• Consolidated sales grew very dynamically in the first half of the year by 15,8% to 151,5 million
• Adjusted EBITDA continues to increase disproportionately by 54,6% to 37,2 million
• Adjusted EBITDA margin improves significantly by 6,2 percentage points to 24,6%
• “Microbatteries” segment with an extraordinarily strong first half of the year - “Power & Energy” segment with development as planned in the first six months
• Renewed expansion of production capacity for lithium-ion batteries financed by capital increase
• VARTA AG buys the VARTA Consumer Batteries business from Energizer
• Sales and earnings forecast for the business year 2019 is increased again:
  Sales are expected to be between 320 and 330 million (previously: 310-315 million EUR);
  Adjusted EBITDA is expected to be between 72 and 76 million (previously: 64-67Mio EUR);
• Payments for investments (CAPEX) expected due to further capacity expansion between 75 and 90 EUR million (previously: 65-75 EUR million)
  

VARTA AG today publishes its financial results for the first half of 2019. The Group can look back on the most successful first half of the company's recent history: New record sales and earnings figures were achieved, and the high pace of growth was further accelerated: Group sales continue to grow very dynamically by 15,8% to 151,5 million. Adjusted EBITDA once again increased disproportionately by 54,6% to 37,2 million. The adjusted EBITDA margin improves by 6,2 percentage points to 24,6%. This again improves profitability very clearly. Consolidated net profit increased by 48,9% to 19,5 million.

Herbert Schein, Chief Executive Officer (CEO) of VARTA AG: "We want to further accelerate profitable growth, especially in lithium-ion batteries, and are investing heavily in expanding our production capacities. As an innovation and market leader, we benefit enormously from the strong market growth and high demand for our lithium-ion batteries. This is also shown by our very good business figures with double-digit growth in sales and earnings. "

Chief Financial Officer (CFO) Steffen Munz adds: "We again increased the fast pace of growth in the first half of the year and further improved profitability significantly. After the first half of the year went very well and we are currently experiencing an enormously high and steadily growing order backlog, we are once again raising the sales and earnings forecast for the 2019 financial year. "

“Microbatteries” segment with an extraordinarily strong first half of the year - “Power & Energy” segment with development as planned in the first six months
The "Microbatteries" segment achieved the best half-year result in the company's history. Sales grew very dynamically by 18,9% to 126,2 million. By far the strongest sales growth was again achieved in the rechargeable lithium-ion cells for high-tech consumer products, especially for premium wireless headphones. Customer demand remains high in a market that is growing at over 30 percent annually. As a technology and innovation leader, VARTA AG has developed unique competitive advantages and is therefore growing much faster than the market. Hearing aid batteries have further expanded their global market leadership in the structurally growing hearing instrument market. The Group is currently benefiting from the trend towards rechargeable hearing aids and is growing faster than the market as a technology leader. Adjusted EBITDA in the Microbatteries segment increased significantly by 53,2% to 35,7 million in the first six months. As a result, the adjusted EBITDA margin improved significantly by 6,3 percentage points to 28,3% of revenue.

The “Power & Energy” segment developed according to plan in the first six months of the 2019 financial year. Sales in the first half of the year rose by 3,6% to EUR 25,0 million, with sales in the second quarter growing by 6,5% compared to the previous year. The start of new customer projects for battery packs will lead to significantly higher sales in the second half of the year compared to the first half of the year. A positive adjusted EBITDA of EUR 1,5 million was achieved in the first half of 2019. The adjusted EBITDA margin of 6,1% is exactly within the medium-term target range of 6 to 8% in relation to sales.

Continued high capital expenditure through the expansion of production capacity for lithium-ion batteries - renewed capacity expansion financed by capital increase
Capital expenditures (CAPEX) for the first half of the year were 2019 at 20,0 million. The focus of investment activity continues to be on the massive expansion of production capacity for rechargeable lithium-ion cells for high-tech consumer products, in particular for wireless premium headphones.

The Group is once again expanding its production capacity - to more than 80 million cells a year from the beginning of 2020 and well over 100 million cells annually until the end of 2020. The background to this is the persistently high level of customer demand in a market that grows annually above 30 percent. The capacity expansion requires an additional investment volume of around 100 million EUR (for an additional 40 million cells per year).

The investment volume will be from the on 13. June 2019 successfully completed capital increase from authorized capital. 2,2 million new shares were placed at EUR 46,70 per share with international investors. From the capital increase, the Company received gross issue proceeds of around 104 million.

VARTA AG buys the VARTA Consumer Batteries business from Energizer
VARTA AG has at the 29. In May, 2019 signed an agreement to acquire the European-based VARTA Consumer Batteries business from Energizer Holdings, Inc. of the US. VARTA Consumer Batteries is one of Europe's leading manufacturers of home appliance batteries for end consumers. The expected net purchase price for VARTA Consumer Batteries is around 100 million. Completion of the transaction is subject to the approval of the European Commission and is subject to the fulfillment of customary market conditions, including antitrust clearance. The transaction is not expected to close until the fourth quarter of 2019.

Sales and earnings forecast for the financial year 2019 is raised again - higher payments for investments (CAPEX) through further expansion of production capacities *
Following the very good sales and earnings performance in the first half of the year and the currently extremely high and steadily growing order backlog, VARTA AG once again raises its revenue and earnings forecast for the 2019 financial year: the revenue forecast will rise from the previous 310 to 315 million 320 raised to 330 million. This corresponds to sales growth of around 18 to 21%. The adjusted EBITDA forecast will be increased from 64 to 67 million to 72 to 76 million and is expected to grow by around 43 to 51% year-over-year.

Due to the continuously very high customer demand for lithium-ion batteries, especially for wireless premium headphones, the annual production capacity is gradually being expanded to more than 80 million cells beginning 2020 and significantly more than 100 million cells to the end of 2020. The implementation of investment projects is already starting in the current financial year. Capital outlays (CAPEX) are therefore expected in 2019 in a corridor between 75 and 90 million (previously: 65 to 75 million).
* The acquisition of VARTA Consumer Batteries is not included in the outlook.

 

Semi-Annual Statement H1 2019:
https://www.varta-ag.com/publications/

Dates:
29.10.2019 - Interim Message 3. Quarter 2019

Contact:
Bernhard Wolf
Head of Investor Relations
Tel: + 49 79 61 921-969
[email protected]

Nicole Selle
Corporate Communications
Phone: + 49 79 61 921-221
[email protected]

Text and images: Varta AG