GraceKennedy bringing Hi-Lo downtown
The imposing headquarters complex that GraceKennedy is finalising on the Kingston waterfront will house a new outlet for Hi-Lo Food Stores, a supermarket chain operated by the group.
The group announced the plan during a livestreamed investor briefing on Tuesday to discuss the conglomerate’s 2018 year-end results and its forward-looking plans.
This year, GraceKennedy plans to invest $3.7 billion in capital projects, up from $3.4 billion in 2018, with most of the funds earmarked for software upgrades and distribution arrangements in the United States and Jamaica.
“We will have a new logistics centre in the USA, based in New Jersey, and by all indications, it is going to make our US company more efficient, in terms of logistics, margins management, working capital and distribution costs per unit,” said Group CEO Don Wehby.
Investment in the centre in the US is budgeted at $455 million and another logistics operation in Bernard Lodge at $650 million.
Turning to downtown Kingston, the food and financial services conglomerate plans to move into its new corporate headquarters by mid-April.
“We will have a retail centre in the building for GraceKennedy, so we will have a Hi-Lo Express and a GK One,” said Wehby. GK One is a one-stop shop for GK’s financial services, which includes FirstGlobal Bank and money transfer agent Western Union, among others.
Supermarkets are rare downtown Kingston, and the addition of Hi-Lo would add to the gentrification of the waterfront.
GraceKennedy made record profit of $5.6 billion on $97.4 billion in revenue for 2018. The conglomerate aims to surpass the $100-billion revenue mark by 2020.
On Tuesday, Wehby also alerted investors to the increased return on investment for its associated company in Barbados, based on tax-law changes implemented by the Mia Mottley-led government.
“This means that our return on investment will be significantly enhanced,” he said about the 40 per cent acquisition of Globe Financial Inc, a merchant bank in Barbados.
In late 2018, the Barbados Government reduced the tax rate for corporations in a move aimed at making local firms more competitive within the region. Wehby said it resulted in a reduction in the effective tax rate for GraceKennedy’s associates in that country from 25 per cent to a 3.7 per cent tax rate, which he pronounced as “exceptionally good”.