VARTA AG Group, an industry leader in rechargeable lithium-ion batteries for high-tech consumer products, announced it will expand its production capacities in 2022. After projections were raised at the beginning of June to more than 100 million cells per year by the end of 2020, the company is now planning to further increase production capacities to more than 150 million cells per year by 2022. The company said this expansion is due to continued high customer demand in a market that is growing by more than 30% per annum.
VARTA stands to benefit most strongly from the technological transition away from cylindrical batteries to coin-shaped batteries. With its leading technology, the Group has supported this technological progress in wireless headsets and is setting the industry standard in this area with constant innovations. The Group is striving to attain 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,” said VARTA CEO Herbert Schein.
The capacity expansion requires an additional investment of around € 130m (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 € 80m.
“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, said Steffen Munz, Chief Financial Officer of VARTA.