Kremi ice cream’s profit surges 16-fold amid hot El Niño weather, efficiency gains

Caribbean Cream Ltd, the maker of Kremi ice cream, reported a 16-fold rebound in quarterly profit as it benefited from lower production costs amid sweltering summer heat.

The company posted net profit of $69.1 million for the second quarter ended August 2026, compared with $4.2 million in the corresponding period a year earlier, according to unaudited financial statements. Over six months, its profit grew to $113.8 million versus a loss of $9.4 million a year earlier. Earnings per share totalled $0.30, compared to a loss of $0.02 a year earlier.

Management, however, downplayed the impact of heat on consumption, saying the company’s investment in securing its own water supply proved more significant by helping it navigate drought-related restrictions.

“The summer heat didn’t have much of an effect on business, but the new well helped us tremendously during the drought and positively affected our costs,” said Christopher Clarke, managing director and CEO, in response to Financial Gleaner queries.

Kremi invested roughly $50 million to drill an underground water well at its Kingston factory, helping to meet the plant’s daily water requirement of about 35,000 gallons.

Revenue for the August quarter rose 8.0 per cent to $891 million, up from $826 million a year earlier. For the six-month period, sales climbed 9.0 per cent to $1.78 billion from $1.63 billion.

Management attributed the revenue growth primarily to stronger product availability throughout its distribution network.

“The continued growth in revenue was primarily attributable to the availability of products across the distribution network, which supported sustained sales performance during the period,” the company said.

While sales growth was solid, the biggest driver of earnings was lower production costs.

Cost of sales declined 3.0 per cent to $545.5 million during the quarter, even as revenues increased. Management said the reduction stemmed from operational improvements, including the construction of a well that lowered water expenses.

“The reduction in cost of sales was primarily attributable to improvements in operational efficiency, including the construction of a well, which resulted in lower water charges. The reduction was further supported by proactive maintenance initiatives and effective cost management measures,” the company said.

As a result, quarterly gross profit jumped 33 per cent to $345 million, up from $260 million a year earlier.

“The stronger profitability reflects the combined impact of revenue growth, improved gross margins, and continued focus on operational efficiency,” management said.

The results come against the backdrop of a hotter-than-normal summer season.

The Meteorological Service of Jamaica said above-normal temperatures were experienced from June to August, with hotter daytime and night-time conditions. The agency said conditions were being influenced by El Niño, which is expected to strengthen into late 2026, bringing the potential for higher temperatures and drier weather.

“Above-normal temperatures are expected from August 2026 to January 2027, increasing the likelihood of hotter daytime and night-time conditions,” the Met Service said in its seasonal outlook.

The agency also warned that “generally, elevated temperatures are expected to persist” and could contribute to increased heat stress.

The latest quarter also reinforces Caribbean Cream’s recovery from last year’s challenging operating environment led by Hurricane Melissa disruptions.

CASH RESERVES ALSO STRENGTHENED

Cash and cash equivalents climbed to $85 million at the end of August, compared with $55 million a year earlier and $28.8 million at February year end.

“The company’s financial position remains sound, reflecting its continued ability to meet its short-term obligations and long-term debt commitments as they fall due,” management said.

Looking ahead, management said it remained focused on improving profitability and shareholder returns through continued operational and strategic initiatives.