VARTA AG February 2019 Companies of VARTA AG VARTA AG at a Glance - PowerPoint PPT Presentation

VARTA AG February 2019 Companies of VARTA AG

VARTA AG at a Glance VARTA AG The battery experts 130 years 130-years history in Leadership in Well-positioned in Highly-automated battery technology technology and innovation attractive growth markets mass production Strong financial profile Revenue Adj. EBITDA Adj. EBITDA-Margin Net Working Capital ~ € 272 m (FY18 prelim) ~ € 50m (FY18 prelim) ≤ 20% of sales ~18,5% (FY18 prelim ) (~12% CAGR ’15 - ’18) (~30% CAGR ’15 - ’18) High-end applications Mission-critical batteries Unique business model Global footprint 75 countries 6 production sites ~ 2000 employees Our Brands 2 Companies of VARTA AG

VARTA AG: The battery experts Two distinct business models: Microbatteries and Power & Energy Microbatteries (1) Power & Energy (2) Healthcare Entertainment & Industrial End markets Products Mainly non-rechargeable / replacement Mainly rechargeable / embedded Rechargeable Tailormade design & USP Industry standard solutions Asset light cell sourcing – Production Highly automated mass cell production in Germany assembly in Romania & Asia  Leading in quality Competitive advantage  Excellence in technology, manufacturing and costs y known as the company’s Energy Storage Sol ( 1) VARTA Mi crobattery GmbH; ( 2) VARTA Storage GmbH; formerl uti ons segment Our Brands 3 Companies of VARTA AG

VARTA’s Competitive Advantage: Strongly differentiated and unique business model Well-positioned in attractive growth markets , benefiting from secular growth trends Global technology and innovation leader , setting the industry standards in microbatteries for mission-critical high-end applications Proprietary in-house production machine technology significantly raising the barriers to entry Highly-automated mass production enabling significant economies of scale and acting as a barrier to entry Strongly differentiated High-degree of vertical integration enables innovations and unique along the value chain business model Close and long-standing relationships with a broad blue chip customer base Our Brands 4 Companies of VARTA AG

Key Investment Highlights  Generating >50% of the revenue & EBITDA in the highly-profitable Attractive Healthcare business exposure to the  Global market leader in the consolidated hearing aid battery market healthcare  Attractive and resilient market growth underpinned by secular end-market growth trends  Multiplying the proven business model to the attractive and highly- Rapidly-growing profitable end-markets in entertainment entertainment  Focusing primarily on the rapidly growing hearables and wearables applications end-market  Competitive advantage in rechargeable lithium-ion coin batteries  Targeting the fast-growing market for residential energy storage Attractive growth systems  Benefiting from the shift to cordless devices in battery packs opportunities in  Positioning as an asset-light solutions provider with attractive Power & Energy returns  Proven track-record of double-digit growth rates  Accelerating growth momentum backed by visible growth Strong financial opportunities € profile  Further possibilities to improve the profitability due to the scaling of the business model Our Brands 5 Companies of VARTA AG

Key Investment Highlights  Generating >50% of the revenue & EBITDA in the highly-profitable Attractive Healthcare business exposure to the  Global market leader in the consolidated hearing aid battery market healthcare  Attractive and resilient market growth underpinned by secular end-market growth trends  Multiplying the proven business model to the attractive and highly- Rapidly-growing profitable end-markets in entertainment entertainment  Focusing primarily on the rapidly growing hearables and wearables applications end-market  Competitive advantage in rechargeable lithium-ion coin batteries  Targeting the fast-growing market for residential energy storage Attractive growth systems  Benefiting from the shift to cordless devices in battery packs opportunities in  Positioning as an asset-light solutions provider with attractive Power & Energy returns  Proven track-record of double-digit growth rates  Accelerating growth momentum backed by visible growth Strong financial opportunities € profile  Further possibilities to improve the profitability due to the scaling of the business model Our Brands 6 Companies of VARTA AG

