Sun | Nov 28, 2021

Tropical Battery adds tyre brands, other products to line-up

Published:Wednesday | March 31, 2021 | 12:06 AM

Energy storage company Tropical Battery is positioning to grow earnings this year, largely from its expansion into distribution of tyre brands Hankook and Laufenn, plus additions to its existing bike and car battery lines.

It’s looking to get over the hump of the pandemic that tripped up earnings last year.

Tropical Battery Company Limited’s bottom line compressed 53 per cent to $29.3 million for year ending September 2020, due to what Managing Director Alexander Melville said were one-off expenses. The company also had a large tax bill of $31 million that erased half of its pretax earnings.

The results came against 7 per cent growth in annual revenues to $1.9 billion, bumped up by Tropical Battery’s doorstep delivery option for auto batteries and accessories, such as lubricants and tyres, launched during the pandemic.

Some 82 per cent of the company’s revenue was from local battery sales, 11 per cent accessories and 5.6 per cent from battery exports to Costa Rica.

The first quarter ending December 2020 continued to show signs of weakness. Sales dipped 9.5 per cent, year on year, from $498 million to $451 million, which the company said was due to shipment delays for its imported supplies.

Profit improved from $15 million to $19 million, but Tropical Battery, which listed on the Jamaica Stock Exchange last September, only made a gain at the bottom line because the tax waiver it receives as a newly listed junior market company has kicked in. Notably, its pretax earnings fell from $22 million to $19 million.

Its growth strategy for this year includes acquisition deals and the product line expansions, but the company is also looking towards a rebound of the tourism market to reboot sales through that channel.

Melville is optimistic about Tropical Battery’s full-year prospects, due in part to the market’s response to their first shipment of lithium-ion batteries valuing over US$300,000. Most of the supplies, about 70 per cent, were said to have been sold in 60 days.

Still, his optimism is tempered somewhat by potential shipment delays.

“We think that this year will be a strong year and we should see higher profit and higher sales,” he said. “The only challenge that we expect is delays in shipment from some of our suppliers, because of COVID. We have tried to mitigate that by increasing the number of inventory that we buy and so that has minimised the problem. We have so much demand and we have ample capital but we just can’t get some of the goods because of delayed shipping,” Melville said.

It’s been 15 years since the seven-decade-old Tropical Battery last made an acquisition – lubricants company Caribrake in 2006. Tropical Battery, which has a network of over 1,000 dealers and distributors, is now hunting acquisition deals in Jamaica and the Caribbean region.