Nov 2013 Financial News

Insurance loss, food business dragged down GraceKennedy's 3Q pre-tax profit

Nov 13, 2013

GRACEKENNEDY'S insurance and food businesses dragged down the company's third quarter net profit by five per cent year on year.

The conglomerate posted $695.1 million at its bottom line for the three months ended September 30, compared to $729 million during the corresponding period last year, even though group revenue increased by 10 per cent, moving from $15.4 billion in the comparative quarter last year to $17 billion during the quarter under review.

However, the group's insurance segment reported a pre-tax loss.

A claims review at Jamaica International Insurance Company (JIIC), which was substantially completed this quarter, saw significant increases in claims provisions, resulting in losses for the insurance segment, the company said.

Revenues for the three months ending September 30 totalled $1.4 billion, up from $1.3 billion during the corresponding period last year, while pre-tax earnings turned from a $161 million during the comparative quarter last year to a $88 million loss during the review quarter.

GK Foods faced difficult circumstances in Jamaica during the three months, mainly due to the challenging economic environment and the resultant impact on disposable income, according GraceKennedy's CEO Don Wehby.

Sales for the food segment grew by 11 per cent year over year, from $10.2 billion to $11.3 billion, but pre-tax profit fell from $222.2 million last year to $133.4 million during the third quarter this year.

"Even with increased raw material and energy costs, however, the company persisted in its attempts to boost domestic business," said Wehby.

Notwithstanding, GK Foods had noteworthy expansion in its operations in Canada, the United States, and the United Kingdom, with all showing increases in revenue and profits, the company said.

GraceKennedy saw solid performance in retail and trading, which represents the merchandising of agricultural supplies and Hardware and Lumber.

That segment more than tripled its pre-tax profit during the third quarter, moving from $26.6 million in the three months to September 30, 2012, to $82.2 million during the review quarter, while sales grew by 10 per cent, up from $1.5 billion to $1.7 billion.

GraceKennedy Financial Group's (GKFG's) money services division saw its profit rise by 21 per cent.

The banking and investments segment saw strong growth in loans and non-interest income, contributing to growth in profitability, according to the company.

That segment of the business had $195 million in pre-tax profit during the quarter under review, up from $136.7 million in the comparative period last year.

Pre-tax profit from the money services division was $492.5 million during the quarter under review, up from $404 million during the comparative period.

FX Trader launched its FX Trader Business Solutions product, which will allow Jamaican companies to send international payments in over 135 currencies around the world.


Source:
Jamaica Observer
Wednesday November 13, 2013

http://www.jamaicaobserver.com/business/Insurance-loss--food-business-dragged-down-GraceKennedy-s-3Q-pre-tax-profit_15415997#ixzz2keeofqHE