GraceKennedy Limited reported improved sales figures in its interim report to stockholders for the nine-month period ended September 30, 2006.  The Group’s revenues were $26,443.1 million, an increase of $1,588.2 million or 6.4% over the corresponding period in 2005.  However the Net Profit Attributable to Equityholders moved from $1,431.5 million to $ 1,308.3 million, a decrease of $123.2 million or 8.6 % over the same period in 2005. 

The Food Trading Division’s performance was negatively affected by the continued softening in consumer demand and the consequent pressure on margins.  However, the implementation of the new software system (SAP) made it possible to consolidate all of the procurement units under one umbrella.  This consolidation of the procurement process throughout the division resulted in an increase in margins for the month of September.  Similarly, all accounting departments in the division were centralized.

During the quarter, the division launched a new product range of banana and plantain chips called Grace Chips a Treat.  The Division’s international markets, with the exception of Belize, have continued to perform exceptionally well with the Grace Brand showing positive growth.  The recent placement of Grace branded products in the Walmart stores in Canada, has seen good initial response.

The Retail & Trading Division reported improved results for the quarter.  During the period, the company concluded the sale of Medi-Grace Limited.  As part of the sale agreement some product lines were retained and transferred to World Brands Limited, another GraceKennedy subsidiary.  This is expected to result in improved profitability in the future.  Goddard Enterprises Limited of Barbados, our partner in Versair In-Flite Services Limited, was awarded the catering contract for the 2007 World Cup Cricket. 

The Financial Services Division reported mixed results for the quarter due, primarily, to the challenging macro-economic environment, which resulted in the slow growth of the overall banking and investments industry.

Business development and improved customer service levels continue to be the primary focus for the banking and investment companies First Global Bank (FGB) and First Global Financial Services (FGFS).  The launch of FGB’s credit cards has been successful for the bank, with the Platinum card exceeding expectations both in terms of number of cards issued and financial performance.

Jamaica International International Insurance Company Limited (JIIC) performed satisfactorily, while Allied Insurance Brokers Limited (AIB) returned excellent results for the period. 

The Information Services Division reported a reduction in profits when compared with the same period last year.  This was due to a provision of $185 million for outstanding receivables, in respect of which collection efforts are continuing.  GraceKennedy Money Services (St. Vincent) Limited commenced operations on July 18, 2006, concluding the division’s Eastern Caribbean Expansion Project, which now sees GraceKennedy representing Western Union in eight countries.

On December 1, GraceKennedy Limited will begin operating under a new structure aimed at promoting growth and creating a platform for greater competitiveness in the local and international marketplace.  The new operating structure groups the company’s business entities under two units, instead of the current four divisions. The two entities are GK Foods and GK Investments.

GK Foods will incorporate all of the food-related businesses, while GK Investments will include all of the other businesses such as insurance, banking, remittances, hardware and other investments.

Under the new structure, Mr. Erwin Burton (currently Chief Operating Officer of the Food Trading and Retail & Trading divisions) will assume the role of Chief Executive Officer, GK Foods, and Deputy Chief Executive Officer, GraceKennedy Limited.

Mr. Don Wehby (currently Chief Financial Officer) will assume the role of Chief Executive Officer – GK Investments and Deputy Chief Executive Officer, GraceKennedy Limited.

Mrs. Fay McIntosh (currently Deputy Chief Financial Officer) will assume the role of Chief Financial Officer; while Mr. Joe Taffe (currently Chief Operating Officer,  of the Financial Services and Information Services divisions) will assume the role of Deputy Chief Executive Officer, GK Investments.

The Group has also reduced the size of its Corporate Offices as part of its bid to lower the costs associated with running the organization.  As a result, services such as Human Resources and Information Technology, which had largely been provided centrally, will be moved out into the subsidiary companies where they can be delivered more effectively.

The restructuring will give greater autonomy to the two new business entities and their related subsidiaries, thus enabling them to compete more effectively in their respective industries.  For 2007, the GraceKennedy Group is expecting to realize significant savings in its overhead costs, as well as increased profitability.

Posted: November 15, 2006