TROPICAL Battery has been energised for expansion mode having declared its intention to pursue a number of acquisitions in the coming months.
Managing Director Alexander Melville, who made the disclosure, also announced that the company is currently seeking out partnerships for strategic alliances. He advised shareholders of the company’s Strategic 2021 Growth Plan which will be underpinned by acquisition and strategic partnerships.
Melville, who has more than 26 years of industry work experience in the automotive/battery business, told shareholders in the company’s just-released 2020 annual report that, “we will be focusing on creating shareholder value through acquisitions of and partnerships with aligned profitable companies in Jamaica and across the Caribbean region”. To this end, Tropical Battery has entered into discussions with several key partners to assist in identifying suitable acquisition targets.
Tropical Battery is one of Jamaica’s oldest and most trusted household brands, primarily operating in the energy storage space for more than 70 years through the sale and distribution of batteries.
Based on its latest audited financial report, the company’s cash flow position, as at the end of its 2020 financial year, was very strong. In fact, the cash generated by operations was the highest on record – coming in at $312 million or a 107 per cent increase versus the $151 million generated in 2019.
HEALTHY AND STRONG CASH BALANCE
As at September 30, 2020 cash and cash equivalents stood at $263 million, which represents the highest on record. “This cash and our strong balance sheet position us well to achieve our growth objectives into new product lines and markets/countries as well as fund strategic acquisitions,” Melville explained.
Total equity was up 34.4 per cent, moving from $547 million at the end of fiscal year 2019 to $735 million as at September 30, 2020. This increase was driven mainly through increases in retained earnings and cash received from the initial public offering last year.
EXPANSION PLANS ALREADY IN MOTION
Foremost in the expansion plans is the drive currently underway to repackage and expand the company’s Tropical lubricant line to include primary batteries, bike batteries and freezetone engine coolant. This is in addition to several other brands in the pipeline like Hankook and Laufenn tyre brands, which are coming soon.
Tropical Battery is also expanding parking at its number one retail store while its sister company, Diverze Properties, is in the process of purchasing land and building directly beside its Grove Road branch in Kingston. The decision to expand the parking facility is based on the fact that its number one customer complaint is the lack of sufficient parking space.
In order to solve this problem, the decision was taken to more than double the existing parking facility. Further expansion currently in the works for Tropical Battery is in the renewable energy (lithium-ion battery) area wherein it has brought in its first container of lithium-ion batteries valued at over US$300,000.
As much as 70 per cent of the shipment was sold in the first 60 days. As part of the expansion plans, Tropical Battery is restructuring some of its retail stores to include solar panel displays and new lithium-ion batteries.