SMA lifted by higher margins as sales slip in Q1 2021

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Image: SMA Solar Technology.

Inverter supplier SMA Solar reported a fall in sales during Q1 2021, but cited the political landscape in the US and Europe as being “extremely encouraging” in the long term.

First quarter sales stood at €240.4 million, down 16.5% year-on-year from the €287.9 million reported in Q1 2020. Sales were also down €14 million compared to the fourth quarter of last year, when SMA’s gross margins plummeted to just 7%.

However the group’s EBITDA margin soared, almost doubling to 8.4% from the 4.3% recorded in the corresponding quarter, helping boost quarterly earnings to €20 million, up from the €12.3 million recorded last year.

The company sold inverters with a combined 3.4GW capacity, down 23% on the 4.3GW shipped in Q1 2020.

SMA said in its first quarter results statement that postponed orders due to COVID-19 disruption, coupled with an increased price of PV modules, led to the downturn in sales. Europe, the Middle East and Africa made up the majority (51.6%) of sales, followed by the Americas (35.9%), while the company’s large scale and project solutions drove sales in the first quarter, making up 43% of revenues.

SMA’s distributed residential business’ sales rose by 6% in the reporting period compared to the same period last year, standing at €75.6 million. The segment’s EBIT also improved year-on-year, reaching €14.2 million compared to just €5.2 million in Q1 2020. However, the overall decline in sales was driven by a downturn in SMA’s business solutions unit, where sales fell from €78.6 million in the first three months of 2020 to €61.6 million this year.

Despite this, the solar tech company still saw its gross margin peak at 22.2% in the first quarter this year, compared with 16.7% during Q1 2020. SMA said in its results statement that this was the result of a “favourable product mix and cost optimisation”, as well as falling sales and the resulting decreased cost of sales.

Outlook

Jürgen Reinert, the company’s chief executive, said that SMA will continue to optimise its product portfolio and reduce costs over the next few months to ensure profitability this year.

The manufacturing boss added that the current political climate in the US and the COVID-19 vaccine’s steady rollout since the end of last year means that SMA expects an increase in inverter demand in its core European and US markets.

The “most recent political signals” he said, such as the EU committing to reducing emissions by 55% by 2030, and US President Joe Biden’s various commitments to investing in renewable energy and infrastructure this year, are “extremely encouraging for medium to long-term market developments.”

The executive board confirmed its fiscal guidance for 2021, which predicts that sales will rise to between €1.075 billion and €1.175 billion.

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