OraneGRACE, Kennedy and Company Ltd. has recorded sales of $14.1 billion for the year 2000, a $40.3 million increase over the previous year, according to the company's chairman and chief executive officer, Senator Douglas Orane.
In a report on the financial statements released yesterday, Senator Orane said the net profit attributable to shareholders increased by $134.5 million, moving from $587 million to $721.5 million.
The figure represents earnings per stock unit of $3.33.
Dividends paid in 2000 to Grace, Kennedy stockholders totalled $90.2 million, representing 12.5 per cent of after tax profits. Grace, Kennedy's dividend policy is to pay at least 10 per cent of after tax profits as dividends. Senator Orane said the group has a strengthened balance sheet with increased cash, lower inventories and reduced long-term debt.
The Merchandise Division went through a major restructuring exercise during last year which coincided with the loss of Unilever, one of its major suppliers, resulting in the launch of a range of new products since January this year, all with Grace-owned brand names to replace the Unilever range.
The major restructuring has resulted in the creation of a new business, Grace Foods & Services Company, operating with lower overheads, greater focus on the selected range of products and services, continuously culling unprofitable profits and more nimble in anticipating changes in the marketplace, Senator Orane noted.
In the four months since its inception, the chairman said that Grace Foods & Services Company has made a pre-tax profit of $42 million.
In the international marketplace, the company recorded modest growth in the Grace brand, moving to US$20.13 million from US$18.05 million, an increase of 12 per cent.
He said the Industrial, Retail and Trading Division performed satisfactorily both in terms of revenues and profits, and both Versair In-Flite Services and Industrial Catering Services continued to show outstanding performance, although high labour costs have impacted on profitability.
SIGNIFICANT GROWTH
Medi-Grace posted disappointing results, but the management team was developing a turnaround plan, which they started to implement during the first quarter this year. Senator Orane said the Financial Services Division performed well resulting in significant growth in profit.
Domestic tonnage across the port of Kingston was flat last year and this has been reflected in the results of Kingston Wharves, which posted after-tax profits of $167 million, $1.7 million less than the 1999 figure.
The Information Services Division recorded impressive results for the year with remittance business continuing to grow and producing increased profits.
Mr. Orane placed the company's buoyant financial results within the context of the policy goals set out in its 2020 Vision - a vision for the company articulated by its directors and staff in 1995.
After five years, the group has achieved commendable results through the focus that the 2020 vision has catalysed, said the chairman of the company.
He reported that during this five year period, sales had increased by 31 per cent, after-tax profits by 93 per cent market value by 201 per cent and dividend payments by 179 per cent.
Based on the broad productivity measure of profits after tax per employee in US$, the company exceeded this goal with productivity up 107 per cent from US$4,140 in 1995 TO US$8,580 in 2000.
In the Maritime Division, the Grace chairman pointed to the fact that the contract of the Kingston Container Terminal held by Kingston Terminal Operators Ltd. would expire on July 31, 2001 and that the Port Authority of Jamaica had advertised the new contract for international tender.
The chairman described various options which the company was exploring, including a merger of Kingston Wharves and the Kingston Container Terminal. If this does not take place and Kingston Wharves' contract is not renewed, he said that a "contingency plan is in place to operate Kingston Wharves as an independent terminal, thus preserving shareholders' value under any possible outcome," said Mr. Orane.
He described the four major drivers which would ensure that the group remains strong and resilient in the next five years as follows:
1. Move closer to the final consumer
2. Expand faster in services
3. Grow international business more rapidly
4. Invest in people
Last week, Trafalgar Commercial Bank (TCB) became a wholly owned subsidiary within the Financial Services Division of Grace, Kennedy when approval was given by the Ministry of Finance for the company to acquire the remaining 51 per cent shareholding from Trafalgar Development Bank (TDB).
Speaking to the Financial Gleaner Senator Orane said: "We have gone to great efforts to underline our strategy for the next five years, I must say that we have an exceptionally strong balance sheet in light of the prevailing economic conditions."
