SMA Solar sees strong demand momentum but inverter pricing hits revenue

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Leading PV inverter manufacturer, SMA Solar Technology, said it experienced strong demand in the third quarter and that its high order book for the fourth quarter suggests a stronger second-half performance.

SMA Solar reported inverter sales of 3.3GW for the first nine months of 2014, down from 4GW in the prior-year period, confirming continued market share losses as ASPs continued to decline due to intense competition in the inverter market. 

As a result, sales were €549.3 million in the first nine months of 2014, compared to €709.3 million in the prior-year period. 

Earnings before interest and taxes (EBIT) were negative €72.7 million, compared to negative €30.1 million in the first nine months of 2013. The company said that the strong demand and order book for shipments in the fourth quarter could result in a break-even situation in terms of operating earnings. 

However, should sales be at the the lower end of its sales forecast, the company said it could finish the year with a loss of approximately €45 million on sales for the year reiterated to be in the range of €850 million to €950 million. 

Pierre-Pascal Urbon, CEO of SMA Solar Technology said: “The increase in demand in the third quarter was not as sharp as expected. First, projects were postponed until the fourth quarter of 2014 and next fiscal year. Second, commercial business in Europe deteriorated again compared to the first half of the year. For the fourth quarter of 2014, we expect a better sales situation, which we can already discern in SMA’s high order backlog. Overall, the market for PV inverters will remain volatile and dominated by high price pressure. Our strategy is aimed at returning SMA to profitability in this market environment.”

Aside from the PV power plant project delays, SMA Solar said that the sales decline in the period was also due to “a sharp reduction in demand in Europe as a result of a significant deterioration of subsidy conditions”.

The company said that was seen in Germany, Spain, Italy and Greece as well as in Thailand. Strong demand for inverters in the booming US and growth in Latin America were not sufficient to completely offset declines in key European markets. 

However, the company noted that its strongest markets in the period had been North America, Australia, Japan and the UK, resulting in 72.1% of sales coming from outside Germany, compared to 60.3% in the same period of 2013.

The North America market is becoming increasingly important to SMA Solar. The company said it had expanded its R&D activities at its inverter plant in Denver to respond more quickly to customer demand.

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