Unless the holiday quarter delivers a strong rebound, Caribbean Cream Limited, the manufacturer of Kremi ice cream, could find itself in a loss-making position at the end of its 2025/26 financial year.

The company, which struggled with a mechanical breakdown earlier this year, reported a net profit of $4.21 million for the three months ended August 31, 2025, a sharp improvement from the $18-million loss recorded in the first quarter. However, the late recovery was not enough to pull the company into the black for the half-year, which closed with a net loss of $9.4 million after tax.

Total revenue for the six-month period climbed nine per cent to $1.63 billion, compared to $1.49 billion in the corresponding period of 2024. The growth came mainly from stronger distribution and increased sales through third-party contractors. Still, higher operating costs eroded the gains.

According to the company’s unaudited financials, cost of sales jumped 20 per cent to $1.14 billion, largely because of increased contract labour, waste disposal costs, and extended lease obligations under IFRS accounting standards. As a result, gross profit slipped nine per cent to $493.75 million, while operating expenses remained relatively flat at $507 million.

That combination pushed Kremi into the red, marking one of its weakest half-year performances since listing on the Junior Market of the Jamaica Stock Exchange.

The results continue a pattern of narrow margins for the ice cream producer. For the financial year ended February 2025, Kremi recorded a net profit of just $17.8 million — a modest rebound following pandemic-era pressures and supply disruptions. The latest figures, however, suggest those challenges have evolved rather than disappeared, as the company now contends with rising input costs and an asset base that occasionally affects production.

In its first-quarter report, Kremi disclosed that a major mechanical failure in its cold-room facility had interrupted supply and reduced throughput. That incident contributed heavily to the company’s early loss. Management said the issue has since been resolved and operations have normalised, but the financial aftershock lingered through the second quarter as the company absorbed additional repair and labour costs.

Still, Kremi appears to be positioning itself for recovery in the second half of the year. Its inventory levels rose 27 per cent to $292 million, reflecting greater stockpiles of raw materials and finished goods to support increased production. Non-current assets also climbed to $2.06 billion, signalling continued investment in plant and equipment.

The company ended the quarter with cash of $56 million, up 49 per cent from its February year-end balance. Its total assets stood at $2.6 billion, with equity of $866 million, suggesting the company retains a healthy financial base despite the temporary losses.

For Kremi, the path to profitability may hinge on seasonality. Ice cream sales in Jamaica typically accelerate during the final quarter of the calendar year, fuelled by the Christmas season, school holidays, and tourism activity. A strong performance in those months could push the company back into positive territory by the close of the financial year in February 2026. Kremi would need to generate at least $10 million in net profit in the second half of the year to break even, and more than twice that to match last year’s performance.

Still, the rebound will depend on how well Kremi manages its cost structure. Rising contract labour and lease payments have been persistent issues, and the company will need to maintain operating discipline to prevent further margin erosion.

Even as it battles short-term pressures, Kremi’s management has signalled confidence in the brand’s long-term potential, citing steady demand and growing distribution partnerships. The company says it is working diligently to “deliver higher levels of profitability” for shareholders.