The just announced capital increase does not solve the problem. The amount is way too small. It just buys management a little time. For example, the board of directors is trying to win new customers for Vartas micro batteries in order to make better use of existing production capacities. However, these will probably not be premium customers like Apple and the margins will be manageable accordingly. There is not much money to be made as a competitor to cheap Chinese manufacturers. And that probably won’t be enough. In the coming months, there is likely to be sustained job cuts.
Varta was geared towards growth: a lot of money went into new facilities and staff that is now not needed to the extent planned. The management obviously hadn’t taken into account the fact that things couldn’t go uphill all the time. Now Varta has to get over the high costs quickly in order to limit losses. This has little to do with sustainable renovation. To do this, Varta would probably first need new products that – whatever the company’s recipe for success – are better than those of the competition. In order to finance new developments, however, the coffers would have to be properly replenished first. A further capital increase therefore seems likely.