In the energy storage markets we are expecting to grow massively, says Varta’s CEO Herbert Schein
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The storage market is doing well – at least in Germany, Austria and Switzerland. How would you assess the momentum for 2016?
Herbert Schein: Until 2015, we were on the market with two storage systems: Varta Home and Varta Family. Both tend more towards the premium segment. Because our new Varta Element has a more attractive price and is better suited as an entry-level unit, it will come in a higher volume. Since the Intersolar in June, the market has picked up significantly for us as well. Our goal is to become one of the top three suppliers in Europe.
Which markets outside of the German-speaking countries do you see as particularly interesting?
Australia is developing very well, and the Italian market is also gathering speed. In the short term, we want to get involved in both these markets and increase our sales. We also see opportunities in the US market.
Varta AG wants to bring in 200 million euros. What is that all about?
Varta AG is the holding company to Varta Microbattery GmbH and Varta Storage GmbH. The business segment and the factory for micro-batteries is in Ellwangen in Baden-Wuerttemberg, whereas Varta Storage manufacture their domestic storage units in Nördlingen in Bavaria. By going public, we hope to attract new funds, because we see massive gains and opportunities in both these segments.
At first glance, this hardly fits together: micro-batteries and building-scale storage units. Would you like to explain your strategy?
First of all: Worldwide, we produce about 900 million micro-batteries per year – mostly for hearing aids, wireless headphones, watches and heat cost allocators. Globally, this line of business has seen substantial growth, for example because people tend to live longer. We lead the global market in micro-batteries. Our EBITDA for 2015 was more than 18 percent. We manufacture the lithium cells and zinc-air batteries on fully automated production lines. That means we combine a high degree of competence in the electro-chemistry of batteries with a unique capacity for manufacture. We even build the most important production machines ourselves.
How important is your competence in chemistry?
The electro-chemistry of lithium cells is very complex. About 150 different parameters are important. That is where we have the edge – apart from 125 years of experience as a manufacturer of batteries. We intend to invest about 50 million euros in a new, fully automated factory for micro-batteries.
And how do you make the link to domestic storage?
Varta Storage is the Varta AG’s second leg. That is where we manufacture and distribute domestic storage units, consisting of the three product lines Element, Home and Family. We buy the cells in Asia. That subsidiary is also where we take care of all activities related to the so-called power packs: Autonomous energy cells required to run humanoid robots, wireless appliances in telecommunications or in medical technology. In the future, the energy supply of robots and appliances will predominantly be done wirelessly, so we are expecting significant increases in demand for power packs. They are needed to run multicopters, or are used in electrical hedge trimmers or many many other uses.
And how about stationary domestic storage?
As you know, this market is growing rapidly. We took a close look at how things are developing and intend to make significant strides in this segment as well. We can achieve this through buying in capacity. But we will also invest in fully automated factories for batteries for domestic storage and power packs. You see, in this growth segment we also intend to play to our strengths: our competence in both chemistry and manufacturing. These two are closely connected with us. And do not forget: Varta is already active in 75 countries.
So you want to go really big?
We want to manufacture storage products in an automated fashion, with the highest precision and quality, albeit at low cost. Only then are we able to open up these markets and offer low prices. We are working on upgrading our factories in Nördlingen, Shanghai, Romania and Indonesia to be able to handle mostly automated processes. In order to achieve such economies of scale, we need to increase our market share. So we are planning further acquisitions, and to do that we need greater funds. In the previous three years, the Varta AG has been growing by 10 percent per annum, even by about 20 in terms of EBITDA.
The interview was conducted by Heiko Schwarzburger.