When GraceKennedy Ltd reported its third quarter results and held its investor briefing on November 14, it served up sumptuous delights. Appetizer — revenues up 5.5 per cent for the nine month period and 10.4 per cent for the third quarter, entrée — substantially improved profits (24 per cent and 122 per cent for both periods respectively), and dessert — all segments posted improved performance. On the market, shares of the iconic Jamaican company moved 12 per cent in one week to hit its 52-week high of $65 on November 16, as investors contemplated whether the diagnosis by some that Grace is a mature company was premature. As investors ask, are these results the beginning of sustained growth? One thing is for certain, Grace’s prospects are becoming more interesting.

At the briefing, GraceKennedy’s CEO, Don Wehby, commented that the question he has been asked since the release of the third quarter results is “are the results sustainable and can we look forward to increased profitability”. According to Wehby, Grace has some clear investment themes which it has been successfully implementing and this is expected to drive continued profitability. These are: sustainable growth and innovation, operational efficiencies, consumer centricity and a performance driven culture.

Given these themes, our goal is not to reflect on how well GraceKennedy has done in its third quarter but to delve deeper into the fundamental analysis of the company. The aim is to assess if it has acquired a framework compatible to its DNA so that it can continue to do well. More importantly can it defy the normal life cycle of companies and break the mold of the matured status, as displayed by companies such as Apple Inc, Caterpillar Inc and General Electric Co.

These large foreign entities, at their very core have all demonstrated the ability to identify growth opportunities, take advantage of on being first movers and thereby gain dominance. They have positioned themselves to capitalise on some of the biggest opportunities of the day, like emerging-market growth, affordable health care and cutting edge technology.

GraceKennedy is executing a similar strategy through its theme of sustainable growth and innovation. It has positioned itself in key growth markets internationally. Executive chairman, Douglas Orane highlighted one of GK’s companies, Enco Products Ltd, as a hidden gem. Established in 1933, Enco is the largest subsidiary in the Grace Foods UK group. It established the UK’s Caribbean food and drink market in the 1950’s and has remained the market leader to this day. Enco’s brand portfolio is unrivalled in the UK market with four of the regions top five Caribbean brands, including Nurishment, Encona, Dunn’s River and the global Grace brand. While other markets in the UK and Europe have stagnated or declined, the demand for ethnic Caribbean foods has been increasing steadily, and is still in its growth stage.

Furthermore, “Brand Jamaica” will be on full display in next year’s Olympics in London. The likes of Usain Bolt, Yohan Blake and other outstanding Jamaican athletes are expected to once again put us in the spot light, whipping up an appetite for all things Jamaican. All aspects of our culture will be in demand, including our culinary delights, and GK through Enco Products is perhaps best positioned to benefit from this.

Also evident from the briefing is GraceKennedy’s effective integration of its operational efficiencies. As each segment leader spoke about the strategies employed in their respective divisions, it was clear that operational efficiencies are an integral part of their processes, simultaneously reducing costs and enhancing product or service offerings. A tale told by Mr Orane as one of the many examples of how GraceKennedy has done this, related one instance of four young men who work at GK’s juice processing plant. Using their own ingenuity, they were able to triple the productivity on one of their lines to over ten thousand cases. They implemented the placement of electronic feedback equipment which measured the speed of each segment of the line, and based on that data, the line was better coordinated to enhance the flow of the bottles. Behind the anecdote are strong figures which emphasise the importance and GraceKennedy’s success with improving its operational efficiency.

GraceKennedy has built a brand on providing quality products and making life easier while building deep customer relationships. It is methodically replicating its DNA in its financial services offerings, as that segment has launched innovative products with the aim of making life easier of its clients such as Global Access, and it is building more customer relations as evidenced by the growth of its loan portfolio.

Additionally, through consumer centricity, GraceKennedy has now started to tap into another source of growth used by companies like General Electric and Caterpillar. These giants of commerce are providing considerable resources to tackle macroeconomic issues, and are being rewarded for it. GraceKennedy’s new 10,000 square foot plant in St Elizabeth enables it to, not only produce enough pepper mash locally for its own needs, but to sell to other local manufacturers and even export. Now customers, such as the local manufacturers buy from GraceKennedy as this helps them to be more profitable. This eliminates the need to import bulk pepper mash and helps Jamaica’s balance of payments situation. A win-win scenario for all stakeholders involved, and a new dimension of customer centricity and solution provision.

GraceKennedy is acutely aware of the importance of being able to compete, innovate and employ best practices. The seamlessness of its leadership succession perhaps epitomizes this. Mr. Wehby has been charged with bringing fresh ideas to the table and achieving sustainable growth for the company. He has the requisite human capital to back him up, as Dr Cassida Jones, Group Chief Human Resources Officer shared how the Human Resources department if facilitating the themes as outlined by Mr Wehby. GK has demonstrated that it understands that grooming, training and securing talent is important if the organization is to successfully execute its growth strategies. Firms that have successfully maintained a positive momentum or turned their performance around have developed the requisite human capital with a proven ability to operationalize strategy.

In executing these four strategic growth imperatives, GK is leading in the capabilities that should create long-term shareholder value. In today’s environment companies must serve two roles: they must deliver positive returns for investors, and they must be successful in implementing strategies to sustain growth, and GraceKennedy does both.

Deon McLennon is an Equity Trader at Stocks & Securities Ltd. You may contact him at dmclennon@sslinvest.com.