SMA buys O&M unit from Phoenix Solar

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German group Phoenix Solar AG has sold its operation and maintenance (O&M) activities in Europe to SMA Solar Technology AG.

Phoenix said it would use proceeds from the sale, which it closed on Wednesday, to repay debt and strengthen its core operations.The asset deal does not include the group’s O&M activities from its various subsidiaries, particularly in the United States and Asia, where O&M operations are run independently, nor will they be affected by the sale.

"It was not an easy decision for us to part with our Ulm-based O&M business," said Phoenix Solar CEO Bernd Koehler. "However, in view of our strategic focus on Asia and the U.S.A., providing support for large solar parks in Europe was no longer readily compatible. Seen from this standpoint, the business did not have a strategic perspective. By contrast, we know that the prospects for our European O&M activities are very good with SMA, and that our former customers will continue to receive the best possible support. We will be able to use the proceeds from the sale to reduce our debt and strengthen our core business."

SMA CEO Pierre-Pascal Urbon added that O&M services for PV power plants were "an important driver of our growth strategy in the service business. After successfully establishing this business field in North America with 200 MW, we are now looking to develop the high-volume European market for SMA through the acquisition of the O&M business from Phoenix Solar." Urbon said SMA would continue to expand its O&M services in Europe and North America.

The leading inverter manufacturer pointed out that since the inverter was a central component in any PV system, many owners and PV system operators already regarded SMA as a "natural partner of choice for operation and maintenance services." The group added that O&M also offered "sustainable and stable sales and yields for SMA."

The deal remains subject to certain conditions that are to be fulfilled in the coming weeks, Phoenix said. The companies declined to disclose financial details of the deal.

Phoenix also announced that it was lowering its fiancial forecast for the year in view of its business performance in the first half of 2014, which it said was characterized by considerable delays in planned order intake in the United States. The company now expects a year-on-year revenue decline of between 35% and 50%, with sales ranging between €70 million and €100 million (compared to €141.2 million in 2013) — well below the previous forecast of between €150 and €160 million for the current year.

As for operating profit (before interest and taxes), Phoenix now expects earnings of between "€0 million and €3 million," which includes the proceeds from the sale of the O&M business and remains an improvement over last year’s €1.4 million loss but below the initially expected €2 million to €5 million.

SMA last week announced that it too was lowering its sales and profit forecast for 2014 and announced plans to lay off some 600 employees worldwide by the end of 2015.