Nine months performance showcases a mix of challenges and opportunities

Durrant Pate/Contributor 

Tropical Battery eked out a record breaking J$782.8 million in gross operating revenue for the third quarter ended June 30, 2023, which represents an increase of 18.3 per cent compared to J$661.8 million for the comparable period last year.

This stellar performance also created another record in a new quarterly record high. The management has attributed the record breaking performance to “the positive impact of our expansion into the Dominican Republic (Kaya Energy Group). The integration of this new market into our operations has proven to be a strategic and fruitful endeavor, particularly as we approach Q4.” 

For the nine-month performance, Tropical Battery’s revenue increased by 8.9% moving from J$1.95 billion in 2022 to J$2.13 billion in 2023. Gross profit closed on J$228.7 million, surpassing the previous year’s figure by J$21 million or approximately 10.0 per cent above Q3 of FY2022’s figure of J$207.6 million. 

Performance challenges

However, the company’s 30.0 per cent gross profit margin is below the corresponding period in FY2022. Net profit came in at J$38.8 million, compared to J$53.8 million from Q3 FY2022. 

The management remarked, “while we are disappointed with our net profit, because of some one-time cost and expenses that should not repeat moving forward. Despite the company’s operational profitability experiencing a dip, our strategic investments and financing decisions have boosted its cash position.”

The Alexander Melville led management is maintaining its growth-oriented approach, which it says is reaping dividend, “evidence by its significant investments but it’s crucial for the firm to ensure this growth translates into improved operating cash flows in the future. We continue to invest in our expansion plans to different markets with the goal of being accretive to shareholder value, customers, team members and stakeholders.”

The management in its quarterly report to shareholders, made reference to Tropical Battery’s aggressive moves like its 51 per cent acquisition of shares in the Kaya Energy Group in the Dominican Republic and is consistently monitoring and strategic adjustments being made to ensure long-term success. 

Financial position

Tropical Battery’s financial position displays substantial progress, characterized by notable growth in assets, a positive shift in liabilities, and a resilient approach to cash flow management. Despite the increase in current liabilities, the net current assets experienced a growth of 23.76 per cent over the year and 19.44 per cent over the nine months, indicating sound financial health. 

Shareholders’ equity displayed a healthy growth of 13.0 per cent from June 2022 to June 2023, reflecting stronger equity positioning of the company. The balance sheet expansion indicates that the company has been growing its operations, with notable increases in both assets and liabilities. 

The growth in shareholders’ equity implies the company has been profitable and is retaining those earnings. The management has listed a number of opportunities that will be pursued in the future such as:

• Expansion into North America: The incorporation of Tropical Battery USA, LLC represents a significant growth opportunity for the company. Entering the large and diverse North American markets of the United States, Canada, and Mexico presents the potential for increased sales and brand awareness. Partnering with Amazon for online distribution should provide immediate access to a vast customer base and could significantly boost the company’s revenue in the coming periods.
• Continued Innovation and Diversification: Tropical’s focus on energy efficiency, renewable energy, and electric mobility aligns well with current global trends and demands. This strategic direction could position the company as a leader in these growing sectors. The recent expansion into the Dominican Republic through the acquisition of Kaya Energy Group signifies Tropical’s commitment to continual growth and adaptation to market trends.