Some customers are affected by delays in the delivery of raw materials or semiconductors, announced Varta on Friday in Ellwangen. Some customers had temporarily stopped their production due to local lockdowns in Asia. In addition, the delayed start of new customer projects has recently been a burden. Against this background, the nine-month figures are below market expectations. The group is also acting cautiously for the next two years. The share price collapsed.
For 2021, Varta is now only expecting a sales increase of 3.5 percent to 900 million euros. So far, 940 million euros have been planned. Around 30 percent of sales should remain in the form of adjusted operating earnings (Ebitda), which in absolute terms now corresponds to around 275 million euros. More details on the outlook should be available when the figures for the third quarter are presented on November 11th.
Varta is particularly strong with lithium-ion button cells for the popular wireless headphones, but also for hearing aids. However, the group has also had the household batteries with the brand name Varta in-house since the beginning of 2020. Varta also produces wall boxes and other energy storage devices. For some time now, the company has also been seeing opportunities with battery cells for electric cars.
With a view to the e-mobility business, the MDAX group now wants to take a lot of money into their hands. “In the 2022 and 2023 financial years, the company is preparing for a major growth offensive with the newly developed, ultra-high-performance V4Drive cell and the entry into the e-mobility business,” it said. To this end, a lot is invested in employee qualification, the hiring of new employees and in new production facilities. The first sales and earnings contributions from this business area are expected from 2024.
Against this background, the adjusted operating profit will probably grow more slowly than sales in the next two years, it said. In terms of sales, management expects an increase of around 100 million euros each for 2022 and 2023. Varta could therefore crack the billion in sales in the coming year. However, the average analyst estimates for the next two years are higher.
Varta shares collapse
Varta shares came under heavy pressure on Friday after the lowered sales outlook for 2021 and cautious comments about the following years. The price collapsed by almost a quarter in the low and even slipped below the mark of 100 euros before recovering a little. Most recently, the shares were still at the bottom of the MDAX with minus 15.54 percent to 109.75 euros.
The company is experiencing production outages at some customers who are suffering from corona lockdowns and material shortages. But the sales outlook for 2022 and 2023, which is dull compared to market expectations, weighed much more heavily, explained a retailer. Ultimately, the sales development has nothing to do with the announced high investments in the business with batteries for e-cars, which will initially weigh on profit growth.
Analyst Michael Punzet from DZ Bank also sees the news as a burden for the shares. Even if there is a tendency towards positive news about the V4Drive cell, investor confidence will be sustained by the lowering of the forecast for 2021 and the cautious statements for 2022 and 2023 compared to expectations. Punzet reduced his profit expectations and lowered the fair value for the share from 145 to 90 euros. He sees further price risks and has downgraded the securities from “Buy” to “Sell”.
With the price slide on Friday, the papers tore important technical supports. If the shares now close significantly below the EUR 110 area, the long-term upward trend could also shake.
ELLWANGEN / FRANKFURT (dpa-AFX)
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