AN islandwide ammonia shortage sent revenues slightly lower for ice cream and novelties maker Caribbean Cream, which trades as Kremi, during its first quarter ended May.

For the three-month period the company reported declines of some $8 million in revenues, which totalled $604 million when compared to $612 million in the prior year’s period. Profit for the period, however, grew near sixfold to $6.7 million, up from $1.3 million, after returning to benchmark levels following a period of loss stemming from some fallouts associated with the COVID-19 pandemic.

CEO Christopher Clarke, speaking with the Jamaica Observer this week, said that although the shortage significantly affected the business and its ability to meet the demand for products, the issue has since been remedied with the business now in a better place to deliver stronger revenues going forward.

“The shortage limited our capacity greatly, causing our finished goods inventory to be deeply depleted, resulting in the impact on sales. The shortage — further compounded by some leaks we had at our plant — also saw us having a greater demand for ammonia, which was what led to the pressure on our operation,” he explained to the Business Observer.

“We fixed a lot of the leaks we had so we should be able to return to our regular revenue performance,” he added, noting that the ammonia shortage was likely a one-off event.

Ammonia which is relied on as a safe and cost-effective industrial refrigerant solution, is used to regulate temperatures in ice production. Largely considered a toxic gas, ammonia is prominently used as a refrigerant by the food industry to power a number of plants used for dairy, ice cream, frozen food production, and a number of other applications.

“What happened was that the supplier in Trinidad had issues as there was a global shortage in cylinders which is used to transport the product, which in turn impacted our local supplier’s ability [which is IGL] to have the product readily available for local supply.

“The situation has since been alleviated and we are back to optimal production capacity,” Clarke stated.

Moving pass this hiccup, a more optimistic Clarke — who is never one to share a forecast — said the commissioning of its new plant is expected to help with clawing back lost revenues in subsequent quarters.

“Our new cold room is expected to go live by the end of August and that will help us to greatly increase our production capacity and storage, enabling us to have larger back stocks in the event that anything happens again which could impact sales,” he said.

Despite increased costs associated with operational expenses and capital expenditure the company’s operations, its directors said, remain strong with total assets climbing to $2.1 billion — $504 million more or some 32 per cent above that seen during last year’s period.

“Operating expenses for the quarter increased by $16 million due to increased employee, security and finance costs. Administrative cost increase by $11 million over last year due to the company adding staff with specialised technical skills. The security cost went up due to recent legislative changes which saw an increase in the national minimum wage, while finance costs increase by $6 million above the last quarter due to additional financing acquired for our CAPEX [capital expenditure],” the directors outlined in a recent report to shareholders.

“Strategies to contain these expenses are currently being undertaken,” they further noted.