The battery manufacturer postponed the presentation of its quarterly balance sheet on Tuesday morning due to “technical problems”.
(Photo: dpa)
Stuttgart The battery manufacturer Varta revised its forecast downwards again on Tuesday. The company only expects sales of between EUR 805 and 820 million this year, a decline of around ten percent.
The provisional adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) in the 2022 financial year will collapse from 282 million euros to 55 to 60 million euros, according to the Varta Management Board. In the coming year, sales are expected to exceed 850 million euros again and the Ebitda result to over 90 million euros.
In addition, Varta announced that the construction of a factory for lithium-ion batteries for electric cars will be put on hold for cost reasons. “The construction of the new factory for the round cell/V4Drive will only continue after binding customer commitments,” said the company’s interim report published on Tuesday.
However, the operation of the first series production plant will continue as planned and will provide the cells to fulfill the OEM contract with a premium car manufacturer. At the end of last year, Varta put a pilot plant for the high-performance battery cells into operation. Mass production was previously planned for 2023.
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“The company’s situation is still challenging in an economic environment that is tense for all of us,” said the new CEO Markus Hackstein. He wants to take countermeasures with a cost-cutting program including short-time work and reposition Varta. “A clear focus is the growth market for energy storage solutions.”
Mishap in the publication of the numbers
Actually, the new Varta boss should appear for the first time this Tuesday at 11 a.m. and explain the difficult situation at the battery manufacturer. But the company from Ellwangen postponed the press conference to 1.30 p.m. at short notice. Varta initially called “technical reasons” for the delay. The final quarterly figures, which were actually announced for seven in the morning, were also postponed until 12:30 p.m.
The breakdown does not reflect well on the already tense situation of the medium-sized company. The share came under pressure: investors reacted to the delays by selling on Tuesday. The Varta titles lost more than nine percent in early trading at the top before they limited their losses to a good five percent by midday.
>> Also read: Varta boss Herbert Schein resigns from office
According to the latest figures, sales in the first nine months fell 8.3 percent to 570 million euros. The company slipped into the red in the third quarter. The reason given by the company was the high raw material and energy prices with simultaneous delays in customer projects in the micro-battery sector.
Varta had already overturned the profit forecast for the year as a whole at the end of September. The company supplies Apple with batteries for the “Airpods” headphones, among others. But with the latest model, Varta has lost its monopoly. Apple is now also relying on the supplier Samsung.
Ambitious goal traction battery
Varta is trying to make the leap from a manufacturer of mini batteries to traction batteries for electric cars. But despite lavish state subsidies, the company threatens to overtake itself. The production for the first customer is running according to the company and will be “continued according to plan”. The series delivery for the so-called V4Drive cells should then start at the end of 2023.
It’s about a battery for accelerating sports cars, not main propulsion batteries yet. But theoretically, the booster technology of the new Varta battery can also be used as the main drive after appropriate adjustment. So far, however, Varta has not been able to present any other customers. Even if additional customers could be won, an order should not be reflected in sales for three years.
The longtime CEO Herbert Schein had to vacate his post at the end of September. The manager, who successfully took the company public, will in future only be concerned with building up the business with lithium-ion cells for electric cars. The business is to be spun off in order to find partners for the expensive construction of new production capacities.
High debts, little cash
Because the company’s own funds have been severely depleted in recent months. At the end of June, the company had less than 40 million euros in cash reserves. At the same time, Varta’s debts have quadrupled in the past three years, to almost 900 million euros. And interest rates go up.
For each of the past two years, 100 million euros in dividends were paid out – money that is now missing in the company. The major shareholder is the Austrian investor Michael Tojner. With his investment company, he still holds just over 50 percent of the shares, after repeatedly parting with blocks of shares.
At a good EUR 30, the share price has lost around 73 percent since the beginning of the year, but is still above the issue price of EUR 17.50 in 2017. Aggressive hedge funds, however, are betting on further price losses.
Most analysts distance themselves from Varta shares. Warburg Research only lowered its target price from EUR 48.50 to EUR 21 at the beginning of November. And Kepler Cheuvreux even halved the target to 15 euros at the end of October.
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