The Group lowered its forecast in the weeks following Hurricane Ivan when there was considerable disruption across Jamaica. While factories and export activities were adversely affected by the loss of crops suffered by suppliers and inbound remittance fees were heavily discounted during the period to facilitate the rebuilding process, the Group recovered more quickly than expected. A larger than expected pension fund surplus, as well as improved performance by three major activities—domestic food, bank and remittance businesses—also influenced the Group’s performance.

The Group achieved Revenues for the year of $30.7 billion (2003: $24.77 billion) an increase of $5.93 billion or 24%. The Net Profit Attributable to Stockholders increased by $245.1 million over the corresponding period of 2003, moving from $1,980.2 million to $2,225.3 million, an increase of 12.4%. This represents Earnings per Stock Unit of $6.87 (2003: $6.12). Operating profits totalled $2,415.3 million, an increase of 21.6% in comparison to the previous year’s result of $1,986.3 million.

Dividends paid to stockholders during the year totalled $291.9 million, a 38.9% increase over the $210.1 million paid in 2003. In keeping with dividend policy, 13.1% of Profit Attributable to Stockholders was paid out as dividends. The market value of the Company increased from $17.45 billion at the end of 2003 to $38.45 billion at the end of 2004,an increase of 120%.

Brand Building Results in Steady International Growth for Food
During the year, Grace, Kennedy (Ontario) Inc. acquired the assets of Elvico Sales Limited, a beverage wholesaling company in Canada. This acquisition has contributed to doubling customer base in Canada. Internationally, Grace-owned brands grew to US$36 million, a 7% increase. 2004 was a year of heavy investment in brand building through advertising and promotions, and consequently this reduced profits in this segment. Grace–owned brands are now sold in 36 countries through 64 distributors.

DIVISIONAL ACTIVITIES

Retail & Trading
The merger between Hardware & Lumber Limited and Rapid & Sheffield Company Limited has contributed to the increasingly positive results in sales and profits for the Retail and Trading Division. The Group’s shareholding in Fidelity Motors Limited has been increased from 15% to 30% and it is now accounted for as an associated company. The installation of a major information system in Hi-Lo Food Stores (Jamaica) Limited is expected to improve customer satisfaction at check out, and improve management of inventories.

Financial Services
The Financial Services Division successfully completed the reorganisation of its banking entities and its securities, pension management, leasing and stockbroking companies during the year. EC Global Insurance Limited, a joint venture between Jamaica International Insurance Company Limited and the Bank of St. Lucia Limited, which offers general insurance in St. Lucia, began operations in September. GraceKennedy and Guardian Holdings Limited entered into a 50/50 joint venture to set up a health insurance company in Jamaica.

Information Services
According to Mr Orane, money transfer operations continued to grow during the year and while compliance programmes to combat money laundering have substantially added to the operational costs, pricing initiatives undertaken with Western Union have resulted in significant transaction growth out of the USA and Canada.

Maritime
The Group divested its shareholdings in Kingston Wharves Limited, sold the port equipment and spare parts of Port Services Limited and sold two of its shipping agencies to a former board member, Mr. Robert Kinlocke.

The two companies retained from the Maritime division, Grace, Kennedy & (Company) Shipping Limited and Port Services Limited continue to operate, with the former continuing to represent all its existing principals and the latter continuing to provide stevedoring services. These companies are now under the corporate umbrella.

Outlook

As part of its strategy to transform from a Jamaican trading company to a global consumer group, GraceKennedy established the objective to earn at least 50% of profits from economies outside of Jamaica. Although there has been an increase in revenues and profits from internationally focussed businesses, growth in the domestic Jamaican economy has consistently exceeded expectations. “In 2004 we earned 85% of our profits from businesses based on the Jamaican economy. We have set a new stretch target which is to grow profits from economies outside of Jamaica at 20% per annum, and we are assessing the resources needed to make this a reality,” said Mr Orane.

GraceKennedy recently sharpened its corporate identity with the launch of a new corporate logo. The familiar Grace ellipse logo will now be exclusive to Grace food products.

Posted: April 14, 2005