Generating >50% of the revenue and EBITDA in the highly-profitable Healthcare business Highlights Description Key customers Healthcare: >50% of revenue Primary / non-rechargeable (>95%) Rechargeable (<5%) Hearing aid batteries Li-Ion Accu (lithium-ion) (i.a. zinc-air) Healthcare revenue Other >1bn healthcare cells Power one EVOLUTION sold p.a. (1) (Thin Foil Technology) ACCU plus (nickel-metal hydride) Defining industry standards Mass production know-how Leading in quality (1) As of 2018 Source: Company information, Consolidated financial statements Our Brands 7 Companies of VARTA AG

Global market leader in the consolidated hearing aid battery market Global hearing aid microbattery market (2) (illustrative) (1) (2) Production exits  Panasonic 2017 2016 2003  Sony Market share  Toshiba Market share  Duracell ( 1) Company esti mates based on own numbers of batteri es sol d; ( 2) VARTA AG / VARTA Mi crobattery GmbH / VARTA Storage GmbH Our Brands 8 Companies of VARTA AG

Global hearing aid market shows highly attractive and non-cyclical future growth ~15-16m Hearing aids sold in 2018 x 4-5 years ~2.1bn Market 4-5% hearing approx. hearing aid growth p.a. (1) units in 2018 in 2020 aid lifecycle x ~30-50 approx. hearing aid batteries p.a. / device Our Brands 9 Companies of VARTA AG

Market growth in hearing aid batteries is underpinned by structural growth trends Total global hearing aid market (1) (in m units) ~15-16 9,4 2010 2018 2016 Increased smartphone Emergence of new Aging demographics Underpenetration -linked features & markets smaller form factors New hearing aids being sold Batteries per device (1) Sonova Annual Report 2009/2010 for 2010; Sonova Investor Presentation (June 2017) for 2016 Our Brands 10 Companies of VARTA AG

Leading position in consolidated hearing aid battery market backed by high barriers of entry Excellence in Excellence in Close relationships to broad blue P P P technology manufacturing and costs chip customer base Hearing aid Retail manufacturers via Duracell & others, and 3 rd party brands Walmart CVS Sonova Sivantos Leading primary battery technology William Widex Walgreen Target through foil sealing Demant Tender White label VA Healthcare Panasonic Kind Leading rechargeable Highly automated battery technology for production NHS Toshiba Sony future disruption Australian Hearing + 380 more ( 1) Trusted B2B brands for highest quality and innovation ( 1) VARTA AG / VARTA Mi crobattery GmbH / VARTA Storage GmbH Our Brands 11 Companies of VARTA AG

Leading primary battery technology: Launched the EVOLUTION series, with a ~15% longer hearing time +12-17% +12-17% VARTA VARTA Rayovac power one EVOLUTION Activecore (today) Our Brands 12 Companies of VARTA AG

Leading rechargeable battery technology: Lithium-ion will be the dominant rechargeable technology Nickel metal ~7% Market structure by device technology hydride Rechargeable/ (development 2001 to 2018) ~3% Lithium-ion 2018 Market entry 100% 2001 2011 Market entry  Nickel metal ~97%  ~93% Lithium-ion % of total % of total % of total hydride (2016) market (1) market (1) (2005) market (1) Non-rechargeable Rechargeable Zinc-air Nickel metal hydride Lithium-ion Overview Benefits Overview Benefits Overview Benefits    On average 10 days life 1 day life per charge Daily charging required    Small form factor Possible to have sealed No need to change cycle   Min. 1,000 cycles (2) Shelf life of 3-4 years unit   Lasts on average 10 days Possible to have sealed  Up to 500 cycles  4-5 years  Battery compatible with unit  Highest energy density  1-2 years  zinc-air Size is customized /  Low cost assembly in most cases necessary Business model “Replacement” Business model “Design - in”  Growing market share of rechargeable batteries  Only one battery required per device  Installed base: ~50m and growing  Higher prices with attractive margin potential  Recurring revenues  VARTA (3) strongly positioned in both technologies  Dominance of (non-rechargeable) zinc-air batteries  Potential shift from non-rechargeable to rechargeable hearing aid batteries will not impact VARTA’s (3) mid-term performance significantly (1) By new hearing aid devices being sold; (2) According to specification; expected 1,500+ cycles; (3) VARTA AG / VARTA Microbattery GmbH / VARTA Storage GmbH Source: Company estimate Our Brands 13 Companies of VARTA AG