don Wehby. Once you build a good relationship with the customers, interact with the consumers and have a quality product like the Grace brand and can deliver at a reasonable price, then you are going to do well

Don Wehby has quickly become one of the youngest and most dynamic Chief Financial Officers of a major Caribbean conglomerate and he is all set to take on yet another major challenge with GraceKennedy.

Last week, it was announced that Wehby (who since 1999 has had dual responsibility for the posts of Group Financial Officer of GraceKennedy and Chief Operating Officer of its Financial Services Division) will now concentrate fully on new and increased responsibilities which he will be undertaking as Group CFO. In his expanded role Wehby will, in addition to his other duties as CFO, have responsibility for a new Strategic Planning Unit that will help guide Grace's continuing expansion.

Earlier this week in an exclusive interview with the Caribbean Business Report, Wehby outlined what his new role will entail, GraceKennedy's plans for further expansion and provided an overview of the economy.

As the Chief Operating Officer (COO) of the Financial Services Division, Wehby was responsible for the First Global Group, Jamaica International Insurance Company (JIIC) and Allied Insurance. He played a pivotal role in both strategic planning and acquisitions with First Global. Under his leadership, pre-tax profits for the Financial Services Division have increased from J$190 million in 1999 to J$1.3 billion in 2004, an increase of approximately J$1.1 billion. The Financial Services Division now contributes 50 per cent of Grace's Group profits.

"The Board took the decision that the role I played at the Financial Services Division should be put into more of a Group perspective around our strategic plan of meeting the unmet needs of Caribbean people anywhere in the world. Of course that will involve growth outside of Jamaica, whether that is growing businesses that we already have in place or forming strategic alliances throughout the region. The CFO's role will be more focused in terms of how GraceKennedy mobilises its financial resources to acquire or facilitate our intended growth," said Wehby.

This new era for Grace will require more from its CFO as it aims to transform its balance sheet. There will now be more emphasis placed upon risk management as the group looks to build critical mass.

Joe Taffe has been appointed as Deputy Chief Operating Officer of the Financial Services Division and following a four -month transition period, he will assume the post of Chief Operating Officer, thus succeeding Wehby in that position.

"Joe has been my right-hand man for the last 10 years. When we acquired TCB, he was the first person that I appointed as a senior manager there. He is a chartered accountant who is mature and disciplined and I have every confidence in him.

"When we first formed First Global we were making J$1 million in profit. Four years later we were reporting J$600 million in profit. I received a lot of the credit for that, but there was a good team around me and Joe was one of the critical members of that team."

Financial Services

GraceKennedy has traditionally been recognised as a food manufacturer and it is largely due to Don Wehby that it now has a significant financial services component. When he assumed the position of COO of the Financial Services Division in 1999, that division accounted for 20 per cent of group profits. Today it accounts for 50 per cent. This, he says is one of the success stories of his career.

"I had this vision to leverage the Grace brand and tie that into our financial services and it worked. We put the Grace tag line across all our financial services companies. For instance, with Jamaica International Insurance Company, we used the line, "Jamaica International Insurance Company, your insurance company from Grace". We then had to make some strategic acquisitions and so we bought Trafalgar Commercial Bank (TCB) and that changed the landscape.
We knew we had to offer a suite of services and so we acquired a stockbroking licence that became First Global Stockbrokers. Then followed a pension management business aimed at third parties and we also offered a Caribbean mutual fund. Today the Grace Caribbean Fixed Income Fund is managing about US$30 million."

Having established a beachhead in Jamaica, Wehby began to look to the wider Caribbean. Grace purchased a 40 per cent stake in Signia, a merchant bank based in Barbados. Following that came the formation of an insurance company in St Lucia called EC Global Insurance. Grace even set up an agency in the Turks and Caicos called First Global Insurance Agency.

"The most important thing I have found in this business is to have the right people working with you. One of the objectives dating back to 1999 was to form a strong management team with a clear succession planning in mind. Everyone here has a defined role and that has worked for us."

First Global began as a niche player but has now gained some traction and has redefined personal banking in Jamaica. It has now set up branches in Manor Park and Montego Bay and is now the jewel on the Financial Services Division's crown.

