German solar inverter manufacturer SMA Solar has announced plans to conduct a “company-wide restructuring and transformation programme” due to the impacts of what the company calls a “volatile” market environment.
SMA Solar plans to cut costs of €150-200 million (US$167.4-223.2 million) by focusing on three areas: optimising the company’s cost structure, an “adjustment” of its organisational structure and a “strategic reposition” of the company in the market. While the company has not announced the specific measures that this approach would include, its CEO Jürgen Reinert said job cuts are “likely”.
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“To ensure that SMA can continue to be an integral part of the global energy transition, we must now position ourselves better and fit for the future,’ said Reinert. ‘With the restructuring and transformation program that has now been initiated, we will stabilise SMA financially in the short term on the one hand and realign the medium and long-term business strategy on the other. However, this will require considerable cost savings, which will also make job cuts likely.”
The news follows the publication of the company’s financial results in August, which it described at the time as “solid”. SMA Solar reported that its earnings before inflation, taxation, depreciation and amortisation fell from €125.3 million (US$136.9 million) in the first half of 2023 to €80.6 million (US$88 million) in the first half of 2024, while the order backlog for its products almost halved over this period.
The company also lowered its full-year guidance for 2024, lowering its sales forecast from €1.95-2.2 billion (US$2.18-2.45 billion) to €1.55-1.7 billion (US$1.67-1.9 billion).
SMA Solar’s financial struggles come on the heels of the publication of the International Renewable Energy Agency’s (IRENA’s) annual renewable power costs report, which found that the price of inverters had fallen in recent years, but had contributed much less to the falling overall cost of solar projects than in previous decades. The IRENA report found that, between 2010 and 2016, falling inverter prices lowered the cost of PV systems by US$384/W, whereas between 2016 and 2023, low inverter prices shaved just US$53/W from the cost of installing a PV project.
This could suggest that the average price of inverters has stabilised somewhat in recent years, a development that makes SMA Solar’s recent financial troubles all the more significant.
“Our top priority is to increase profitability and sustainably strengthen the company’s financial stability,” added SMA Solar CFO Barbara Gregor. “At the same time, we are keeping a firm eye on the future and setting a decisive organisational and strategic course. It will now be crucial to quickly concretise our ambitious plans and then implement them in a disciplined and consistent manner.”
