Varta Plans for Over 100 Million Batteries Annually

June 06, 2019 by Scott McMahan

Varta AG Group plans to expand its production capacities further to above 80 million cells per year in 2020, and the company will have an additional expansion to well above 100 million cells per year in 2021.  These expansions are a result of continued high customer demand in a market that is growing by more than 30% annually. This is a considerable increase over the original plan to expand its production capacity from about 50 million batteries in 2019 to around 60 million batteries in 2020.

The company says that this strong market growth is driven by the trends of miniaturization, increasing connectivity, and the move towards wireless devices.

"We are at the start of an enormous boom from which we stand to greatly benefit. We are growing much faster than the market and, for this reason, we are expanding again our production capacities massively. As an innovation leader, we have successful design-in projects with all leading premium headset manufacturers," Herbert Schein, CEO of Varta AG said.

Varta says it has established an unmatched competitive edge in this market segment, and it is benefiting the most from the segment's shift away from cylindrical batteries to coin-shaped batteries. With its leading-edge technology, the company points out that it has supported this technological transformation in true wireless premium headsets and it is setting industry benchmarks in this area with new innovations.

"The short and medium-term customer demand for lithium-ion batteries can be easily predicted. At the moment, we are recording a strong and steadily growing order backlog. It is necessary to expand production capacities further in order to continue to deliver the demand in the future," Steffen Munz, CFO of Varta AG, added.

The capacity expansion requires an additional investment of about € 100 million (to manufacture an additional 40 million batteries per year). The company intends to finance the investment with the cash flows from the operations and potentially a capital increase via a book building process with institutional investors as well. Depending on market conditions, the company says that the book building process could be conducted in the near future.

The group is targeting global market leadership for lithium-ion batteries in this segment with a market share of about 50% in 2020.