"We don't have the branch network of a BNS or NCB so our expansion has been carefully planned. One of our competitors was telling me recently that not having a real estate portfolio is one of our advantages because we don't have to carry those overheads. If you observe some of the larger banks in Jamaica, they are actually cutting some of their branches. What we have said is that we need some strategic locations throughout the country.

"We came up with the idea of placing a First Global Bank in our Manor Park branch of Hi-Lo supermarket. There the banking hours are later than one normally finds. This is in keeping with our efforts to cross - sell the GraceKennedy Group. First Global is still a niche player, but the niche is expanding. I think we can launch two more branches, perhaps in Ocho Rios and Mandeville."

Internet banking

Grace's Group CFO points to the growth of First Global's Internet banking and that entity's application of technology. It now has 15,000 Internet customers. He notes the many UK customers who are accessing their Jamaican accounts and making transactions.

There is a pervading feeling among the banking community that people are reticent to utilise the technology and that there are not enough people who have access to it. Grace takes the opposite view, with technology forming an important part of its strategy.

On this issue Wehby said: "Many professionals in Jamaica today do not have the time to wait in banking halls, so you go online to check your investments and your current account and conduct your banking there. We saw this coming and prepared for it. Because we had one branch, we treated it as priority number one."

Food Division

About five years ago when Unilever pulled out of its distribution deal with Grace, the company faced a crossroads. It responded by establishing its own branded foods in the collective consciousness of Caribbean people.
This has been one of the most successful strategies employed by Irwin Burton, Douglas Orane and Don Wehby.

"Today, Grace Food and Services is having its best year in the history of GraceKennedy as far as profits and revenues are concerned. For the half year of 2004, Grace Foods contributed J$188.2 million in pre- tax profits. This year, for the same period, it contributed J$3137 million in pre-tax profits. The reason for this rise in profits? The Grace food brand. It is as simple as that.

"About four years ago the Food Division was losing money. We had a US$20-million debt on the balance sheet. The Food Division's COO at the time Irwin Burton said, 'We have to change from an elephant to a tiger and make it more flexible.' So we went through what is called financial surgery - that is going through line by line analysing every single cost. We managed to reduce our costs and we outsourced our warehouse operations. In effect we created a different business. Because it became so efficient as a result of our cost and distribution structure we then looked at the marketing of our brands. This made us pay attention to quality.

"We then set about building on our relationships with our customers, particularly Wayne Chen of SuperPlus and Sing Chin of Progressive Stores. Once you build a good relationship with the customers, interact with the consumers and have a quality product like the Grace brand and can deliver at a reasonable price, then you are going to do well."

Wehby sees the supermarket business in Jamaica as being very challenging with so many operators and outlets beginning to cannibalise businesses.

"There are so many operations in the corporate and urban areas and we recognise that. But saying that, we have added a Hi-Lo in Port Maria and in Ocho Rios because we see the growth in both the supermarket and retail business coming from outside Kingston. We believe that the city is now saturated with locations sitting on top of each other. Although we have faced increased competition for revenues we have still managed to hold our own. Our Barbican and Liguanea stores are doing well."

Hi-Lo stands for high quality at low prices. With 15 supermarkets, Grace has better purchasing power from its suppliers. This means it does not have to pass on a percentage of bulk purchasing to consumers.

"We still get complaints, particularly about not having a full range of products so we listen to the consumers and note their purchasing habits. We are trying to get the infrastructure right and have implemented a new IT system that cost around US$2 million. The supermarket business in Jamaica right now is very tough so you have to give good value."

Maritime

GraceKennedy has now given up its maritime business, which for several years did swell under Robert Kinlocke. Grace likes to have a return on equity of over 20 per cent with market growth in excess of 10 per cent and for the business under review to be a generator of cash.

When the group examined its maritime operations and realised the capital that would be needed to sustain it and the return on equity it would bring, it decided the returns would not be sufficient.

"It was a very emotional decision, but it was in the best interests of the shareholders. When GraceKennedy started it was a trading company with maritime interests, so we have been in this business since the company started.

"But when you look at the pool of capital that you have and see that you can get better returns elsewhere it makes sense to pull out of maritime. It is capital intensive and I think there should be a single merger between the Port Authority and Kingston Wharves."

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