Kremi’s expansion helps melt away profit
KREMI-MAKER Caribbean Cream has launched new sizes for its products.
But ongoing investments helped melt its August second-quarterly profits to $1.3 million, or 83 per cent below year-earlier levels, according to CEO Christopher Clarke.
“These results are attributable to a number of factors, including investment in key administrative staff, foreign exchange losses, increasing selling and distribution costs to drive retail expansion, and investment in marketing, promotion and brand building,” Clarke said in the notice which was also signed by Chairman Carol Clarke Webster.
The company sells ice cream and ice cream cakes in varying sizes to wholesalers, retailers and the hospitality sector.
Inventory actually increased by two-thirds over the year to August, to $115 million, based on additional containers for quarts and pints and purchases for shortening to accommodate growing volumes.
Overall, Kremi earned $253 million in sales for its August second quarter or 20 per cent higher than year-earlier levels.
“This was aided by investment in the new line of ice cream products, the quarts and the pints, which were launched during this period,” Clarke stated in the notice sent to shareholders on the Jamaica Stock Exchange (JSE).
The growth in sales actually resulted in a 23 per cent jump in gross profit to $58 million.
The company expects to finish a segment of its $300-million modernisation of its property, plant and equipment by year-end.
The final phase of the investment will begin April 2015 with the construction of a warehouse to allow for more storage of raw materials.
Up to August, total assets stood at $548 million, which was 30 per cent higher than a year earlier.
“This was attributable to the continued investment in the expansion of the production facility which should be commissioned by year-end,” he said.
Kremi listed on the JSE Junior Market last year.
It raised $69 million (net of transaction costs) from the initial public offering.
But it borrowed another $94 million from Bank of Nova Scotia to assist in the completion of phase two of its expansion.