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Utility segment sales in the first nine months of 2018 increased to €205.7 million, 8.5% higher than the prior year period and accounted for the share of SMA Solar’s total revenue in the reporting period. Image: SMA Solar

Utility segment sales in the first nine months of 2018 increased to €205.7 million, 8.5% higher than the prior year period and accounted for the share of SMA Solar’s total revenue in the reporting period. Image: SMA Solar

Major PV inverter manufacturer SMA Solar Technology reported third-quarter 2018 financial results that were largely impacted by cuts in utility-scale and Distributed Generation (DG) deployments in China as the 531 New Deal and US residential issues take hold. 

"For 2018, we expect a market slump of 26% in China, the world's largest photovoltaic market," said SMA Chief Executive Officer Dr. Jürgen Reinert. "The PV projects already planned before the unexpected and significant curtailment of the PV expansion targets by the Chinese government have since been implemented. Thus, Chinese manufacturers of modules and inverters are now increasingly pushing into international markets and creating massive price pressure. To benefit from even lower prices in the coming months, project developers and investors are increasingly postponing the construction of large PV projects until next year. Against this background, orders received at SMA lagged significantly behind expectations in recent months.” 

SMA Solar reported sales of €575.1 million for the first nine months of 2018, a 2.9% decline from the prior year period. 

However, third quarter sales declined by almost 15% to €180.5 million from the previous quarter, due to China’s 531 New Deal impacted demand and flow through to pricing pressure and project delays until a return to pricing stability. 

SMA Solar's third quarter sales declined by almost 15% to €180.5 million from the previous quarter.

SMA Solar's third quarter sales declined by almost 15% to €180.5 million from the previous quarter.

The company had previously announced in late September that it had lowered full-year revenue guidance and profits as a result of the change in market conditions and reiterated in its latest financial report that revenue would be in the range of €800 million and €850 million, while EBITDA would be at the break-even level or slightly negative for 2018. 

PV inverters sales in the first nine months of 2018 were around 6.2GW, up from 5.9GW in the prior year period. However, PV inverters sales in the third quarter reached around 1.9GW, compared to around 2.46GW in the second quarter of 2018, over a 22% decline. 

PV inverters sales in the third quarter reached around 1.9GW, compared to around 2.46GW in the second quarter of 2018, over a 22% decline.

PV inverters sales in the third quarter reached around 1.9GW, compared to around 2.46GW in the second quarter of 2018, over a 22% decline.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first nine months of 2018 were €50.5 million slightly down on the previous year's level. However, on a quarterly basis the impact is apparent in the third quarter as EBITDA declined significantly to €9.5 million, compared to €18 million in the first quarter and €23 million in the second quarter of 2018. 

With the delays to PV power plant projects, SMA Solar reported further declines in its products order backlog, which declined more than initially expected. 

Total product order backlog declined 51.7% in the first nine months of 2018, compared to the prior year period. The total product order backlog stood at €163.2 million at the end of the reporting period. 

SMA Solar’s total product order backlog reached a recent quarterly peak of €337.9 million in the third quarter of 2017. 

SMA Solar’s total product order backlog reached a recent quarterly peak of €337.9 million in the third quarter of 2017.

SMA Solar’s total product order backlog reached a recent quarterly peak of €337.9 million in the third quarter of 2017.

SMA Solar’s residential segment sales have declined around 23% in the first nine months of 2018, impacted by the general shortage of high-power transistors and weaker US sales such as in California, due to generation charge changes. High-inventory levels in the US supply chain for PV inverters was also cited for the decline in residential sales. 

However, residential segment sales have increased slightly quarter on quarter through the first nine months of 2018. 

Commercial segment sales in the first nine months of 2018 increased to €191.8 million, up slightly from 188.1 million in the prior year period. Third quarter commercial segment sales actually decline in the third quarter of 2018 to €60 million, compared to €75 million in the previous quarter, a 20% decline. 

Utility segment sales in the first nine months of 2018 increased to €205.7 million, 8.5% higher than the prior year period and accounted for the share of SMA Solar’s total revenue in the reporting period. 

However, utility segment sales declined to €54.8 million in the third quarter of 2018, down from €84 million in the previous quarter. 

The segment was in negative EBIT territory in the first nine months of 2018, with losses of €23 million, compared to a positive EBIT of €5.9 million in the prior year period. 

Storage segment sales in the first nine months of 2018 were €46.1 million, a 2.9% increase over the prior year period. Third quarter sales for Storage segment were €17.2 million, significantly up from €9.0 million in the previous quarter but not as high as the first quarter of 2018, when sales topped €19.9 million.

SMA Solar’s residential segment sales have declined around 23% in the first nine months of 2018, impacted by the general shortage of high-power transistors and weaker US sales such as in California, due to generation charge changes. High-inventory levels in the US supply chain for PV inverters was also cited for the decline in residential sales.

SMA Solar’s residential segment sales have declined around 23% in the first nine months of 2018, impacted by the general shortage of high-power transistors and weaker US sales such as in California, due to generation charge changes. High-inventory levels in the US supply chain for PV inverters was also cited for the decline in residential sales.

Guidance

SMA Solar reiterated full-year revenue guidance to be in the range of €800 million and €850 million, indicating a sales increase in the fourth quarter of at least €225 million to reach the low-range of guidance. 

"We will adjust our structures to react even more flexibly to the new conditions and to increase SMA's profitability quickly and sustainably. By the end of this year, the restructuring measures will be agreed upon and adopted with the employee representatives. In addition, we will introduce more new developments into the markets along with our existing cost-optimized products to counter the increasing price pressure in the component business. It is our long-term goal to tap into the higher-margin system and service business on the basis of our comprehensive experience and competence in energy management and the integration of battery storage," added Dr. Reinert.

Tags: sma solar technology, pv inverters, pv power plants, rooftop, solar-plus-storage, residential, california, us, china, 531 new deal

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