VARTA AG

1H 2020 Earnings Presentation

August 14th, 2020

Companies of VARTA AG

VARTA Microbattery • VARTA Storage • VARTA Consumer

Disclaimer

This presentation contains certain financial me assures (including forward - looking measures) that are not calculated in accordance with IFRS and are therefore considered "non- IFRS financial measures". The management of VARTA believes that these non- IFRS financial measures used by VARTA, when considered in conjunction with ( but not in lieu of) other measures that are computed in accordance with IFRS, enhance an understanding of VARTA' s results of operations, financial position or cash flows. A number of these non- IFRS financial measures are also commonly used by securities analysts, credit rating agencies and investors to evaluate and compare the periodic and future operating performance and value of other companies with which VARTA competes. These non- IFRS financial measures should not be considered in isolation as a measure of VARTA' s profitability or liquidity, and should be considered in addition to, rather than as a substitute for, net income and the other income or cash flow data prepared in accordance with IFRS. In particular, there are material limitations associated with the use of non- IFRS financial measures, including the limitations inherent in determination of each of the relevant adjustments. The non- IFRS financial measures used by VARTA may differ from, and not be comparable to, similarly- titled measures used by other companies.

Certain numerical data, financial information and market data (including percentages) in this presentation have been rounded according to established commercial standards. Furthermore, in tables and charts, these rounded figures may not add up exactly to the totals contained in the respective tables and charts.

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Executive Overview

  • No impact of Covid-19 on operational and financial performance in HY1
  • Strong group revenue and earnings growth
    Group revenue +158% YoY; Adj. EBITDA +174% YoY; Adj. EBITDA margin at 26.1% (+1.5 PP)
    w/o acquisition: Revenue +66,5% YoY; Adj. EBITDA +125% YoY; Adj. EBITDA margin at 33.2% (+8.6 PP)
  • Microbatteries & Solutions segment performing very well Entertainment with high growth momentum
    Healthcare sees fast recovery of rechargeable hearing aid batteries
  • Household Batteries develop better than expected
    Consumer Batteries better than expected, focus on branded batteries improves profitability.
    Integration of the Consumer acquisition is on track according to plan
    Energy Storage Solutions growing faster than the market
  • Production capacity for Li-Ion batteries to be expanded to 300 million cells p.a. by the end of 2021
  • Guidance for FY 2020 raised*:
    • Revenue: ~€810-830m(previously: ~€780-800m), up ~123-129% YoY
    • Adj. EBITDA**: ~€210-215m(previously: ~€175-185m), up ~115-121% YoY
    • CAPEX : ~€320-360m (previously: ~€300-330m), further expanding the production capacity for li-on batteries
  • In view of the global spread of the coronavirus (COVID-19), negative effects on the VARTA AG Group cannot be ruled out. However, for now, these risks have not materialised.
  • Including adj. items from shared-based payments, expenses from M&A transactions, restructuring costs and inventory step-up from purchase price allocation (PPA)

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Business Highlights

Microbatteries & Solutions

  • Lithium-IonBatteries/CoinPower:
    • Premium TWS: continuing to expect 30-40%CAGR of end-marketoffers enormous growth opportunity
    • Performance: 30% increase of energy density on track (+15% reached already, further +15% increase this year
    • Further significant capacity expansion: 200m cells per year already by end of Q1 2021, 300m by end- 2021
    • Settlement of patent infringement lawsuit with large client achieved, further out-of-court agreements on track
  • Hearing-aidbatteries: We continue to grow faster than the market
    • Rechargeable hearing aid batteries expected to recover fast

Household Batteries

  • Consumer Batteries:
    • Increase energy density and introduce more environmentally friendly packaging, delivered better than expected results
    • Focus on branded Consumer batteries improves profitability as expected
    • Integration of the Consumer acquisition is on track according to plan
  • Energy Storage Solutions: strong revenue growth, growing faster than the market - future growth opportunities due to expiring feed-intariffs

Research & Development

  • Existing R&D efforts, particularly in CoinPower will be intensified
  • IPCEI funding further accelerates innovations
  • IPCEI supports future growth opportunities with bigger formats

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Another significant capacity increase

New building in Nördlingen offers flexibility

Two levels with 15,000m2 in total

Designed for coin-shaped batteries, it will offer optimized and highly efficient production facilities

Infrastructure supports further expansion even beyond 300m cells p.a.

