Kremi in­vest­ing $200 mil­lion in plant up­grade

Jamaica Gleaner - - BUSINESS - Steven Jack­son Se­nior Busi­ness Reporter

CARIBBEAN CREAM Lim­ited, which trades as Kremi ice cream, plans to in­vest $200 mil­lion to im­prove op­er­a­tions and dress up ex­panded space in its Kingston plant.

The com­pany an­nounced the in­vest­ment in its op­er­a­tions, even while cat­e­goris­ing the new­est new player, Lasco, as a sep­a­rate and non-com­pet­ing en­try in the ice-cream mar­ket. Lasco Man­u­fac­tur­ing is now pro­duc­ing a pow­dered ice cream dis­trib­uted through gro­cery re­tail­ers, a mar­ket seg­ment in which Kremi says it has no plans to com­pete.

The ice cream maker an­nounced plans to in­stall a waste­water plant by next year. This will treat and pump waste wa­ter ef­fi­ciently in or­der to de­crease oper­a­tional costs, said Kremi Chief Ex­ec­u­tive Of­fi­cer Christo­pher Clarke. Sec­ond, the com­pany plans to com­plete the ex­pan­sion of its pro­duc­tion space, which it is in­creas­ing by 50 per cent.

“The waste­water project is bud­geted at $30 mil­lion. Our fit­ting of the fac­tory, which in­cludes many more things be­sides floor­ing, is bud­geted at $170 mil­lion,” Clarke told Gleaner Busi­ness fol­low­ing the com­pany’s an­nual gen­eral meet­ing on Tues­day.

“Be­sides floor­ing, we will in­clude san­i­tary wall cov­er­ing, in­su­la­tion, AC units for pro­duc­tion area, and other things.”

The planned project ex­pen­di­tures amount to four times the $47 mil­lion capex recorded by Kremi for its last fi­nan­cial year end­ing Fe­bru­ary 2016.

The plant im­prove­ment will al­low Kremi to lay the ground­work for pos­si­ble HACCP cer­ti­fi­ca­tion. This would al­low en­try into the United States for its prod­ucts, but Clarke said the com­pany cur­rently does not have an ex­port plan.

Lasco en­tered the mar­ket in Jan­uary with its prod­uct dubbed Ice Dream, which is sold from dry goods shelves rather than freez­ers. Lasco’s tar­get is per­sons who want to make ice cream for their fam­i­lies or for re­sale within com­mu­ni­ties.

“The com­pany [Kremi] is do­ing well, and we be­lieve that the prod­ucts are not com­pet­ing prod­ucts, so we do not see any prob­lem — It’s a dif­fer­ent prod­uct,” said Clarke, who also noted that Kremi doesn’t plan to add pow­dered ice cream to its prod­uct line.

Kremi’s first-quar­ter end­ing May 2016 re­sults how­ever con­tin­ued to show strong earn­ing at 81 per cent to $71.2 mil­lion net profit. Kremi also ex­pects to in­crease its staff

com­ple­ment slightly from 130 to 140 by the close of the fi­nan­cial year end­ing March 2017.

Since list­ing on the Ja­maica Stock Ex­change (JSE) the com­pany in­vested in equip­ment, blast freez­ers and rack shelves in or­der to ac­com­mo­date its in­creased pro­duc­tion.

“It is now time to build out the space. The pro­duc­tion floor has in­creased by 50 per cent to ac­com­mo­date fu­ture growth. Good man­u­fac­tur­ing prac­tices and HACCP were taken into ac­count when de­sign­ing this fa­cil­ity to en­sure qual­ity and ef­fi­ciency are max­imised,” Clarke told share­hold­ers at the AGM. They in turn mostly con­grat­u­lated Clarke on Kremi’s stel­lar per­for­mance in re­gard to its cap­i­tal gains on the Ja­maica Stock Ex­change.

“In ad­di­tion to our cap­i­tal­i­sa­tion, we ask that some higher div­i­dends could be paid,” share­holder Orette Sta­ple re­quested. Most share­hold­ers, how­ever, sought clar­ity on ex­pense line items.

Kremi listed on the ju­nior stock mar­ket in May 2013, be­com­ing the first ice cream maker to go pub­lic. Its per­for­mance re­mains one of the best on the mar­ket for 2016, with its shares climb­ing from $1.75 to over $10.75 over 52 weeks. It now trades just above $9.

The com­pany is a man­u­fac­turer and dis­trib­u­tor of bulk ice cream prod­ucts. It pro­duces 20 flavours of Kremi ice cream in three-gal­lon, 1.5-gal­lon and quart sizes, as well as three flavours of ice cream cake nov­el­ties. It also dis­trib­utes the Fla­vorite brand of frozen nov­el­ties from Trinidad.

Caribbean Cream cur­rently owns and op­er­ates three de­pots lo­cated be­tween Mon­tego Bay and Kingston, and its prod­ucts are dis­trib­uted through fran­chise op­er­a­tors in Kingston.

The ice cream maker re­port­edly com­mands a 50 per cent share of the bulk dis­tri­bu­tion mar­ket. Its re­tail prod­ucts are dis­trib­uted by Wisynco Group.


Christo­pher Clarke, CEO of Kremi/Caribbean Cream Lim­ited.

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