Kremi enters final phase of expansion thrust
Ice cream maker hires Red Stripe managers; readies for warehouse construction
KREMI maker, Caribbean Cream, beefed up its management with recent hires from local brewer Red Stripe as part of the final phase of its expansion thrust.
The company is also readying itself to build a warehouse under its growth and rebranding programme that will cost over $300 million.
"We have invested in the leadership of the company. We have invested in the future growth of the company," said Caribbean Cream's CEO Christopher Clarke at the company's annual general meeting held at the Jamaica Conference Centre yesterday. "Red Stripe is one of the premier manufacturers in Jamaica."
Former Red Stripe general manager Mark Mckenzie already sat on company's board since its public listing in May last year.
However, Karen Williams and Stephen Lloyd, who also worked for the brewery, joined Kremi in May this year as financial controller and chief operations officer, respectively.
By April 2015, the final phase of the investment schedule will begin, with the construction of a warehouse to allow for more storage of raw materials, said the company. Clarke, however, chose not to reveal the cost of building the warehouse.
"I rather not say at this moment," he told the Observer. "But we will use cashflow to finance it."
The ice cream maker's expansion thus far has already seen an increase in factory floor space by 50 per cent; expanded cold room capacity by a factor of four; and an increase in the capacity of its blast freezer — which hardens the ice cream for packaging — by a factor of eight.
Yesterday's AGM was the first one since the company listed on the Jamaica Stock Exchange in 2013.
On top of the $69 million (net of transaction costs) that Caribbean Cream raised from its initial public offering last year, it borrowed another $94 million from Bank of Nova Scotia to assist in the completion of phase two of
its expansion plans. The investment aims to position Kremi to take a bigger market share in an industry flooded with imports.
"We believe that the investment in the blast freezer is a big step in getting us towards that place," he said.
Last October, Kremi opened a Kremi retail outlet in Liguanea Lane Plaza in Kingston and set up a Kremi depot on Red Hills Road in Kingston. "To date both have proven to be profitable strategic moves," according to the annual report.
The Liguanea branch is Kremi's first franchise. It's operated by Christopher's father, Dean Clarke. Management will evaluate the performance of the Liguanea branch and determine whether to grow its franchise network.
"Liguanea branch is a pilot programme which could potentially materialise in [other] franchises in the future," Clarke told the Business Observer. "But it's way too early to tell that that will be the direction in which we will go. We expect our future growth to come mainly from capturing more market share in bulk and prepackaged products."
Kremi earned $16.5 million net profit on $251 million in revenues for its May 2014 first quarter, or 79 per cent more profit than in the comparative period a year earlier. It follows on flat net profit of $35 million for its financial year ending February 2014. Its revenues however jumped 26 per cent to $855 million over the period and gross profit margin moved from 19 per cent to 23 per cent.
"The major achievement of the year was the launch of a $300-million investment schedule of retooling, rebranding, recruiting senior managers and expanding our facilities aimed at a higher level of productivity and more operational efficiencies," said Clarke in his CEO's report prefacing the annual report. "All these activities took place during a very challenging year for the Jamaican manufacturing sector primarily due to the rapid devaluation of the Jamaican dollar, which resulted in significant increases in our operational inputs. However, we were not deterred from our vision to be the number one ice cream company in the Caribbean."