  • Production expansion to 200m cells p.a. will be installed by Q1 2021
  • Next step-up planned: further expansion to 300m cells by end-2021 with the new plant
  • Next generation of production lines with significantly more output and increased efficiency

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Delivered strong HY1 results, continuing the high pace of revenue and earnings growth

Revenue

in m€

+158%

(ex M&A: +67%)

390.7

151.5

1H-2019

1H-2020

Adjusted EBITDA*

in m€, margin in % of revenue

174%

(ex M&A: +125%)102.1

37.2

24.6%

26.1%

1H-2019

1H-2020

Net result

in m€

+105%

39.9

19.5

1H-2019

1H-2020

  • Microbatteries & Solutions with exceptionally strong revenue growth, with Entertainment continuing to grow rapidly
  • Household Batteries with a rock solid performance in HY1
  • Adj. EBITDA grew again faster than the revenue due to the very favorable margin mix along with the continued scaling of the business model
  • Expanding the margin, up 1.5PP to 26.1% (+8.6PP ex M&A)
  • Strong increase primarily due to the strong operational performance, slightly offset by one-time expenses for the acquired Consumer business

* Including adj. items from shared-based payments, expenses from M&A transactions, restructuring costs and inventory step-up from purchase price allocation (PPA)

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Generated strong operating cash flow - continuing to massively expand the production capacities

Net Working Capital (NWC)

in m€, of LTM revenue

+311%

73.9

18.0

6.7%*

5.0%

FY-2019

1H-2020

CAPEX

in m€

+104

123.7

20.0

1H-2019

1H-2020

Operating Cash Flow

in m€

+260%

81.6

69,5%

22.7

Quote

1H-2019

1H-2020

  • Addition of ~57.0 m€ from the acquired Consumer business
  • Decrease of 1.1 m€ w/o VARTA Consumer mainly due to further customer prepayments
  • Continuing to massively expand the production capacity for lithium-ion batteries
  • Expanding the capacity to ~200 million cells by Q1-2021
  • Investment program is on track as planned
  • Strong cash generation from the operating activities mainly due to the strong operating result

* w/o Consumer

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Microbatteries & Solutions - 1H 2020

(€ m, rounded)

1H 2019*

1H 2020

YoY Change*

Revenue

140.8

239.7

70%

Adjusted EBITDA

35.6

82.4

132%

Adjusted EBITDA Margin

25.3%

34.4%

+9.1PP

*Like-for-like comparison, 1H 2019 adjusted according to the new segment reporting (retrospective pro-forma restatement)

  • Microbatteries & Solutions recorded very strong H1 results, further accelerating the high pace of revenue and Adj. EBITDA growth
  • Lithium-Ionbatteries/CoinPower are further accelerating the very high growth momentum, backed by the booming end-market for premium true wireless headsets
  • Hearing aid batteries are continuing to grow significantly faster than the market, better than expected performance in primary batteries offsetting temporary slowdown of rechargeable hearings due to shop closures
  • Power Pack Solutions continues strong growth momentum due to the new customer projects
  • Adj. EBITDA margin at 34.4%, an improvement of 9.1PP - key drivers: operating leverage, economies of scale and a favorable margin mix effect from lithium-ion batteries

Rechargeable lithium-ion coin cell for premium true wireless headsets

Hearing aid batteries: VARTA is market leader in both primary and rechargeable cells

Development of complete

battery systems

including housing and

electronics

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Household Batteries - 1H 2020

(€ m, rounded)

