Kremi refinances debt, cash holdings jump
Ice cream maker Caribbean Cream Limited, which trades as Kremi, came close to doubling its yearly earnings, which topped $100 million while traversing a pandemic-hit economy unscathed.
The company, even with a big capital expenditure on growth programmes, closed the year ending February 2021 with cash resources of more than $200 million.
The company, which in the middle of the COVID-19 pandemic had reported a marginal increase in market share from its ability to manufacture products locally during the lockdown while competitors grappled with scarce imports, recorded a 9.5 per cent gain in revenue $1.87 billion, gains that flowed to the bottom line.
Still, Kremi, which is dependent on consumers having disposable income for feel-good or discretionary purchases like ice cream, acknowledges the company is still vulnerable to the pandemic, with recovery uneven across economic sectors and many jobs yet to be restored. But it is fairly confident it can weather any headwinds, having implemented business continuity and contingency planning around COVID-19, and says it expects to continue generating revenue and cash flows at pre-pandemic levels in this financial year.
Part of its preparation included $259 million of financing from CIBC FirstCaribbean Jamaica, of which $157 million was used to clear four loans Kremi had with Scotiabank.
“The loan is repayable within a 60-month term with a balloon payment at the end of the term. Interest is at floating 6 months weighted average treasury bill yield plus 4.80 per cent per annum, reset quarterly,” the company said in its statement to shareholders published alongside its year-end financial report.
Some $88 million of the new borrowings was poured into the business, $57 million of which went towards capital expenditure projects. That portion of the loan attracts fixed interest of 5.80 per cent per annum and is payable quarterly, Kremi said.
It’s overall capex for the year totalled $147 million. The company headed by Chairman & CEO Christopher Clarke closed the year with $217 million of cash, 68 per cent more than the $129 million held in 2020.
The company is currently developing a combined heat and power, which will be fuelled by natural gas. It also acquired a piece of property, the use of which is yet to be determined.
Kremi is one of two large manufacturers of ice cream in Jamaica, the other being Crazy Jim. It claims a market share of 55 per cent. The company trades in bulk ice cream, and convenience tubs, as well as novelties.