WHILE its core business continues to grow at double digits, Tropical Battery is looking to further distinguish its image from a lead acid battery business into an energy solutions provider across Jamaica and the region.
The company has added three new subsidiaries in the last six months and formed a joint venture with CAC 2000 Limited called Enrvate Limited. The other two subsidiaries, Tropical Mobility and Tropical Finance Limited, will be led by Oliver Hill. All companies are meant to complement each other as Jamaica aims to find more energy efficient means and lower carbon output vehicles while the world undergoes a global shift.
“These subsidiaries are to promote some of our existing products like with Tropical Energy, as we sell solar panels and lithium-ion batteries which we want to promote by having an existing subsidiary. Tropical is not just an old-legacy, lead acid battery company because of our history. We're trying to convert a lot of younger persons and everybody in Jamaica to know that we're also Tropical Energy, Finance and Mobility,” stated Managing Director Alexander Melville at the company's virtual annual general meeting held on Friday.
Melville added, “Tropical Finance is to help customers acquire more expensive products or systems that we may be selling in the future, whether it's electric vehicles [EVs]or larger solar systems. Tropical Mobility is focused on electric vehicles. We are focusing on the collection of those older, lithium-ion batteries that will be coming out of EVs as they become more prominent and take more market share from the conventional combustion engine cars.”
While Melville didn't provide a comprehensive update on Enrvate's $24–$36 million in additional contributions from selected partners, he noted that the fund raising was ongoing and is going well. CAC and Tropical Battery committed $5 million each to the capital commitments of the joint venture. Enrvate focuses on providing energy monitoring for corporate clients and making recommendations to optimise utility expenses.
Tropical Battery's first-quarter revenue catapulted by 47 per cent to $661.94 million, which is a quarterly record and above the pre-COVID-19 figure of $498.24 million. The net battery sales rose by 52 per cent to $591.26 million. Apart from the increased sale in batteries, its tyres, oils and accessories improved as COVID-19 restrictions eased during the period which allowed it to increase promotions and direct sales to its more than 25,000 customers. The Grove Road location has seen increased traffic due to the expansion of its parking lot. The company has started training and certification but the spent lithium battery export hasn't gone off as yet.
Tropical's net profit grew by 198 per cent to $56.66 million, which isn't far from its record $88.33 million earned in its 2021 financial year ending September 30. Tropical repaid its $100-million short-term loan to NCB at the end of February, which Melville attributed to the company's current success. This allowed the company to stock up on inventory which totalled $873.36 million while its competitors are currently running out of batteries as supply chain issues resulted in only two out of five containers arriving in Jamaica. Total assets stood at $2.03 billion while cash and cash equivalents was $144.30 million.
Although the Russia-Ukraine invasion has seen the price of nickel surpass US$100,000 per metric tonne and US$128 per barrel for oil, Melville explained that the company won't be impacted by the event.
“The current Ukraine situation is not an issue for us. We don't buy battery products out of Russia or Ukraine and we have suppliers from 3 to 4 different countries. We did a study and don't see any impact to our business or supply chain coming out of that event.”
Tropical's stock price has increased 72 per cent year to date to $2.16 as investors reacted to the company's strong quarterly performance. The company's market capitalisation now tops $2.81 billion following its listing in September 2020 at $1 per share.