January 14, 2020

Caribbean Cream Limited (KREMI) for nine months ended November 30, 2019 reported an 8% increase to total $1.24 billion compared to $1.15 billion in the corresponding period last year. Revenue for the third quarter rose 14% to close at $395.48 million compared to $348.24 million for the comparable quarter of 2018.

Costs of sales amounted to $841.54 million (2018: $757.42 million), an increase of 11%, while for the quarter there was a 12% growth to $270.09 million (2018: $241.90 million) . Nevertheless, gross profit improved by 1% or $3.59 million to $393.91 million compared to $390.32 million for the period ended November 30, 2018. The company booked gross profit of $125.39 million for the third quarter versus $106.33 million reported for the similar quarter of 2018.

Administrative Expenses climbed 15% to close at $279.83 million (2018: $242.71 million), while selling and distribution costs increase 24% from $41.48 million in 2018 to $51.26 million. The increase in operational expenses was attributable to, “annual increases in salaries, expenses associated with opening an additional depot, utilities and depreciation on the capitalization of the production building,” as highlighted by the Company. Consequently, operating profit for the nine months period amounted to $64.82 million, down 40% relative to $107.87 million book in 2018.

In addition, finance cost rose 16% year over year to amount to $16.09 million relative to $13.85 million recorded in the nine months ended November 30, 2018. The company reported a 56% decline in interest income for the period from $1.99 million reported in 2018 to $881,084 for the nine months ended November 2019.

The Company noted, “There were increased depreciation cots as a result of the capitalization of Novelty Line and Ammonia Plant: additionally increased utilities negatively affected the gross profit.” The Company also stated that it, “ continues to review the production process with aim of achieving further operational efficiencies.”

After incurring taxes of $6.20 million (2018: nil) for the period under review, net profit attributable to shareholders decreased by 55% from $96.02 million booked in 2018 to $43.41 million. Profit for the quarter amounted to $8.09 million (2018: $1.74 million), up 366% year over year.

Consequently, Earnings per Share (EPS) for the nine months amounted to $0.12 (2018: $0.25), while the EPS for the quarter totalled $0.021 (2018: $0.005). The trailing twelve months earnings per share amounted to $0.10. The numbers of shares used in these calculations were 378,568,115 units. KREMI’s stock price close the trading period on January 14, 2020 at a price of $4.00.

Furthermore, KREMI added that, “our first new depot has opened in May Pen, expanding distribution and KREMI novelties continue to grow following the installation of the new production line.”

Balance Sheet Highlights:

The company’s assets totalled $1 billion (2018: $979.87 million), $22.95 million more than its value as at November 30, 2018. The increase in assets was largely due to an increase of $82.14 million in ‘Property, Plant and Equipment’ to a total of $741.09 million (2018: $658.95 million) and ‘Inventory’  which increased by 18% to total $136.88 million (2018: $116.39 million). ‘Cash and Cash Equivalents’, however, decreased as at November 30, 2019 to close as $55.53 million (2018: $149.79 million).

Shareholders’ equity amounted to $733.07 million (2018: $715.34 million), representing a book value per share of $1.94 (2018: $1.89).

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