Varta : Quarterly Report Q1 2022

VARTA AG Group

Quarterly report Q1/2022

as at March 31, 2022

VISION

We are defining the future of battery technology to empower a more independent life.

MISSION

Through continuous investment in research and development, we set the benchmark in battery technology and customization to strive for market leadership in our business segments.

VARTA AG - SELECTED GROUP KPIs

(€ k)	MARCH 31, 2022	MARCH 31, 2021
Revenue	185,291	204,298
EBITDA	37,130	59,752
Adjustments:
Cost of share-based payment	4	143
Costs of M&A transactions	940	1
Adjusted EBITDA	38,074	59,896
Adjusted EBITDA Margin (%)	20.5%	29.3%
Net income	6,033	24,372
Earnings per share	0.15	0.60
Investments (CAPEX)	30,812	44,194
Free Cash Flow	-23,853	-52,420
Equity ratio*	36.5%	42.6%
Balance sheet total*	1,488,205	1,250,173
Employees at the end of quarter	4,724	4,593
* Comparison period relates to December 31, 2021

VARTA AG

VARTA AG produces and markets a comprehensive battery portfolio that ranges from microbatteries, household batteries and energy storage systems up to customer-specific battery solutions for a wide range of applications, 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 focuses on the

microbatteries business, lithium-ion CoinPower, 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 therefore a recognized innovation leader in the most 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 4,700 employees.

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 large cells and lithium-ion battery pack business. The VARTA AG Group is a globally leading manufacturer of microbatteries for hearing aids and rechargeable microbatteries. The Company boasts reputable firms as clients and manufactures batteries in numerous important 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 that operate on microbatteries. The Group can call on extensive industry experience in the construction of high-performance, safe and needs-based lithium battery packs within the Lithium-Ion Battery Packs segment - for medical technology, robotics, connectivity and telecommunications applications. The product portfolio ranges from customer-specific battery packs to fully configured standard batteries that can be used immediately.

Household Batteries

The "Household Batteries" segment covers the battery business for end customers and includes household device batteries, rechargeable batteries, chargers, portable power (power banks), lights and energy storage systems. In the Consumer segment (household device batteries), VARTA AG is the European market leader, with a production site in Germany. The innovative, high-quality products are developed and manufactured with state-of-the art technology and by leveraging the expertise of internationally qualified specialists. In addition to the innovative strength, the range of products, quality and design make the offer unique. For VARTA, an intensive focus on consumer lifestyles and close working relationships with retailers are essential to react quickly and flexibly to current device trends with the optimal energy solutions. Within the Energy Storage Systems business segment, VARTA contributes to the implementation of the energy revolution with the development and production of energy storage systems. The energy storage solutions 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. As such, they are 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 STATEMENT Q1 2022

Business development in the first three months

VARTA AG remains committed to annual targets despite global crises

• • Group revenue still set to be between € 950 m and € 1 bn.

• • First quarter of 2022 influenced by the war against Ukraine and long-term impacts of COVID-19.

• • Revenue Q1 2022: € 185.3 m (Q1 2021: € 204.3 m).

• • Adjusted EBITDA Q1 2022: € 38.1 m (Q1 2021: € 59.9 m).

• • Increased stockpiling of raw materials and finished goods to ensure delivery capability.

• • High demand for household batteries and high growth rates for energy storage systems continue.

• • For Q2 2022, revenue is expected to total between € 195 m and € 205 m, with EBITDA in a corridor between € 34 m and € 38 m.

VARTA AG remains committed to its target of revenue growth. The technology company based in Ellwangen (Baden-Württemberg) expects to generate Group revenue of between € 950 m and € 1 bn in the current year, which would equate to growth of up to around 10 % in comparison with the previous year. VARTA will continue to invest in the expansion of its production capacities for lithium-ion batteries: At present, the Company is delivering tens of thousands of ultra-high-performance lithium-ion round cells per month from its pilot production line in Ellwangen to customers for release testing. For the small, rechargeable lithium-ion cells - CoinPower - the Company has the infrastructure in place to react fast and flexibly to customer demands.

Up to now, the ongoing global COVID-19 pandemic has not had any direct impact on

VARTA's supply chains, and there have been no periods of production downtime at proprietary factories either. Moreover, the war against Ukraine is not directly impacting the Company. Nevertheless, indirect impacts from the pandemic and the war cannot be ruled out. Some VARTA customers have been affected by COVID-related disruptions in terms of deliveries of raw materials and semiconductors as well as local shutdowns of production facilities. The impact of rising raw material prices and energy costs as a result of the war against Ukraine are impacting revenue and profit and price increases can only be passed on to customers with a time delay.

Herbert Schein, CEO of VARTA AG: "VARTA is continuing to invest in our lithium-ion business and we are expanding our portfolio. Our strength lies in our innovative capacity, as we are currently demonstrating with our large-format lithium-ion round cells. Here, we are offering strategic advantages, just like we have done with CoinPower. Customer interest here is huge. VARTA cells allow them to manufacture and market new and improved products in areas such as home and garden, power tools, industrial applications and in the automotive sector."

Armin Hessenberger, CFO of VARTA AG: "VARTA is and remains a very healthy company - although we are not immune to global crises either. Rising costs for raw materials and energy can only be passed on to customers with a delay, while project and set-up costs in connection with large-format lithium-ion cells, for which we expect to generate initial revenue in 2024, are also curbing revenue and profit."