The Jamaican conglomerate GraceKennedy Limited grew its net profit by 31 per cent during its financial year ended December 2012, moving to J$3.8 billion from J$2.9 billion, a reflection of marginal improvements in revenues and a significant drop in taxes paid during the period.

Revenues grew by five per cent to J$61.3 billion, up from J$58.2 billion in 2011, according to its latest financials.

Of the revenue segments, food trading continues to be the major contributor reflecting growth of 5.7 per cent. There was also improved revenue intake from the other segments – retail trading, insurance, banking and investment as well as money services.

The company saw an increase in its expenses from J$55 billion to J$58 billion during the review period.

For the year, GraceKennedy benefitted from deferred tax of approximately $578 million, which significantly lowered the amount paid for the reporting period.

The deferred tax, which was credited to the company's account, came as a result of the Government's reduction of corporate income tax for unregulated entities from 33.3 per cent to 25 per cent.

The reduction came into effect January 1, 2013.

Other income from fees and commission, dividends, foreign exchange, rebates, reimbursements and recoveries, gain on disposal of investments, and interest income from securities available for sale remained flat at $1 billion.

Profits from operations also remained flat at $4.2 billion. Despite a dip in the group’s cash flow, it remained stable at $9.6 billion.

At the end of December 2012 GraceKennedy’s asset base stood at $106.4 billion. Of that amount investment securities accounted for $45.7 billion, of which $39.4 billion was held in government of Jamaica securities.

The company, while announcing the approval of its participation in the recent National Debt Exchange (NDX) programme, said that the short term adverse impact on profitability is not expected to materially affect the financial position of the group.

Company executives said today that the impact of the NDX on the company's equity is just about three per cent.

That amounts to about a $1 billion erosion of its equity base, which stood at $34 billion at the end of December 2012.

"It's not a significant impact in the short-term," Don Wehby, group chief executive officer told investors at a briefing this afternoon.

The company says strategies are in place to make up for the shortfall that will be experienced from the impact of this lowering of interest rates.

Explaining, Courtney Campbell, chief executive officer of GraceKennedy Financial Group said it is now important to become efficient and contain operating cost.

As it relates particularly to First Global Bank, he said the company will be looking to accelerate loan growth, make product pricing competitive and better manage customer relationship.

"We will recover the loss investment income through loan interest income," said Campbell.

Campbell, who was also addressing the investors, said First Global Financial Services has already begun to re-examine its business model to emphasize more on fee based income.

Similarly, he said its insurance subsidiary Jamaica International Insurance Company will continue to improve its underwriting position.

GraceKennedy is a publicly listed company trading on both the Jamaica Stock Exchange and Trinidad and Tobago Stock Exchange.

sabrina.gordon@gleanerjm.com