1 month ago
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A water well currently being drilled for Caribbean Cream Limited, which trades as Kremi, could be a game changer for the ice cream company, which has already registered improved performance in 2024 over the previous year.
CEO of Caribbean Cream, Christopher Clarke, said the well which is being drilled at the company’s plant on South Avenue in Kingston will provide a stable source of water for the company going into the new year.
“The moratorium on the drilling of wells in the St Andrew area was lifted and we were fortunate enough to get permission to drill the well. So, we’re wrapping up the drilling phase as we speak, and the next phase is to test the water. I think that within three months we will start to reap the benefits,” Clarke told the Financial Gleaner shortly after the company’s annual general meeting on Tuesday.
The well draws water from a naturally occurring aquifer, at a rate of 50 gallons per minute, enough to make Caribbean Cream independent of the state-run utility, National Water Commission.
“We expect to be completely independent of the NWC within three months,” Clarke told the Financial Gleaner.
The project is budgeted at $50 million and will enable the company to save around $2 million per month. The development of the system, including all the approvals, is being done by Jamaica Wells and Services Limited.
Clarke said Caribbean Cream normally spends around $25 million year on water consumption if there is no drought. That figure rises if there is need to truck in water.
“Ours is a very water-intensive business with the plant consuming 36,000 gallons a day,” the chief executive said.
Caribbean Cream’s unaudited financial results for the six months up to August this year showed an increase in gross profit of 39 per cent over the corresponding period of 2023. Gross profit for the half year was $541 million, an increase of $151 million over the same period in 2023.
The half-year revenue amounted to $1.5 billion, up from $1.3 billion in the corresponding period last year, while administrative and other operating expenses for the half year were $498 million, an increase of 31 per cent over the corresponding period in 2023, which was $381 million.
In its report to shareholders for the half year, the company’s board said its use of loans to finance capital improvements would pay off in the long term.
“Over the past few years, the company has heavily invested in capital expenditure projects financed through loans. In the short term, this may negatively affect cash flow, but we believe as the company grows, we expect improved returns on our investment,” said Caribbean Cream.
“The company’s focus is on upgrading its property plant and equipment, and the enterprise resource planning system aims to improve efficiency and profitability. The required outlay of capital invested in the company and financed through increased loans was the vehicle used to achieve the same. The financial position of the company has been impacted as we use our current working capital to complete a few projects to achieve higher productivity. We have already begun to reap the benefits from higher sales and profitability,” Caribbean Cream said.
Improvements at the company include a new cold room and blast freezer commissioned a year ago.
Meanwhile, the CEO said the company would have adequate supplies of ice cream for the holiday season.
“For the Christmas season, I think we’re in a good spot right now. With increased capacity from the cold room and the blast freezer, we don’t need to stock up as much as we needed to in the past. So regardless of stock levels, I think we can meet demand,” Clarke said.
Caribbean Cream, which employs approximately 150 persons, produces bulk ice cream, ice cream tubs, frozen novelties and ice cream cakes under the Kremi brand.
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