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In full swing: Varta share: crisis? What crisis? | message


by Stephan Bauer, Euro am Sonntag

Crisis? What crisis? The message that Herbert Schein is giving investors in a conference call is at least surprising. “Our production is running at full capacity. We don’t see that changing,” says the head of battery manufacturer Varta. Schein is forecasting sales of between 780 and 800 million euros for the current year, and the operating profit (Ebitda) of the world market leader in microbatteries should therefore be between 175 and 185 million euros.

Last year, the Swabians bought back the once split-off end-customer business Varta Consumer Batteries from the US company Energizer. Now the well-known batteries with the Varta logo are also part of Varta AG’s business. This alone makes the company jump in sales.

But at the same time, the Swabians are planning without a corona crisis. “We mostly source raw materials. We take over most of the manufacturing ourselves, so we have no problems with supply chains,” says Schein. The boss emphasizes that he talks to customers almost every day. Their plans, especially that of battery manufacturers for small in-ear headphones, have hardly changed. “Some plan a little more carefully, others increase their forecasts. On average, we are on the same level of planning as two months ago,” said the Varta boss.

The Ellwanger currently live mainly from the boom wireless headphones like Apple’s AirPods. The Californians and also the Korean Samsung sell these products extremely quickly, Varta can hardly keep up with the deliveries of batteries. The business with so-called micro batteries for hearing aids delivered more than 80 percent of the 363 million euros in sales in 2019 with operating margins of a good 30 percent.

Dividend is canceled

To take full advantage of the boom, extensive capacity increases are underway. The MDAX company was able to deliver 70 million cells per year at the end of 2019, and should be 170 million by the end of 2020. Varta plans to spend 300 to 330 million euros in 2020 for the expansion. The operating cash flow, which still carried almost all of the investments in 2019, is not sufficient for this. More than 200 million euros have to be financed. Varta wants to do this from loans and prepayments from customers. “2020 is a transition year,” says CFO Steffen Munz.

For shareholders, this means: The dividend for 2019 is missing. In addition, the balance sheet indicators deteriorate. Varta is changing from a quasi debt-free company to one with burdens, technically speaking: the ratio of net debt to operating profit rose from around zero in the past year to around one. That is not yet an excessive amount, but a crisis year is certainly not the best time for this.

Nevertheless, the planned sales increase of between 115 and 120 percent and the growth of 75 to 90 percent look fantastic given the circumstances. Purely organic, i.e. without the takeover of consumer batteries, which costs 112 million euros, there is still around 35 percent growth and 55 percent EBITDA growth. If Varta’s plans work and the sales markets hardly deteriorate as forecast now, 2020 will be another record year.

Capacity planning was known. And in the medium term, competition from Asia should catch up. This could put sales prices under pressure and put pressure on margins, at the latest with the next generation of headphones. “Over time, the competition could turn the product into a mass product,” said Robert-Jan van der Horst, an analyst at Warburg Research. Investors are at risk of disappointment.

Energy loss: The boom is ongoing, but is probably priced in. Disappointment potential, note stop.


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Image sources: 360b /, Mirco Vacca /

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