Shares in German inverter manufacturer SMA Solar fell 17.9% this morning on the back of news the company is slashing its 2014 sales and revenue forecasts and laying off more staff.
The company revealed last night that it was revising down full-year sales guidance to €775 million to €790 million from the previous €850 million to €950 million, citing project delays in the UK and declining demand in key European markets.
It is the second time the company has cut guidance this financial year. In July, following poor first-half results, SMA downgraded its original forecast of €1 billion-1.3billion.
Chief executive Pierre-Pascal Urbon said: “Our previous forecast was based on the assumption of a strong sales upturn toward the end of the year. Unfortunately, markets in Europe have not developed as well as expected. The British government has unexpectedly extended the deadline for the grid connection of large-scale PV plants under the current subsidy regime by one year to March 31 2016. As a result of this, a large number of projects will be delayed until 2015.”
Urbon said a further factor was the decline in its distribution business in Europe, which he said had “declined dramatically”, particularly in Germany.
To return to profitability, SMA said it would reduce its development budget to approximately €80 million and restructure its Chinese subsidiary, Zeversolar.
And more jobs look likely to be lost. In July, following its disappointing first half results, SMA said it would shed 600 workers by mid-2015, but it has now said it would be “significantly more” than this number.
Sam Wilkinson, solar research manager at IHS, said the news was “in line” with expectations. “SMA indicated in their last call that they’d be at the bottom end of their guidance, and I’m not entirely surprised by it.”
Wilkinson said SMA’s position as a premium brand in a highly competitive market was “clearly threatened”.
“There is a lot of competition from extremely aggressive, extremely competitive suppliers from the both the West and the East. Europe has declined from US$5.5 billion in 2010 to US$1.4 billion. So we’re looking at a market that has fallen by 75% effectively in Europe,” he said.