BULK ice cream manufacturer Caribbean Cream Limited, known by its brand name Kremi, has invested $440 million in property, plant, and equipment this year as it pursues an ambitious expansion plan that promises to boost its storage capacity and production volumes.
During its annual general meeting held at Courtleigh Hotel & Suites on Tuesday, CEO Christopher Clarke revealed that the company is on the cusp of completing a cutting edge cold room and blast freezer at its South Camp Road, St Andrew, facility.
"Our new cold room is 99 per cent complete. We have moved all our tools and materials and are currently working to lower the temperature to -25. We will start storing goods in the room by the end of November, increasing our finished goods capacity from 150 to 750 spaces," said Clarke in providing an update on its development.
The company anticipates a slew of benefits from this expanded cold storage, such as improved customer satisfaction and a wider array of stock-keeping units (SKUs) to have buffer stock.
"The buffer stock will allow us to have longer production runs because we will no longer need to satisfy the weekly demands, and this should increase the production efficiency," he said to shareholders.
Regarding the new blast freezer and cold room, Clarke pointed out that while the structure is complete, the temperatures inside the room need to be gradually reduced to avoid potential floor damage. He also noted that lowering the room temperature below -35 degrees Celsius will significantly increase the total production capacity from 500 to 750 gallons per hour.
In addition to these physical developments the company is set to launch enterprise resource planning (ERP) IT software on November 1. This software will serve as a pivotal tool for stock management, offering real time visibility and precise control over all SKUs spanning from raw materials to finished products.
"The software will tie in all our procurement, warehousing, manufacturing, distribution, and sales operations into one database, enabling the company to keep track of inventory," Clarke explained.
Kremi also provided an update on its anticipated combined heat and power (CHP) plant intended for its South Road operation in Kingston. Initially slated for completion in 2020 with a US$2-million investment, the completion of the CHP plant was delayed due to the challenges brought about by the COVID-19 pandemic. The company has now announced that its construction is in the final phases and it expects a substantial reduction in utility bills, with a cost-effective and efficient operation forecasted to commence in the first quarter of 2024.
Shareholders inquired about the company's potential adoption of solar energy alongside the CHP plant. Clarke revealed that while solar is under consideration, their current focus is on the testing phase for the CHP plant for their factory.
"We have a proposal [for solar] in front of us for the depots we are currently looking to install," he added.
Revenues from the production of Kremi's frozen novelties continue to exhibit robust growth, with a 20 per cent increase.
The company successfully rebounded, booking profits of $41.8 million, despite the challenges it faced. The recent half-year results reported revenues of $1.2 billion, mirroring the corresponding period last year. However, the cost of sales was notably high, amounting to $1.73 billion, representing a $239 million increase. Clarke addressed the disruption in sales, attributing it to a widespread shortage of ammonia, a key component in their cooling systems. Nevertheless, the company achieved higher profits, totalling $12 million compared to last year's $9.7 million.