Leading PV inverter manufacturer, SMA Solar Technology has announced a further round of restructuring with heavy job losses after drastically lowering its revenue forecast for the year.
The company revised down its revenue forecast for the year to between €850 million to €950 million (US$1.14-1.27 billion), compared to its previous guidance of revenue between €1.0 billion to €1.3 billion (US$1.34-1.74 billion).
At the low-end of the revised guidance, SMA Solar warned that it could have losses of around €45 million (US$60.3 million). Previous guidance was a breakeven position or a profit of around €20 million (US$26.8 million).
Stagnation in PV markets within Europe and further declines in its core market of Germany were behind the revised guidance as well as the shift of end markets to the likes of China and Japan, neither country a strong market for the company as they are dominated by domestic firms.
According to Sam Wilkinson, market research analyst at IHS: “China and Japan will account for 45% of global PV inverter revenues in 2014, and these are the two markets that SMA is yet to have a meaningful impact on. In fact, these two markets are the only regions where SMA did not appear in the top-five suppliers in 2013. Actually it wasn't even in the top-ten in either of them.”
SMA Solar noted that “cut throat” pricing for inverters was also contributing to the need to restructure.
According to IHS, the average PV inverter prices are expected to decline by between 10% to 15% in most market segments in 2014.
The market decline in Europe and shift to Asia that has contributed to SMA Solar’s market share losses over the last five-years will also see the company make further restructuring efforts with the loss of approximately 600 employees worldwide, according to the company.
Job losses of around 400 will be focused on its Sales, Operations and Administration areas.
The company is also reducing its R&D expenditure to around €90 million (US$120.6 million) per annum.
Pierre-Pascal Urbon, CEO of SMA Solar Technology said: “After intensive conversations with customers at the key trade fairs in China, Europe and North America as well as our own market analysis, we expect to see a stagnation in the worldwide demand for PV systems for 2014 as a whole. Particularly in the core markets in Europe, demand has collapsed even further than expected due to further cuts in subsidies. The SMA Managing Board believes that developments over the next few months will be far more dynamic than in the first half of 2014. In 2014, the most important foreign markets include North America, Japan and China. Together, these markets are expected to account for 60% of the global market. The cut-throat competition is keeping pricing pressure high in the industry.”
The company is planning to launch a new range of inverters in 2015 and leverage lower cost components sourcing via its Chinese subsidiary, Zeversolar.
“In addition, we also anticipate a slight increase in our market share for 2014 to more than 15% worldwide. In the future, additional sales impulses will also be generated by our Service business and by the photovoltaic diesel hybrid business. With net liquidity of €250 million (US$335 million) and an equity ratio of almost 60%, SMA will be able to implement this strategy under its own steam,” added Urbon.
However, Wilkinson disagrees with SMA’s market share gain assertions.
“The remaining global PV inverter market all countries – apart from China and Japan – is predicted to be flat in 2014, generating US$3.9 billion dollars in both 2013 and 2014, and SMA's share of this stagnant sector of the market is gradually being eroded. Although SMA claims that its global market share will increase in 2014, IHS estimates that SMA accounted for just 13% of global revenues in Q1'14, a decrease of four percentage points compared to the first quarter of 2013.”