Following the announcement in late July that SMA was lowering its annual sales forecast, triggering the loss of 600 jobs worldwide, the company confirmed today that global sales in the first half of 2014 were 120.3 million ($160 million) down on last year’s performance.
Sales of 341.2 million ($456 million) for Q1 and Q2 were below last years 461.5 million, with just 2 GW of inverters sold globally in the first half of the year. In 2013, that figure was 2.5 GW. The company pinned this below-expectation performance on suppressed demand from Europe, and particularly Germany SMA’s domestic market where demand for its inverters was 40% down on last year.
However, SMA is confident that its strong global presence can help the company claw back some of its losses in the second half of the year, pointing to the fact that 70.8% of its market share is now comprised of sales outside of Germany, noting North America, Australia and Japan as key markets.
In Europe, the U.K. is poised to replace Germany as its main European market as the solar sectors in other traditionally strong countries such as Spain, Italy and France continue to suffer from adjustments to subsidy conditions, the German inverter company said.
Expectations up despite growing losses
Low sales in Europe coupled with more challenging cost pressures caused by a decline in inverter prices resulted in more red ink for SMA as the company’s half-year operating loss deepened nearly threefold from 22.3 million in the six months of 2013 to 62.4 million. SMA’s operating result includes one-time items resulting from impairment losses of 7 million.
Net cash stands at 244.8 million ($327.4 million) approximately 60 million less than last year but the equity ratio of 55.5% means that the company is likely to be in a strong position to finance further developments from its own resources moving forward. The shedding of 600 positions worldwide will also go some way towards cutting SMA’s overheads, leading the board to tentatively predict a "break even at best" scenario for the end of the year.
"In the coming months, we expect a considerable rise in demand, especially in the international project business," said SMA CEO Pierre-Pascal Urbon. "Thanks to our global presence, we will benefit from the forecast development.
"The management board’s objective is to further extend SMA’s market leadership. By significantly reducing the cost of sales, optimizing our processes and making extensive structural adjustments [SMA has just acquired the operation and maintenance (O&M) unit from Phoenix Solar as the company expands its service offering in Europe and North America] across the entire organization, we have also satisfied all the conditions required to achieve a return to profitability next year."
The SMA managing board predicts sales of between 850 million and 950 million for the SMA Group for the 2014 fiscal year. The lower end of the sales forecast anticipates a loss of approximately 45 million, the company said.
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