Hurricane Melissa Showed No ‘Grace’ to GK’s Performance

Food and financial services conglomerate GraceKennedy Limited (GK) reported net profit of $6.90Bn for the year ended December 2025 (FY2025), representing an 18.2% year-over-year decline. The dip occurred despite achieving record revenues of J$177.80Bn. A 7.7% dip in operating performance in its Food and Money Services segments during the first nine months of the year was compounded by the impact of Hurricane Melissa in the fourth quarter, which led to a 56.5% decline in quarterly earnings. Together, they contributed to lower pretax earnings (PBT) for the group’s four segments.
Annual PBT from its Food Trading Segment (GK Foods) is down 10.7% despite higher revenues (+6.0%), supported by solid growth in its international food operations. However, the temporary closure of its Grace Food Processing meat plants following Hurricane Melissa, along with higher-than-anticipated operating expenses, weighed on the division’s overall profitability. Additionally, its distribution sub-segment faced elevated warehousing and logistics costs, which also countered revenues.
Meanwhile, its Financial Services segment, which comprises Banking and Investments (B&I), Insurance and Money Services (MS), also saw PBT decline by 20.6%, driven primarily by its Insurance and MS arms.
Notably, its MS segment is down 20.4%, owing to a 4.2% decline in revenues, reflecting reduced transaction volumes. This occurred despite higher net YTD remittances, even before Melissa and a 14.2% jump for November 2025 following the hurricane. Management also pointed to tightening margins in some key markets, even as it retained market share in those territories.
PBT from the Insurance segment is down 30.2% to $1.44Bn, despite higher revenues. Insurance revenues were up 17.3%, supported by strong top-line growth in general insurance and the continued success of its partnership with Scotiabank Jamaica, under which GK General Insurance underwrites ScotiaProtect. The expansion of this partnership into Barbados, the Turks and Caicos Islands, and The Bahamas in November 2025 has demonstrated encouraging early traction. However, elevated claims related to Hurricane Melissa weighed on general insurance profitability, albeit its reinsurance programme helped mitigate these impacts.
Lastly, the B&I segment was flat relative to the other FS segments. Revenues were up 3.7%, driven partly by double-digit loan portfolio growth at its Jamaican commercial banking operations. However, the Jamaican investment and advisory business faced headwinds from a subdued capital market, including the local equity market and was further affected by higher provisions for credit losses.
After achieving record revenues for FY2025 and assuming there is a normalisation of hurricane-related disruptions and expenses, GK could see profits rebound in FY2026. Moreover, it could see additional tailwinds from the full acquisition of Dairy Industries Limited, which allows GK to retain 100% of the profits from Dairy Industries, rather than sharing them through a joint venture. Additionally, the regional rollout of the GK One app into Trinidad, the Cayman Islands and Guyana is expected to shift remittance volumes to a lower-cost digital platform, reducing agent commissions. Moreover, a 5.50% interest rate environment could lower the group’s debt servicing costs if debts are refinanced. However, potential inflation pressures from the US-Israel war with Iran could keep inflation and interest rates higher for longer.
GK’s stock price has declined by 12.6% year-to-date, closing at $71.67 on Tuesday. At this price, the stock is trading at a price-to-earnings (P/E) ratio of 10.3x, which is lower than the Main Conglomerate Sector’s average of 10.6x.

(Source: JSE & NCBCM Research)