Caribbean Cream Limited, the maker of Kremi-branded frozen desserts, has crossed the $3-billion revenue mark for the first time in its history. But even with higher sales and newly completed infrastructure upgrades, the company is facing rising costs and a profit that’s been cut in half.

Net profit fell by 52 per cent to $17.8 million for the financial year ending February 2025, down from $36.7 million the year before. And while the company has made big capital outlays to expand production capacity — including a new cold room and underground water well — returns on those investments are still ramping up.

“Cash flow continues to be tight,” CEO Christopher Clarke told the Jamaica Observer in a recent interview. “We’re gradually making improvements, but we’re not in danger of not paying our bills or anything like that. We just need to improve the cash flow.”

Clarke attributed the rise in administrative expenses — up $151 million year over year — to a series of general repairs across Kremi’s network of distribution depots, coupled with upward pressure on wages.

“There is upward pressure on salaries in Jamaica as a whole, but it’s mostly the repairs to our depots that are driving up those costs,” the CEO said.

While he did not share specifics on when or how efficiency gains might materialise, Clarke confirmed that the depot repairs were not part of a structured upgrade plan but more general in nature.

Meanwhile, the company’s lease liabilities have also surged from $89 million to more than $283 million as Kremi renewed several of its expiring lease agreements for longer periods.

“We had one year left on the lease and we renewed them for another five years,” Clarke explained. “The rate did not go up significantly, but it’s the amount of time on the lease that went up.”

An increase of $174.27 million, or approximately 218 per cent year-over-year in right-of-use assets on the balance sheet reflects the longer tenure of these lease contracts. That, combined with a modest reduction in cash reserves, down from $140 million to $38 million, signals tighter liquidity for the company.

Still, Clarke remains confident that recent investments will begin to bear fruit. The new cold room, commissioned in November 2023, has already begun to boost production and sales.

“That’s what’s fuelling a lot of our extra sales,” he told the Business Observer.

Another key project — a $50-million underground water well at its plant on South Road in Kingston — is expected to come online in the September quarter. Once operational, the well is projected to significantly reduce utility costs and improve production efficiency.

“We just need the projects to start returning on their investment,” said Clarke. “The well should start to save us money around the September timeframe.”

Despite public statements last year about pursuing new market segments, co-packing opportunities, and possibly international expansion, Clarke played down any immediate plans to scale aggressively beyond Jamaica.

“We are doing more co-packing now,” he said. “But the increase isn’t significant just yet… We are not yet at a stage where we can look at markets outside of Jamaica.”

Asked about broader strategic targets, Clarke kept his response short: “Short-term plans are just trying to get more sales and improve efficiency. The well coming on-stream would definitely help with that.”