Battery systems manufacturer Voltabox estimates that it will not achieve its growth targets for 2020 due to the Covid 19 pandemic and is reducing its forecast for the current fiscal year. It remains to be seen whether the situation will also affect Paragon’s plans to sell its Voltabox shares.
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In a statement, Voltabox said that orders were increasingly being cancelled, customers were “noticeably” calling in fewer orders and the supply chains for important electronic and housing components were also blocked. The company has applied for shorter working hours (called Kurzarbeit in German) and will make “a comprehensive structural adjustment to its cost base to stabilize operations”.
The short statement from Voltabox only says that the Management Board has come to the conclusion that the loss of sales due to the spread of the virus cannot be made up for even if the economic conditions return to normal quickly during the rest of the year. Therefore, the Management Board “cannot make any reliable sales and earnings forecast for the current year at this time”.
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It is unclear whether the current economic situation will also influence the planned sale of Paragon’s stake in Voltabox. At the beginning of March, the automotive supplier Paragon announced that it was seeking to sell its 60% stake in Voltabox, a subsidiary specialising in lithium-ion battery systems. At that time, Paragon said that several options were being examined – from a partial sale to a sale of the entire holding.
Paragon itself, with a very similarly formulated justification, has also lowered its sales and earnings forecast and postponed the announcement of its financial figures and the Annual General Meeting. “The uncertainty about the further economic development as a result of the current restrictions makes reliable guidance impossible at present,” writes Paragon. “Fewer customer call-offs and logistical problems at the fully consolidated financial investment Voltabox, as well as signals from automotive customers regarding vehicle sales in the further course of the year, indicate that plant closures will be longer and production restarts slower than initially expected”.
Update 11 May 2020: Voltabox has now also retroactively carried out a “comprehensive balance sheet adjustment” for 2019. The reason given for this step was the “expected change of anchor shareholder” (i.e. the planned withdrawal of Paragon) and the economic outlook, which has been severely clouded by the pandemic. In total, the value adjustments made in 2019 amount to 100.6 million euros. These “involve asset values, which are expected to presumably provide a lower contribution to revenue and earnings in the future than planned, due to significantly worsened business prospects”, the company stated in the ad hoc announcement. “Among other factors, earnings were also impacted by an extraordinary write-down of assets relating to the U.S. subsidiary Voltabox of Texas, which has remained unprofitable so far, as well as the reversal of the transaction for the sale of IP rights at the end of 2019.”
According to the preliminary figures now available, the Voltabox Group’s sales in the past financial year amounted to 56.6 million euros. The failure to achieve the forecast of 70 – 80 million euros is due to the reversal of the sale of rights to use power electronics and powertrain products as a result of the Covid-19 pandemic.
Preliminary earnings before interest and taxes (EBIT) adjusted for the one-time special effects amount to -5.7 million euros, corresponding to an EBIT margin of -10.1 per cent; the forecast of -8 to -9 per cent was thus not achieved. A reliable estimate for the current fiscal year is still not possible due to the circumstances caused by the Covid-19 pandemic.
With reporting by Sebastian Schaal, Germany
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