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Varta slumps after slashing 2022, 2023 outlooks

Investing.com
·2-min read

By Geoffrey Smith

Investing.com -- Shares in Varta (ETR:VAR1) slumped by over 6% in Frankfurt on Tuesday after the German battery maker slashed its forecasts for the next 15 months, the latest unpleasant surprise for its shareholders in 2022.

The company said on Tuesday it now expects revenue in a range of €805-820 million euros (€1=$1.0403) this year, the second time it has cut its forecast in four months. It had originally estimated revenue around €975M. In the same vein, whereas it initially expected earnings before interest, taxes, depreciation, and amortization of €270M, it now sees EBITDA at between €55-60M, implying that it will be loss-making over the whole of the second half.

The new forecasts confirm the sharp deterioration in its fortunes that Varta had sketched out last month, in predicting a 14% drop in sales and negative EBITDA in the third quarter. While it expects a return to profitability in 2023, with EBITDA of around €100M, revenue is expected to bounce back only weakly, to a range of around €865M.

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"This forecast is based on the assumption that the challenging economic situation and the existing global crises will continue in 2023, with corresponding negative consequences for costs, supply chains and consumer demand," the company said in a statement. Even these forecasts, it added, are subject to a significantly higher degree of uncertainty than usual.

Varta, whose pivot to microbatteries for appliances such as AirPods had made it a retail investors' darling during the pandemic, has had a wretched year as demand for gadgets has slowed and supply chain and commodity price problems have snarled its business.

Chief Executive Herbert Schein stepped down with immediate effect in September after supply chain issues and rising input costs led to two big orders being delayed. The company had suspended its guidance at the time, only reinstating it on Tuesday.

Varta stock is now down over 80% from its 2021 peak.

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