THE GraceKennedy Group is to divest its Hardware & Lumber (H&L) subsidiary, inclusive of the Rapid True Value and Agro Grace businesses, CEO Don Wehby announced in a press release yesterday.

“The decision is a strategic one in keeping with GraceKennedy’s goal of expansion in foods and financial services in Jamaica and internationally.” the release stated.

Over the years, H&L has been making losses on its operations, but recovered in recent times after pumping investments into its agricultural division, AgroGrace. Still, the company’s profits have been so low that returns on equity were less than three per cent in its recently released first quarter financial, or about half the rate of goverment bonds.

The Jamaica Observer reported on Wednesday that H&L had again found itself with declining profits following a massive inferno at the Riverton dump earlier this year. The company posted profits of $34.5 million, or 14.5 per cent less than previous balances for the quarter. Aside from the fire, the company also blamed losses on lower levels of suppliers’ rebates and declining foreign exchange earnings.

GraceKennedy entered into a conditional agreement for the sale of its 58.1 per cent shareholding in H&L on 22 April 2015. The remaining shareholding is held by PanJam. The leading local hardware store is reported under GraceKennedy’s Retail & Trading operating segment.

The company did not say who the purchaser was, stating legal obligations.

“Given confidentiality agreements, no further details can be provided pending finalisation of the transaction,” the release said. But Wehby added that while no assurance can be given, it is anticipated that the sale should be concluded within the current financial year.

H&L currently comprises two separate divisions.

Rapid True Value is a leading local supplier of hardware and home improvement products. The H&L Wholesale operations have now been merged into the Rapid True Value business. Last October, the company pumped $35 million into the renovation of its Portmore location which was part of renovation efforts in of seven stores islandwide, totalling over $100 million.

The Agro Grace business is a local wholesaler and retailer of agricultural products. Earlier this month, the Jamaica Observer reported that AgroGrace had recently reopened its Mandeville store following relocation to “bigger and better” facilities on Ward Avenue.

There are currently 10 Rapid True Value outlets across Jamaica, along with six Agro Grace Retail Centres. The company is headquartered at 97 Spanish Town Road in Kingston.

— Karena Bennett