Kremi Scoops Up Revenues, But Earnings Melt in Q2

• Despite Caribbean Cream Limited (Kremi) adding more scoops to its revenue in the second quarter ended August 31, 2025, rising costs caused a 77.2% year-over-year (YoY) net profit drip to $4.21Mn.
• Q2 Revenues increased by 12.9% to $825.56Mn, driven by increased demand from third-party contractors, which was supported by consistent stock levels to meet the demand.
• However, contract labour, waste disposal costs, and extended lease obligations ballooned Cost of Sales by 25.0% $565.27Mn. As a result, gross profits declined by 6.6% to $260.28Mn, and gross margins dipped by 6.6 percentage points to 31.5%
• The gross profit decline was somewhat offset by higher incomes, rising from $0.91Mn to $2.71Mn and lower operating expenses, which chilled by 2.3% to $226.58Mn, but finance costs countered, increasing by 34.2% to $30.79Mn, reflecting higher interest and lease interest expenses. Notably, its lease liabilities more than tripled to $259.96Mn.
• Ultimately, Keremi’s lower Q2 2025 earnings, coupled with its $13.65Mn loss for Q1 2025, translated to a $9.45Mn loss for 6M 2025. This represents a meltdown from the $33.89Mn profits in 9M 2024.
• While a strong holiday season could mean additional revenue increases, Kremi’s overall performance will depend on its ability to manage costs effectively.
• Kremi's stock price has fallen 25.6% since the start of the calendar year. The stock closed Friday’s trading session at $1.62 and currently trades at a P/B of 0.9x, which is below the Junior Market Manufacturing Sector Average of 1.4x.

(Sources: JSE and NCBCM Research)