Sun | Feb 17, 2019

Kremi commissions freezing plan, makes higher profit

Published:Wednesday | January 16, 2019 | 12:00 AMSteven Jackson/ Senior Business Reporter
Caribbean Cream CEO Christopher Clarke
A tub of Kremi ice cream.
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Caribbean Cream, which makes the Kremi brand of ice cream, has announced that it completed the installation of its $180-million ammonia refrigeration plant in its latest quarter, which will increase its production capacity by 20 per cent.

The plant was partially financed by $100 million in new loans.

''The refrigeration plant adds speed at the production line, so the ice cream sets faster,'' said Christopher Clarke, CEO of Caribbean Cream. The plant increases efficiency by utilising ammonia to act as a rapid freezing agent.

The company finished the plant in its third quarter after starting the project within the financial year. As a consequence, the company's fixed assets increased to $659 million as at November 2018, from $487 million a year earlier.

With improved refrigeration, the company will be able to freeze products faster. That means that since the factory already operates near full capacity, the increased freezing will allow for greater production during high-demand periods, such as summer and other holiday periods.

''Now we can sell more,'' stated Clarke in an interview with the Financial Gleaner on Monday about the plant, but he stressed that the increased productivity will not correlate to an equal rise in sales.

For its third quarter ending November 2018, Kremi made $348 million in revenue, or 9.0 per cent higher year-on-year, due to improved product availability and a price rise. The revenue rise offset a 4.0 per cent increase in operating costs at $242 million. Gross profit was 25 per cent higher year-on-year totalling $106 million. This led to higher net profit for the quarter at $1.74 million, or 166 per cent higher than the $653,000 made a year earlier.

The Caribbean Cream CEO remained mum on future plans for expansion, but signalled that with banks offering relatively cheap money at 7.0 per cent, that creates expansion opportunities.

"It is a game changer for the manufacturing sector. It changes the philosophy for us and other companies. So you can expect more plant upgrades in the future from Caribbean Cream, and also expect other manufacturers to do the same," said Clarke.

He anticipates a positive outlook for the remainder of the financial year ending February based on steady commodity prices and a relatively stable dollar.

"Basic ingredient costs are stable, so it won't disrupt the production flow," he added.

Kremi's total assets rose to $980 million versus $782 million a year earlier, while its total equity stood at $715.3 million as at November 2018 versus $618.9 million a year earlier.

steven.jackson@gleanerjm.com