SMA cost cuts take effect in solid H1 financial results

The world’s leading solar inverter supplier in terms of market share, Germany’s SMA, has today published solid first half (H1) financials that reveal the company’s recent cost cutting and restructuring measures have had the desired effect.

Sales over the first six months of the year were up 26% on the same period last year, reaching €429.3 million ($477 million) compared to €341.2 million in H1 2014. This performance – in line with management forecast – was driven by the large-scale sector, with residential and commercial growth also noteworthy.

The company’s strategy to globalize gathered pace, with SMA increasing its share of international sales, i.e. sales outside of Germany, to 87.2% of all revenue (up from 73.4% in H1 2014), with North America, Japan, the U.K. and Australia the most important global markets.

Total shipments reached 3.2 GW for the half year, up from 2 GW recorded in the first six months of last year – a performance that drove considerably improved EBITDA earnings, which reached €21.3 million ($23.6 million) compared to negative €17 million in H1 2014.

Despite ongoing layoffs and subsequent severance payments, SMA’s net cash reached a high of €211 million ($234 million), and gross cash flow also improved to €-5.1 million. Over H1 2014, that figure was €-41.7 million.

For the second consecutive quarter, SMA is forecasting an improved fiscal outlook, predicting annual FY sales of between €800 million and €850 million, with 80% of this forecast already accounted for in sales and orders from the first six months of the year.

"After a positive development in the first half of the year and in light of the continued high order backlog, the SMA managing board is anticipating a rise in sales again in the current fiscal year for the first time since 2010," said SMA CEO and CFO Pierre-Pascal Urbon. "In recent years, we have consistently invested in the establishment of global infrastructure in order to compensate for market fluctuations, and we can now benefit from growth in demand and the consolidation in the PV industry in all regions."

Urbon stressed that the "comprehensive transformation" of the company over the past few months served to facilitate this turnaround in fortunes, and added that the continued goal is to achieve a total reduction in overheads of €160 million by the end of the year.

"The first effects of the cost reduction measures initiated will already be evident in the second half of 2015. We therefore anticipate positive free cash flow in the current fiscal year," he said.