After losses for the coming year, the battery group Varta expects noticeable sales growth again. The Apple supplier is struggling with a collapse in demand for mini batteries for the wireless AirPods headphones.

After the recent weak business, the troubled battery manufacturer Varta is planning a noticeable increase in sales for the coming year. The company has hope thanks to increasing demand for battery storage, but the recently very disappointing lithium-ion button batteries are also expected to pick up again.

Meanwhile, the savings program is making progress, and Varta expects more impetus in the second half of the year due to seasonal effects and ongoing customer projects. “We have a challenging time behind us and we still have a lot of work ahead of us,” said boss Markus Hackstein (48). The stock rose on Friday.

After the start of trading, the course was up 4.2 percent at EUR 20.06, thus expanding on the gains of the previous day. After its rapid upswing into 2021, however, paper has experienced an equally rapid descent. At the record high in January 2021, the share was worth over 180 euros.

Concerns about cheap competition from Asia, a slump in demand due to consumer restraint and high energy and material costs have hit the company hard. Varta felt compelled to restructure in the spring and announced that around 800 jobs would be cut worldwide as a result of a savings program. Already last year, a hefty loss was incurred due to high depreciation, among other things.

The banks had given the green light for the restructuring concept in March after major shareholder Michael Tojner (57) had given fresh capital of 51 million euros. In the past year, Varta slipped deep into the red. Due to write-downs on the business with rechargeable button cells (“Lithium-Ion CoinPower”), the loss was around 200 million euros, the company said. The button cells had once brought Varta a lot of growth. In 2021, the company listed in the SDax had made a profit of almost 126 million euros.

Sales collapsed by 11 percent to 806.9 million euros and thus reached the lower end of the expected range. Varta had lowered its forecasts several times as demand for mini-battery packs for wireless headphones fell. The main customer Apple had scaled back the production of the wireless “AirPod” headphones.

Sales of household and hearing aid batteries also declined. The battery storage division, on the other hand, almost doubled sales thanks to a high order backlog and continued high demand for home storage. The business with batteries for solar systems, wall boxes and large storage systems is aimed at private and commercial customers. Varta wants to expand the division and is currently building a new factory that should produce the first modules at the end of 2023.

Varta had already presented key data in July and again lowered the forecasts for 2023. Total sales fell by 10 percent to EUR 339 million in the first six months. Adjusted for special effects, earnings before interest, taxes, depreciation and amortization were minus 6.8 million euros – a year earlier it had been an operating profit of 68.9 million euros.

Weak demand for rechargeable button batteries

But now the management around Hackstein is feeling a little more confident. The revenue in 2024 should increase to at least 900 million euros, especially for battery storage, as the company announced in Ellwangen. Analysts recently had an average of almost 920 million on the slip. For this year, Varta has only calculated an increase of around 1.6 percent compared to the previous year with around 820 million euros, mainly because the demand for small rechargeable lithium-ion button batteries is weak.

In the first half of the year, Varta continued to go deep into the red, with a net loss of 110.4 million euros. A year ago, the company reported a small profit of 2.8 million euros. In addition to conversion costs for the job cuts, write-downs were incurred on the button cell division because business was not going as originally expected. In addition, Varta had to pay more and higher interest for the increasing debt.

The division with the rechargeable lithium-ion button cells, which had also brought Varta strong growth with the boom in wireless headphones, causes problems in day-to-day business. Varta supplies the electronics giants Samsung and Apple with these batteries. The consumers’ fading desire to buy as a result of high inflation and the difficult economic situation also had an impact on Varta, with sales in this area falling by three quarters. The main reason is that the main customer in the segment has significantly reduced volumes due to weak demand, Varta said.