Dennise Williams, Staff reporter
WEHBY
GRACEKENNEDY ANNOUNCED during their annual general meeting on Monday that the group would be consolidating several of its subsidiaries.
Detailed in their 2004 annual report, GraceKennedy has about 57 subsidiaries plus 10 associated companies (where Grace owns between 20 to 50 per cent ownership).
According to Don Wehby, group chief financial officer and chief operating officer of the financial services division, "Last year, we consolidated several companies under the First Global brand. This year, we are looking at merging several companies and eliminating subsidiaries in a tax-efficient way."
John Mahfood, chief operating officer of the retail and trading division and chief executive officer of the Hardware and Lumber division, added, "This year we will be eliminating all subsidiary companies and there will only be the Hardware and Lumber brand."
Until the merger of Rapid Sheffield and True Value, the Rapid Sheffield brand was a relatively small retail business having an infrastructure that was not being supported by retail stores. When we did the merger, we moved from $2.5 billion to $5.5 billion in the hardware business. It has now become very profitable."
GLOBAL REACH
In addition to becoming a leaner organisation, GraceKennedy is focusing on expanding its global reach. Douglas Orane, chairman and chief executive officer, said, "We are moving beyond being a Jamaican trading group to a global consumer group headquartered in Kingston, Jamaica, in fifteen years time."
In furtherance of this, Mr. Orane detailed the group's moves over the last year to build businesses based on economies outside of Jamaica in conjunction with "strengthening Jamaican beachheads."
He continued, "We are sowing the seeds for future growth. Let us look at what we have done so far."
Purchase of Elvico Sales in Ontario.
Bill Express operational in the Eastern Caribbean.
Investment of Signia Financial Group, a merchant bank based in Barbados.
Investment in Global Insurance in St. Lucia.
Established insurance agency in Turks
and Caicos.
Grace Caribbean Fixed Income Fund now available in Trinidad and Tobago and Barbados from its Cayman base.
FOOD TRADING
Grace brand products launched in the Dominican Republic and Martinique bringing the worldwide distribution to 36 countries.
Market specific foods products developed for targeted countries. For the Canadian market, there is now a Grace casserole sauce.
However, these moves have not translated into the net profits. Mr. Orane explained: "What we are finding is that in Jamaica, we can get quick returns because we are well known, but internationally, it takes more time and investment to get returns. Despite the fact that Grace-owned brands grew by seven per cent, it was less than our projections and that affected our profitability. But we do believe we are on the right track."
Nonetheless, the company's share price, at least on the Jamaican Stock Exchange, has remained in the region of $115 per share for several months. However, perhaps alluding to the benefits accruing to long-term shareholders, Mr. Orane said, "For investors who had the equivalent of US$1,000 in Grace shares in 1995, that same amount would be worth US$17,000 today."
That said, Mr. Orane did acknowledge to shareholders at the company's Harbour Street headquarters that, "Our objective is to have a return on equity at 20 per cent but it is now in the teens. It is something that we are working on."
