Expansion plans bolstered by strong cash flow at the end of 2020

Tropical Battery is now in expansion mode, having declared its intention to pursue a number of acquisitions in the comings months.

Managing Director Alexander Melville has advised shareholders of the company’s Strategic 2021 Growth Plan, which will be underpinned by acquisition and strategic partnerships.

Melville 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, the company has entered into discussions with several key partners to assist in identifying suitable acquisition targets. Tropical Battery’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. As at the September 30, last year, cash and cash equivalents stood at $263 million, another 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,” said Melville, who  has more than 26 years of industry work experience in the automotive/battery business.

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 train

At present, the company is repackaging and expanding its Tropical lubricant line, Primary Batteries, Bike Batteries, Freeze-tone Engine Coolant to the line of products it currently distributes and retails. 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 for more parking.

Hence, the decision to solve this problem by more than doubling the existing parking facility.

Another expansion currently in the works for Tropical Battery is in renewable energy (lithium ion battery), where it has brought in its first container of lithium ion batteries valued at over US$300,000.

As much as 70 per centof 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.