Kremi summer ice cream sales jump, but earnings flat
Caribbean Cream Limited, which trades as Kremi, reported a modest uptick in net earnings for the August second-quarter and double-digit growth in sales.
The ice cream company made $46.4 million net profit on revenues of $300 million over three months, or two per cent higher net profit year on year.
Revenue grew 11 per cent as a result of continued marketing and sales within in the wholesale/ retail segments; and also the hotels, restaurants and institutions segments of the market, "where we continued to make inroads into our competitors' market share, and the consumers continue to show their brand loyalty to the Kremi brand," said directors Chairman Carol Clarke Webster and CEO Christopher Clarke in a statement accompanying the financial report.
The modest rise in profit resulted from a 17 per cent spike in expenses to $70.8 million.
"The key drivers behind these numbers are salary adjustments and continued investment in key personnel as the business grows," stated management. "An aggressive technical support training programme for all levels of company personnel. This supports our drive for greater efficiency and HACCP and 5s certification."
Kremi does not have an export plan. HACCP certification, however, would allow entry into the United States for its products if it deems that market viable to explore. The 5s certification deals with organisational practices developed from five Japanese concepts aimed at improving work flow.
Kremi's earning per share for the quarter remained flat at 12 cents when compared with a year ago.
Over six months, earning per share tripled rose from 22 cents to 30 cents. The stock has traded as high as $10 this month in a junior market that trades at roughly 15 times earnings. It last traded at $9.25 per share.
Last month, Kremi announced plans to invest $200 million to improve operations and dress up expanded space in its Kingston plant. Initially, the company will install a wastewater plant by next year at a cost of $30 million. This will treat and pump waste water efficiently in order to decrease operational costs.
Second, the company plans to complete the expansion of its production space, add sanitary flooring and wall covering, insulation, AC units, which it is increasing by 50 per cent costing some $170 million.
The planned project expenditures amount to four times the $47 million capex recorded by Kremi for its last financial year ending February 2016.
Since listing on the Jamaica Stock Exchange in 2013, the company has invested in equipment, blast freezers and rack shelves in order to accommodate its increased production.
Kremi is a manufacturer and distributor of bulk ice cream products. It produces 20 flavours of Kremi ice cream in three-gallon, 1.5-gallon and quart sizes, as well as three flavours of ice cream cake novelties. It also distributes the Flavorite brand of frozen novelties from Trinidad.
The company, which reportedly commands a 50 per cent share of the bulk distribution market, currently owns and operates three depots located between Montego Bay and Kingston.
Kremi's retail products are distributed by Wisynco Group.