$586m leap in operating income for Grace

Orane

A 96.3 per cent increase in operating income for the first nine months of 2001 was the main highlight of the Grace, Kennedy Interim Report to Stockholders released on Wednesday by chairman and chief executive officer, Senator Douglas Orane.

During the first nine months of 2001, operating income was $585.8 million compared with $298.3 million for the corresponding period in 2000.

"This demonstrates that our investments in recent restructuring have been bearing fruit through substantial increases in internal efficiencies and productivity gains," Senator Orane said.

He added that the outstanding success of Grace Foods & Services, the new local distributing company founded one year ago, was substantially responsible for the increase in operating income.

The net profit attributable to stockholders increased by $167.6 million over the corresponding period of 2000 moving from $484.4 million to $652.0 million. This represents earnings per stock unit of $2.96 (2000: $2.20), an increase of 34.5 per cent.

Grace, Kennedy achieved revenues of $11.265 billion for the nine-month period ended September 30, 2001, an increase of $850.0 million or 8.2 per cent over revenues of $10.413 billion for the corresponding period in 2000.

The company will be making a dividend payment in December 2001 of $61.7 million which represents 28 cents per share based on the existing share capital of 220,377,545. The total dividend payment for 2001 will be $116.1 million or 53 cents per share. This represents an increase of 28.7 per cent when compared to the payment of $90.2 million in 2000.

Senator Orane maintained that the company had suffered few adverse effects in the aftermath of the terrorist attacks in the US Importantly, the company's remittance businesses in Jamaica, Trinidad & Tobago and Guyana have recorded continued growth and are producing increased profits.

Grace Food Processors Ltd., which was recently restructured, returned to full production in September and is profitable.

According to Senator Orane, results of the various divisions have confirmed the management's assessment that the company is on track to meet its objective of a 25 per growth in after-tax profits for 2001.

Referring to the fact that Kingston Wharves was not selected as the first ranked bid for the management of the Container Terminal, Senator Orane stated that the company is now proceeding to implement contingency plans which had been drawn up in the event that the contract was lost. These plans would ensure that the impact of the new situation is minimised as much as possible.

Recent developments at Grace, Kennedy include the establishment of a stockbroking company, First Global Stockbrokers Ltd. and a mutual fund management company in the Cayman Islands.

Both entities are expected to begin operations during the fourth quarter of the year, reflecting the overall objectives of the group to expand faster into services.

The proposed merger of the company's subsidiaries, Rapid & Sheffield Company Ltd and Agro-Grace Ltd. with Hardware & Lumber Ltd. is being pursued. "If all proceeds as planned, we expect to complete the due diligence exercise and final negotiations during the fourth quarter," Senator Orane stated.

Twenty-six young Jamaicans have accepted scholarships and are now studying in the US following a College Fair held earlier this year when Grace & Staff Community Development Foundation hosted a number of recruiters from colleges in the US.

At the same time, the Grace, Kennedy Foundation has awarded three scholarships to tertiary institutions in Jamaica - the Carlton Alexander/Jamaica College Scholarship and the Grace, Kennedy UWI and UTech scholarships.

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