Varta : Quartalsbericht Q3/2020

QUARTERLY REPORT Q3 / 2020

VARTA AG GROUP AS OF SEPTEMBER 30, 2020

VISION

We are defining the future of battery technology with the

aim of facilitating a more independent life.

MISSION

Through investing continuously in research and development, we set the standard for battery technologies and customization

in aspiring to market leadership in our business areas.

VARTA AG - SELECTED GROUP KPIs

		JAN 1-SEP 30,		JAN 1-SEP 30,
(€k)	2020	2019
Revenue	630,339	242,764
EBITDA	151,555	60,993
Adjustments:
Costs of share-based payment	701	1,990
Non-cash effects from the purchase price allocation (PPA)	8,661	0
Expenses for M&A transactions	1,784	0
Restructuring costs for VARTA Consumer	14,065	0
Adjusted EBITDA	176,766	62,983
Adjusted EBITDA margin (%)	28.0%	25.9%
Consolidated result	78,314	32,968
Investment expenditure (CAPEX)	190,521	67,854
Free cash flow	-140,961	-23,372
Equity ratio	45.4%	62.0%*
Balance sheet total	1,070,968	668,830*
Staff (as of quarter-end)	4,601	2,613

* as of December 31, 2019

VARTA AG

VARTA AG produces and markets a comprehensive battery portfolio that ranges from microbatteries, household batteries and energy storage systems all the way to customer-specific battery solutions for a wide range of uses, setting the industry standards as technology leader in many important areas. As the parent company of the Group, it is active in the "Microbatteries & Solutions" and "Household Batteries" business segments. The "Microbatteries & Solutions" segment focuses on the OEM business for microbatteries and the lithium-ion battery pack business. Through intensive research and development, VARTA sets global standards in the microbatteries segment and is a recognized innovation leader in the important growth markets of lithium-ion technology and primary hearing aid batteries. The "Household Batteries" segment covers the battery business for end customers, including household batteries, rechargeable batteries, chargers, portable power (power banks), lights and energy storage systems. The VARTA AG Group employs more than 4,500 staff. VARTA AG'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.

MICROBATTERIES & SOLUTIONS

The "Microbatteries & Solutions" segment focuses on the OEM business for microbatteries and the lithium-ion battery pack business. The Group is an internationally leading manufacturer of microbatteries for hearing aids and rechargeable microbatteries in the area of Entertainment. VARTA AG ranks among the most important companies for its customers and manufactures batteries in numerous key electro-chemical systems as well as in a variety of structural shapes and sizes. The range of applications extends from hearing aid batteries to wireless headsets, all the way through to automotive applications operated on the basis of microbatteries. The two segments, Healthcare and Entertainment & Industrial, work together in a synergistic manner. In the Power Pack Solutions segment, the Group boasts comprehensive industry experience in the construction of high-performance, safe and needs-based lithium battery packs

• for medical technology, robotics, connectivity and telecommunications. The product portfolio ranges from customer- specific battery packs to fully configured standard batteries.

HOUSEHOLD BATTERIES

The "Household Batteries" segment covers the battery business for end customers, including household batteries, rechargeable batteries, chargers, portable power (power banks), lights and energy storage systems. In the area of household batteries, VARTA AG is the European market leader via the Consumer Batteries segment with production located in Germany. The innovative, high-quality products are developed and manufactured using cutting-edge technology and by way of the expertise of internationally qualified specialists. A combination of innovative capacity, diversity, quality and design make the product range unique. For VARTA, a pronounced focus on consumer lifestyles and close working relationship with retail partners are essential in order to react quickly and flexibly to emerging device trends with the best energy solutions. By developing and manufacturing energy storage solutions within its "Energy Storage" business segment, VARTA is contributing to the energy revolution. The energy storage solutions developed by VARTA in the home and mass storage markets range from compact, basic models such as the wall-mountedVARTA pulse neo to large-scale storage solutions such as the VARTA flex storage for commercial applications. The AC-coupled systems feature integrated battery inverters and can be combined with all sources of green energy without the need for additional PV inverters. This makes them suitable for all new installations and retrofit projects. The smart energy management system also ensures optimal use of self-produced solar energy and is designed to significantly increase domestic solar power use.

QUARTALSMITTEILUNG Q3 / 2020 VARTA AG

3

Business development in the first nine months

VARTA AG continues growth course and again raises annual guidance for 2020

• Group revenue rises by 159.7% to € 630.3m over the first nine months of fiscal year 2020 (excluding Consumer Batteries: +69.7%)
• Adjusted EBITDA rises by 180.7% to € 176.8m (excluding Consumer Batteries: +127.8%)
• Adjusted EBITDA margin stands at 28.0% (+2.1 PP)
• Microbatteries & Solutions segment: Revenue totals € 388.9m (+71.4%), adjusted EBITDA stands at € 141.3m (+130.6%), adjusted EBITDA margin comes in at 36.3% (+9.3 PP)
• Household Batteries segment: Revenue of € 241.2m, adjusted EBITDA totals € 35.5m, adjusted EBITDA margin stands at 14.7% (+3.6 PP)
• Revenue and income guidance1) for 2020 raised again:
  Revenue anticipated to total € 840m-860m (previously: € 810m-830m),
  Adjusted EBITDA expected to stand at € 230m-235m (previously: € 210m-215m),
  Projected CAPEX payments of € 290m-320m due to ongoing capacity expansion project (previously: € 320m-360m)

Strong growth in revenue and operating earnings continues

The VARTA Group has continued its high-level revenue and profit growth: Group revenue rose by 159.7% to € 630.3m over the first nine months of the year. Organic sales growth amounted to 69.7% (excluding the first-time consolidation of Consumer Batteries). Adjusted EBITDA increased by 180.7% to € 176.8m when adjusted for special effects (excluding Consumer Batteries: +127.8%), a development which produced an improved adjusted EBITDA margin, rising by 2.1 PP to 28.0%. With growth of 137.5% to € 78,3m, Group profit more than doubled.

"VARTA is continuing on its growth path. For this reason, we are raising our guidance for the current year", says Herbert Schein, Chief Executive Officer of VARTA AG, before adding: "We continue to look ahead to the future with optimism. The trend seen at cellphone manufacturers is clear: Cables are a thing of the past. In the near future, the only interface to the devices will be wireless. Moving forward, it can therefore be expected that the trend toward True Wireless Stereo (TWS) Headsets will be consolidated further and accelerated further. Technological progress in the area of TWS, which VARTA is actively helping to drive forward, is advancing rapidly. VARTA is excellently positioned to deal with such a development. In this context, we shall be upping the pace of production by more than 50 percent over the coming year, thereby making VARTA even more efficient. The increased energy density of our small lithium-ion batteries is set to be available on schedule by the end of the year. This will open up additional competitive advantages for us".

1. In view of the situation regarding coronavirus (COVID-19), it is still not possible to rule out any negative impacts on the VARTA AG Group. At the time that these statements were compiled, these risks were not assessable and could therefore not be factored into guidance.

4	QUARTALSMITTEILUNG Q3 / 2020 VARTA AG