Varta : Quarterly Report Q1 2021

VARTA AG Group

Quarterly report Q1 2021

as of March 31, 2021

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 technology and customization in aspiring to market leadership in our business areas.

VARTA AG - SELECTED GROUP KPIs

(€ k)	March 31, 2021	March 31, 2020
Revenue		198,509
204,298
EBITDA	59,752	46,560
Adjustments:
Expenses for share-based remuneration	143	203
Measurement of inventories PPA - VARTA Consumer	0	4,468
Expenses for M&A-transactions - VARTA AG Group	1	277
Integration costs for VARTA Consumer	0	187
Adjusted EBITDA	59,896	51,695
Adjusted EBITDA Margin (%)	29.3%	26.0%
Consolidated result	24,372	24,530
Earnings per share	0.60	0.61
Investment expenditure (CAPEX)	44,194	69,493
Free Cash Flow	-52,420	-137,955
Equity ratio*	47.9%	44.4%
Balance sheet total*	1,105,720	1,122,803
Employees at the end of quarter	4,593	4,151

* As of December 31, 2020

VARTA AG

VARTA AG produces and markets a comprehensive battery portfolio that ranges from microbatteries, household batteries and energy storage systems all the way through 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 "Lithium-Ion Solutions & Microbatteries" and "Household Batteries" business segments. The "Lithium-Ion Solutions & Microbatteries" segment (previously Microbatteries & Solutions) has been renamed and is focusing on the Microbatteries business, Lithium-Ion CoinPower, Lithium-Ion Round Cell Batteries (Lithium-Ion Large Cells) as well as the Lithium-Ion Battery Pack business. Through intensive research and development, VARTA sets global standards in many areas of lithium-ion technology and microbatteries 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, and includes household batteries, rechargeable batteries, chargers, portable power (power banks), lights and energy storage systems. The VARTA AG Group currently employs around 4,500 staff. At present, VARTA AG's operating subsidiaries are active in more than 75 countries around the world, with five production and assembly facilities located in Europe and Asia as well as distribution centers in Asia, Europe and the USA.

LITHIUM-ION SOLUTIONS & MICROBATTERIES

The "Lithium-Ion Solutions & Microbatteries" segment focuses on the Microbatteries, Lithium-Ion CoinPower, Lithium-Ion Round Cells (Lithium-Ion Large Batteries) and the Lithium-Ion Battery Pack business. Until now, microbatteries and hearing aid batteries for the professional area came under Healthcare, while CoinPower with the OEM microbatteries came under Entertainment. VARTA AG is a leading manufacturer of microbatteries for hearing aids and rechargeable microbatteries in the area of Entertainment. The Company boasts reputable firms as clients and manufactures batteries in numerous key electro-chemical systems as well as in a variety of structural shapes and sizes, while the range of applications extends from hearing aid batteries to wireless headsets, all the way through to automotive applications operated by way of microbatteries. The Group can call on extensive industry experience in the construction of high-performance, safe and needs-based lithium battery packs within the Power Pack Solutions segment - for medical technology, robotics, connectivity and telecommunications applications. The product portfolio ranges from customer-specific battery packs to fully configured standard batteries.

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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. With the Consumer Batteries segment, VARTA AG is the European market leader in the area of household batteries, with production located in Germany. The innovative, high-quality products are developed and manufactured using cutting-edge technology and by leveraging the expertise of internationally qualified specialists. A combination of innovative capacity, breadth, quality and design make the product range unique. For VARTA, an intensive 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 optimum energy solutions. By developing and manufacturing energy storage systems within its "Energy Storage" business segment, VARTA is contributing to the energy revolution. The energy storage systems developed by VARTA in the home and mass storage markets range from compact, basic models such as the wall-mounted VARTA pulse neo to large-scale storage solutions including 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.

4 | VARTA AG QUARTERLY REPORT Q1 2021

Business development in the first three months

VARTA AG increases profitability and confirms cooperation on V4Drive with automotive manufacturer

• Group revenue grows in the first three months of 2021 by 2.9% from € 198.5m to € 204.3m compared to the same period of the previous year
• Adjusted EBITDA is € 59.9m (Q1 2020: € 51.7m). This corresponds to an increase of 15.9% compared to the previous year
• New segment name emphasizes focus on lithium-ion business: "Microbatteries & Solutions" is now called "Lithium-Ion Solutions & Microbatteries"
• Revenue in this segment rose by 2.7% to € 121.9m (2020: € 118.7 m).
• The Household Batteries segment continues to develop very positively. Revenue und sales figures in the Energy Storage Systems division have doubled year-on-year.
• Household Batteries: Revenue increase by 3.4% to € 82.4m (2020: € 79.7m)
• First customer from the automotive sector for new lithium-ion round cells V4Drive
• Development of the pilot line for lithium-ion round cells on schedule
• Further, larger lithium-ion round cells planned

VARTA AG is continuing its successful lithium-ion strategy with new battery formats. VARTA confirms to have a first customer from the automotive sector for the new high- performance V4Drive round cell in the 21700 format. In addition, the technology company from Ellwangen (Baden-Württemberg) announced that it will also develop other, larger lithium-ion round cells in the future. In the first quarter of 2021, VARTA was able to increase group revenue by 2.9% to € 204.3m compared to the same period of the previous year. The adjusted EBITDA rose by almost 16% to € 59.9m.

"VARTA has further increased its profitability. We are optimistic about the second half of the year," says Herbert Schein, CEO of VARTA AG. "All segments continue to contribute to the growth of our company and were able to further increase the good results. The properties of our new lithium-ion round cells are met with great interest from customers. We are thus opening new and larger areas of business. In the meantime, we have also been able to win our first customer for our V4Drive in the automotive sector. VARTA remains successful with its innovation strategy." In the second half of the year in particular, VARTA expects an increase in revenue and business results thanks to new customer orders in the area of True Wireless Stereo Headsets (TWS). "In order to emphasize our focus on the successful business with our lithium-ion batteries, we have decided to rename our Microbatteries & Solutions segment to Lithium-Ion Solutions & Microbatteries", says Schein.

Armin Hessenberger, Chief Financial Officer (CFO) of VARTA AG, adds: "VARTA is a thoroughly healthy company. Thanks to our further increased profitability and our low level of debt, we have the opportunity to continue investing heavily in the lithium-ion business and at the same time to pay our shareholders a dividend for the first time. The decision will be made by the general meeting next month."

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