1H 2019*

1H 2020

YoY Change*

Revenue

10.3

150.8

1,357%

Adjusted EBITDA

1.7

19.7

1,080%

Adjusted EBITDA Margin

16.1%

13.0%

-3.1PP

*1H 2019 includes only the Energy Storage Solutions business

  • Household Batteries continues its rock solid performance in H1
  • Consumer Batteries delivered better-than-expected H1 results on revenue in line with expectations - Strategic focus on higher-margin branded Consumer batteries improves the profitability of the business
  • Energy Storage Solutions with strong revenue growth
  • Delivered an Adj. EBITDA margin of 13.0% - Consumer business with a better-than-expected margin in H1 mainly due to a favorable business mix effect

In Germany VARTA produces

>1.7 billion

alkaline batteries per year

VARTA offers both:

commercial and residential

energy storage systems

Companies of VARTA AG VARTA Microbattery • VARTA Storage • VARTA Consumer

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Raising the revenue and Adj. EBITDA guidance* for FY20

VARTA AG

Group

Segment

Microbatteries &

Solutions

Segment

Household

Batteries

  • Revenue: €810-830m (previously: €780-800m), up 123-129% YoY
  • Adjusted EBITDA**: €210-215m (previously: €175-185m), up ~115-121% YoY
  • CAPEX: ~€320-360m (previously: ~€300-330m), further expanding the production capacity for li-on batteries
  • Revenue: growing at a very significant double-digit growth rate, exceeding the growth rate of the previous year (like-for-like)
  • Adjusted EBITDA: growing again faster than the revenue - expanding the margin compared to previous year's level
  • Entertainment further accelerating the high-growth momentum
  • Revenue:
    • Very significant growth is expected for energy storage (≥20%)
    • The acquired VARTA Consumer business will generate additional revenue of >€300m in 2020 (focus on branded business)
  • Adjusted EBITDA margin in the low double-digit range
  • In view of the global spread of the corona virus (COVID-19), negative impacts on the VARTA AG Group cannot be ruled out. At the time that the 2019 annual financial statements were prepared, these risks were not present.
  • Including adj. items from shared-based payments, expenses from M&A transactions, restructuring costs and inventory step-up from purchase price allocation (PPA)

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Summary - HY1 2020

  • Delivered very strong HY1 results, despite the challenging environment due to COVID-19 - further accelerating the high pace of revenue and earnings growth
  • Microbatteries & Solutions with exceptionally strong HY1 2020 results Entertainment is booming, further accelerating the very high growth momentum Healthcare continues to outgrow the market - fast recovery in rechargeable expected
  • Household Batteries continues better-than-expectedperformance in HY1 2020 Consumer batteries delivered better-than-expected results, strategic focus on higher margin branded batteries improves the profitability of the business - integration on track Energy Storage Solutions with strong revenue growth, growing faster than the market
  • Production capacity for Lithium-Ion batteries to be expanded to 300 million cells p.a. by the end of 2021
  • Guidance for FY 2020 increased*
    • Revenue: ~€810-830m (previously: ~€780-800m), up ~123-129% YoY
    • Adj. EBITDA**: ~€210-215m (previously: ~€175-185m), up ~115-121% YoY
    • CAPEX : ~€320-360m (previously: ~€300-330m),further expanding the production capacity

for li-on batteries

* In view of the global spread of the corona virus (COVID-19), negative impacts on the VARTA AG Group cannot be ruled out. At the time that the 2019al financial statements were prepared, thesies

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VARTA AG

1H 2020 Earnings Presentation

August 14th, 2020

Companies of VARTA AG

VARTA Microbattery • VARTA Storage • VARTA Consumer

Contact Investor Relations

Financial Calendar

Bernhard Wolf

12.11.2020

Interim Statement Q3 2020

Head of Investor Relations

VARTA-Platz-1

73479 Ellwangen

Phone: +49 79 61 921 969

E-Mail:bernhard.wolf@varta-ag.com

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Consolidated income statement for the period 01/01/-06/30/2020, unaudited

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Reconciliation from EBITDA to

Adjusted EBITDA, unaudited

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Reconciliation old vs. new segment reporting, unaudited

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Consolidated statement of financial position, unaudited (1/2)

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Consolidated statement of financial position, unaudited (2/2)

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Cash flow statement, unaudited

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VARTA AG published this content on 14 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 August 2020 15:33:26 UTC