GK scans its business for more ways to grow bottom line
Published:Monday | June 5, 2023 | 9:51 AMKarena Bennett - Business Reporter
GraceKennedy Group CEO Don Wehby continues to scan the food and financial services conglomerate for ways to combat expenses and supply chain snarls.
In the meantime, it's investing in technology and production upgrades to make its businesses more efficient.
Last year, the company pumped just over $3.8 billion into a range of different assets, including new software, computer equipment, alongside more efficient machinery at its now fully operational Grace Foods Processors NALCAN plant, which was formed from the merger of the National Processors and Grace Food Processors Canning plants.
It brought together the production of drink crystals, cereals, and dry mixes for soups, canned vegetables, sauces, and beverages, including Tropical Rhythms, at one complex in Kingston.
This year, GraceKennedy will be pumping more funds into tech upgrades, but resolving supply chain issues is at the forefront of its concerns.
“One of the first things that we did for 2023 was to look at the service level and the supply chain. In fact, our head of domestic food, Frank James, and Zak Mars, have just returned from Thailand, where we are having serious discussions with a number of suppliers to get better pricing for our goods,” Wehby said on Wednesday at the company's annual general meeting.
On the retail side, the conglomerate is also undertaking solar installation works at the Hi-Lo Food Stores to cut its energy bill.
And: “We’ve also been looking at our expenses on the financial side, whether we have been spending in an efficient way. That’s an exercise we go through every Monday morning,” Wehby added.
GraceKennedy will be spending US$6.9 million on the implementation of SAP S4/HANA, a software that’s expected to drive more efficiency across GraceKennedy’s food businesses, and US$.2.3 million on phase two of the Oracle Fusion software to better managing its accounting systems.
"... These two applications alone will run us $1.4 billion,” Group CFO Andrew Messado said, quoting the Jamaican dollar value of the capex.
Last year, GraceKennedy generated a new record high of $142.9 billion in revenue, largely due to strong growth from the food division. But the financial division delivered a mixed performance, achieving top-line growth but a decline in pretax profit.
As such, the group reported a 15 per cent dip in profit to $7.6 billion in FY2022.
For the first quarter ending March, the group again posted revenue gains growth in all its segments, leading to a record quarterly revenue of $39 billion, but two of four segments faltered in relation to earnings. Overall, however, profit rose nearly 21 per cent to $2.3 billion.
“Our revenue line has been growing nicely, but some of the revenue is not flowing through to the bottom line in an efficient way," said Wehby.
"So the first thing that we have to do is to better manage our margins, not just within our food division, but also on the financial services side,” he said.