Market conditions in the PV industry continued to impact PV inverter leader, SMA Solar Technology in 2013. Pricing competition, a slump in European sales and little exposure to the two largest markets in 2013, China and Japan, resulted in a loss of €89.1 million for the full year.
SMA Solar reported revenue in 2013 of €932.5 million, down from US$1.5 billion in the previous year as sales of inverters plummeted from 7.2GW in 2012 to 5.4GW in 2013.
Pierre-Pascal Urbon, CEO of SMA Solar Technology said: “For the first time in the company’s history, we had to post a high annual net loss due to the dramatic decline in the European market. Despite this difficult situation, the SMA managing board has not reduced investments in technology development. Expenditure on development of future products was again at more than €100 million. By this, we defend our position as a technological market leader in a highly competitive market. Overall, we are of course not pleased with these financial results. Nevertheless, we are convinced that we have laid the strategic foundation for sustainable financial improvements,”
According to market research firm, IHS, the inverter leader retained its number one position but its global market share declined to 17%, a decline that has continued for five consecutive years. SMA Solar’s market share had previously stood close to 40% in 2009, according to IHS.
With the acquisition of Power-One by ABB last year, SMA Solar’s nearest rival was said to be closing the market share gap and narrowed by 4 percentage points compared to 2012.
IHS noted that SMA’s shipments decreased by 25% in 2013, despite industry shipments growing by 12% due to SMA’s weakness in the booming Japanese & Chinese markets.
With the Chinese market booming with installations (mostly ground mount) reaching at least 11GW in 2013, China-based Sungrow saw a significant increase in sales on the back of shipments of 3.5GW in 2013, a 178% increase from 1.25GW in the previous year, solidifying its position as the third largest PV inverter supplier.
Although SMA Solar has attempted to belatedly enter the Chinese market through its majority share acquisition of Zeversolar, IHS noted that the Chinese operations remained loss-making, due to what SMA Solar said were “start-up losses of €15 million.” SMA Solar had previously noted that it had been forced to realign Zeversolar’s product offering and operations to better be able to compete.
European market decline
Increased pricing pressure in its core European markets due to the major decline in demand in Europe and notably in SMA Solar’s core market of Germany led the sales decline last year.
“SMA’s full-year financial results today enforced IHS’ previous predictions of a major decline in the European PV inverter market,” commented Cormac Gilligan of IHS. “IHS estimates that PV installations in Europe declined by 37% in 2013. This slump in demand ignited a severely competitive price war which led to European PV inverter market revenues declining by a huge 46% to US$2.1 billion. Europe accounted for 33% of the global inverter revenues in 2013, compared to nearly 60% in 2012.”
SMA Solar noted that it was “unable to compensate for the decline in European demand through the internationalisation it has been pursuing for many years. In the key growth markets China and Japan, countries with high market entry barriers, SMA is still in the early stages of the market development process.”
The company guided first quarter of 2014 sales of €170 million to €200 million, down from €212 million in the same period a year ago. SMA Solar also guided a loss of €20 million to €25 million in the quarter, compared to a loss of €8 million in the first quarter of 2013.
The company reiterated full-year 2014 sales to be in the range of €1.0 billion to €1.3 billion.
“2014 will be a critical year for SMA and all other European PV inverter suppliers. Global PV inverter revenues are forecast to grow by 5%. However, to be able to grow in line with this, suppliers will need to overcome many challenges in entering new markets and cope with continued price pressure,” added IHS’ Gilligan.
IHS noted that it expected China and Japan to account for 44% of PV installations in 2014 and 35% of inverter revenues. SMA Solar continues to have only a small position in both of these markets.
With China authorising 14GW of incentive-based PV installations in 2014 and global PV demand expected to be in excess of 46GW, SMA Solar’s guided revenue forecast suggests further market share declines this year.