VARTA plans another expansion - looking for pole position

The decision is a consequence of continued high customer demand in a market that is growing by more than 30% per annum, the company states. Right now, the Group is targeting to attain a global market leadership for lithium-ion batteries with a market share of more than 50% in 2020. “We stand on the cusp of a huge boom in lithium-ion batteries for premium true wireless headsets, from which we are set to benefit enormously. We have developed unique competitive advantages and are growing much faster than the market. For this reason, we are again significantly expanding our production capacities,” says Herbert Schein, Chief Executive Officer of VARTA AG, in a press release. “We are registering an enormous and steadily growing order backlog and we have been able to easily forecast short and medium-term demand for lithium-ion batteries. The renewed expansion of production capacities will allow us to continue the high pace of growth,” adds CFO Steffen Munz. The capacity expansion requires an additional investment of around EUR 130 million (to manufacture an additional 50 million cells per year). The investment volume is to be financed using the cash flow from the operating activities in connection with additional customer pre-payments. Moreover, the group has at its disposal a revolving credit facility in the amount of EUR 80 million. The investment will be largely focused on the two main production locations for lithium-ion batteries in Germany. In Ellwangen, electrode manufacturing will be hugely expanded in addition to lithium-ion cell production. In Nördlingen, a new facility is to be constructed for the production of lithium-ion batteries adjacent to the existing manufacturing site. Implementation of these capacity expansion projects will begin in the third quarter of this year.