Directors of Tropical Battery Company Limited have credited the acquisition of Dominican Republic-based Kaya Energy Group for contributing to increased growth in revenues in third quarter (Q3) 2023, despite indicating the need to be monitored and make adjustments to the operation so as to ensure the overall success of the group.

Tropical Battery’s revenues for the April to June quarter rose by 18 per cent to $782.84, up from $661.84 million in the corresponding period in 2022. At the same time, gross profit increased by 10 per cent for the three months, closing at $228.66 million.

“The integration of this new market into our operations has proven to be a strategic and fruitful endeavour, particularly as we approach Q4,” directors Alexander and Daniel Melville said in a report attached to unaudited statements.

For the nine-month period, Tropical Battery’s revenue grew by 8.9 per to $2.13 billion, while gross profit jumped 12 per cent.

Tropical Battery announced the acquisition of solar photovoltaic engineering, procurement and construction company Kaya Energy Group in February in a cash and equity deal. The move, the company said then, would result in product and market diversification while enabling the vertical integration of Tropical Energy’s business with Kaya’s design, engineering, installation and maintenance expertise.

“The Dominican Republic has a population of more than 11 million and GDP of nearly US$100 billion, over six times the size of the Jamaican economy, with considerable momentum driving the adoption of renewables. Kaya Energy Group has built an impeccable reputation over the past decade, while spearheading the push for an enabling regulatory regime in the country, and we have a lot of synergies that will propel our combined growth for years to come,” Alexander Melville, managing director of Tropical Battery, said at the time.

Yet, even with revenues streaming in from the new associate company, Tropical Battery’s profitability fell significantly.

“We’re not so happy that our quarterly net income was down. It’s not great, we’re still profitability…but we had some one-off expenses and we’re just kind of reinvesting in some growth areas that we think are going to produce a lot of value in the future for shareholders and the company,” Alexander Melville informed Jamaica Observer.

The one-off expenses to which he referred are associated with the company’s e-commerce push and market expansion initiatives in the US market, adding to its geographical diversification strategy. Just last month Tropical Battery announced that it had created a subsidiary, Tropical Battery USA, LLC, to serve as the key platform for the company’s foray into online marketplaces, starting with Amazon.

“We have to make investments in our Amazon account setup and certainly costs associated with new business that we are doing, and new channels of revenue…and we’re trying to get that up by the end of September,” Alexander Melville shared, clarifying that professional fees was a significant line item.

“We’re seeing good demand on Jamaican products that are being sold by Amazon and we think we’re a strong Jamaican brand and we’ll have some good traction there,” he added.

With continued investment, the managing director anticipates that Tropical Battery will begin to average 20 per cent growth in revenues and profits over the coming quarters and years.

Net income for the quarter totalled $30.11 million when compared with $53.85 million a year prior. Earnings per share dipped one cent to $0.03.

For the quarter, net income generated was $124.04 million down from $144.24 million or by 16 per cent.

Looking ahead, Alexander Melville is bullish that the continued build out of the new subsidiaries and diversification into renewables will continue to drive revenue growth in the long term, adding that the company envisions generating $1 billion in the next five years.