The cooling of inflation in the last few months has helped to push Caribbean Cream, which trades as Kremi, back to profitability at the end of its last financial year.
For the year ended February, after-tax profit amounted to $27.1 million, rebounding from net losses of $9.1 million in the previous year. This, backed by strong revenue outturns of $2.5 billion — $420.8 million above that earned in February 2022.
"The results we have seen are largely due to us maintaining a tighter control on our pricing to consumers, in addition to the easing of rapid inflation that was previously driven by COVID, which negatively impacted the business. As inflation eases I believe that our business, for the most part, will get back to normal," said CEO Christopher Clarke in a telephone interview with the Jamaica Observer on Monday.
According to data from the Statistical Institute of Jamaica (Statin), inflation levels which peaked at 11.8 per cent in April 2022 fell to 7.8 per cent in February 2023. In April the country's point-to-point inflation further fell to 5.8 per cent — the lowest in near two years, down from 6.2 in March and back within the Bank of Jamaica's (BOJ) targeted range of 4 to 6 per cent. This, as international commodity prices for mainly food and fuel continue to come down.
Kremi's business, which is largely concentrated on the sale and manufacture of ice-cream and frozen novelties, had previously suffered at the hands of supply disruptions, high energy cost along with that for key inputs such as milk powder and palm oil which caused its profits to plummet significantly, even as management undertook a number of strategies, including marketing and social media engagements to ramp up sales.
Noting that the company's strategies would largely remain the same for the current financial year, Clarke told the Business Observer that through the supply of consistent volumes and cost containment, the roll-out of key infrastructures including its combined heat and power (CHP) plant, expected to come on stream this year, will further add to the growth and efficiency of its operations.
"Our new cold room is to also come on stream this year and this too will give us a substantial boost," Clarke said, noting that the larger cold room with blast freezers will go a far way in helping the company to store more of its inventory.
At the year-end mark the company's total assets stood at $2.1 billion, up from $1.7 billion in 2022, while earnings per share increased to $0.07 moving from losses of $0.02.
Describing the annual performance as "okay" based on the numbers published in its recently posted audited financials, Clarke said the intention is to now push the business back to pre-pandemic levels and to even surpass it.
"Our profit performance, while it's better than a loss, is not where we were before which is now our foremost goal," he stated.
In 2019, Kremi reported profits of $88.6 million, accompanied by revenues of $1.6 billion and EPS of $0.23. This followed from an even better performance in 2018 when it secured $89.7 million in profit and EPS of $0.24.