Corporate news on the audited figures for full year 2018

VARTA AG closes 2018 with strong figures and continues to invest in the expansion of production capacities

Ellwangen, March 28, 2019. VARTA AG has published its audited figures for financial year 2018, confirming the preliminary figures released on February 15, 2019. The Group can look back with huge satisfaction on the most successful financial year in its recent history. New record figures were achieved for revenue and profit, with continued double-digit growth rates: Group revenue increased by 12.2% to EUR 271.7m, again a double-digit revenue growth compared to previous year. The adjusted EBITDA grew again faster than the revenue growth due to the continued scaling of the business model. Adjusted EBITDA increased by 28.3% to EUR 50.2m. The adjusted EBITDA margin improved significantly by 2.3pp to 18.5%. Net income increased by an impressive 90% to EUR 25.7m.
Herbert Schein, CEO of VARTA AG: "The strong financial results confirm the objectives of our profitable growth strategy. With the massive expansion of our production capacities and with our new innovative products our growth dynamic will accelerate yet again and we will be able to further expand our strong market position. Therefore, we will be able to continue our profitable growth path over the long-term."

Both segments contributed to the revenue and profit growth and have developed very positively
Revenue in the Microbatteries segment rose by 7.5% to EUR 218.9m. Adjusted EBITDA increased by 8.2% to EUR 47.3m. The strongest sales growth was again achieved by the small lithium-ion batteries (CoinPower). As technology and innovation leader, the Group has benefited from highly dynamic growth in the market segment for wireless lifestyle products, particularly wireless premium headphones or earbuds (hearables). Our market leading position for hearing aid batteries has been further secured in a market benefiting from structural growth.
Sales in the Power & Energy segment increased very dynamically by 37.4% to EUR 51.8m. The segment recorded sustained high growth for energy storage solutions, particularly in the residential storage market. The new customer projects for battery packs have also contributed positively to the dynamic growth. A highly positive adjusted EBITDA was achieved for full year 2018. There was a step-change improvement in operating earnings, rising by EUR 7.3m from EUR -4.4m to EUR 2.9m.
 

Very healthy balance sheet enables further investments using the company's own funds
The largest investment program in the company's history was launched directly after the IPO in October 2017 with the aim of expanding production capacities. The balance sheet as of December 31, 2018 has increased by EUR 70.2m to EUR 401.7m, primarily due to the massive investments to expand production capacities. In the previous financial year, investment activities were focused on the expansion of production capacities for small lithium-ion batteries (CoinPower).

Since the IPO, the Group's equity ratio has been very solid. As of year-end 2018, the equity ratio amounted to 64.6% (year-end 2017: 69.5%).

Steffen Munz, CFO of VARTA AG: "The very healthy balance sheet enables us to finance further investments in the expansion of production capacities as well as in innovations and new products using own funds"

Investments in 2018 financed in full by operating cash flow
Capital Expenditures (CAPEX) were EUR 56.3m in fiscal year 2018, up EUR 39m compared to previous year, with the main focus on expanding the production capacity in small lithium-ion batteries (CoinPower). The capital spent was 3.5 times higher than last year. VARTA AG was able to completely finance the massive investments in capacity expansion from the cash flow generated from the operating activities. Operating activities resulted in a cash flow of EUR 69.8m. Free cash flow was EUR10.5m for fiscal year 2018.

Very positive outlook for 2019 and further investments in the expansion of production capacities
VARTA AG is very optimistic with regards to financial year 2019. Due to massive expansion of the production capacity, the very healthy backlog and the visible growth opportunities, the Group expects clear double-digit growth rates both in terms of revenue and profit. In 2019, it is anticipated that currency adjusted Group revenue will be in the range of EUR 303m and EUR 309m, resulting in an organic revenue growth of around 12% - 14% year on year. In 2019, adjusted EBITDA is set to be in the corridor between EUR 61m and EUR64m, equating to an approximately 22% - 28% increase year on year.

Production capacities will be further expanded due to the sustained high demand for small lithium-ion batteries, particularly with regards to wireless premium headphones or earbuds. Production capacities for lithium-ion batteries will be expanded to over 60 million cells per year. In 2019, CAPEX in the range of EUR 65m - EUR 75m is expected.

VARTA AG - Selected Group metrics

Annual report 2018:
https://www.varta-ag.com/publications/?lang=en



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About VARTA AG

As the parent company of the Group, VARTA AG is active in the business segments Microbatteries and Power & Energy through its operating subsidiaries VARTA Microbattery GmbH and VARTA Storage GmbH. Already today an innovation leader in the microbatteries sector and one of the market leaders for hearing-aid microbatteries, VARTA Microbattery GmbH also aspires to market leadership for lithium-ion batteries in wearables and, in particular, hearables. VARTA Storage GmbH focuses on intelligent energy solutions for customized battery storage systems for OEM customers and the design, system integration and assembly of stationary lithium-ion energy storage systems. The VARTA AG Group's operating subsidiaries are currently active in more than 75 countries around the world, with five production and assembly facilities in Europe and Asia as well as distribution centers in Asia, Europe and the USA.