VARTA AG has published its figures for the first quarter of 2020 – including the consolidated figures of the acquired European VARTA Consumer Batteries business (VARTA Consumer) for the first time following its acquisition. The Group has made a positive start to the new fiscal year, building upon the substantial organic growth in revenue and income achieved in the past. Group revenue grew by 170.3% in the first quarter to € 198.5m. Organic revenue growth, excluding the first-time consolidation of VARTA Consumer, amounted to 68.2%. Adjusted EBITDA increased by 197.0% to € 51.7m. Excluding VARTA Consumer, adjusted EBITDA rose by 135.0%. The adjusted EBITDA margin improved by 2.3PP to 26.0%, while Group profit rose by 265% to € 24.5m.
Herbert Schein, CEO of VARTA AG, explains: “Together with VARTA Consumer, we have made a very positive start to the new fiscal year and have again accelerated our high growth momentum. The pleasing result is primarily attributable to sustained strong demand for our lithium-ion cells, while we significantly increased sales by rapidly expanding production capacities. Our business model is also proving to be highly robust, while the high level of discipline we have shown in implementing protective measures against COVID-19 has meant we have been able to continue production without any restrictions so far.”
Steffen Munz, CFO, adds: “We confirm our guidance for fiscal year 2020. Our exceptionally healthy balance sheet with its high equity ratio and low debt combined with an anticipated increase in operating cash flow allow us to finance further investments in the expansion of production capacity”.
On January 2, 2020, VARTA AG successfully concluded the acquisition of the European VARTA Consumer Batteries business from the US-based Energizer Holdings, Inc.. The acquisition of VARTA Consumer has seen VARTA AG become a globally leading manufacturer of battery solutions with a comprehensive product portfolio. The business acquisition means that the global VARTA trademarks for devices, microbatteries and energy storage systems have once again been brought together under the umbrella of VARTA AG. This move serves to strengthen the brand identity of VARTA products across all segments.
Re-segmentation of operating activities
In the wake of the acquisition of VARTA Consumer, the VARTA AG group carried out a re-segmentation of its operating business at the start of 2020. The Microbatteries & Solutions segment includes the business areas Healthcare, Entertainment and Power Pack Solutions. The second segment, Household Batteries, comprises the Consumer Batteries business in addition to energy storage solutions.
“Microbatteries & Solutions” segment records highly impressive quarterly figures
The “Microbatteries & Solutions” segment has made a very positive start to the new fiscal year. Revenue rose by 75.3% to € 118.7m. Adjusted EBITDA increased by 151.1% to € 40.8m. This produced a step-change improvement in the adjusted EBITDA margin of 10.4PP to 34.3%. By far the strongest revenue growth is again being recorded for rechargeable lithium-ion batteries for high-tech consumer products, particularly premium true wireless headsets (hearables). Even in the current market environment, demand remains high on this dynamically growing market. Our global market position for hearing aid batteries has been further expanded in a market subject to structural growth. For primary batteries in particular, business in the first quarter of 2020 developed better than expected.
“Household Batteries”segment makes solid start to 2020
The “Household Batteries” segment has made a solid start to the new fiscal year 2020, with revenue totaling € 79.7m. Adjusted EBITDA amounted to € 10.9m in the first quarter of 2020, producing an EBITDA margin of 13.7%. VARTA Consumer Batteries developed better than expected in the first three months of the year. By focusing on the brand business, profitability has significantly improved. Business in the area of energy storage solutions has developed according to plan in the first quarter of 2020.
Outlook for fiscal year 2020 confirmed
Following a better than expected start to the new fiscal year, the VARTA AG Group remains committed to its outlook for the fiscal year published on March 31, 2020 despite the major macroeconomic uncertainties resulting from the coronavirus pandemic. Group revenue of € 780m–800m is still expected for 2020. This corresponds to revenue growth of between 115% and 120% in comparison with the previous year (including VARTA Consumer). Organic revenue growth (excluding VARTA Consumer) is set to stand between 32% and 38%. In 2020, adjusted Group EBITDA will still be in a corridor between € 175m and € 185m and will therefore increase by 79% to 90% in comparison with the previous year (including VARTA Consumer). Excluding VARTA Consumer, adjusted EBITDA will grow between 50% and 60% in comparison with 2019.
In view of the global spread of the coronavirus (COVID-19), negative impacts on the VARTA AG Group cannot be fully ruled out. This could impact production activities at our locations, transportation to our customers as well as disrupting our suppliers. It can also not be ruled out that our customers are temporarily unable to purchase products from VARTA due to disrupted production processes at their own sites. However, at the time that these quarterly financial statements were prepared, these risks were not present, meaning that VARTA does not therefore expect any adverse impacts for its outlook due to COVID-19.
