Its no secret that prices across the solar industry are tumbling. Mainly a result of global price pressure, the latest company to feel the burn of the falling prices is SMA Solar Technology, who has now been forced to adjust its financial forecast for the year.
It is not catastrophic for the tier-one inverter manufacturer, dropping its revenues forecast from between EUR 950 million and EUR 1,050 million down to between EUR 900 million to EUR 950 million. It is also adjusting its forecasted EBIT from between EUR 80 million to EUR 120 million to between EUR 60 million and EUR 70 million. Both the adjusted figures are still improvements from 2015, however.
The company was candid in its announcement, stating that a mixture of worldwide price pressure right across the industry, and delays to solar projects had caused the adjustment of the forecasts.
After a successful third quarter in 2016, we expect weaker business at year-end due to the significant increase in price pressure and numerous project delays in the EMEA and North American regions, commented SMA CEO Pierre-Pascal Urbon. SMA has reacted to changes in market conditions in good time. This year, we presented significantly cost-reduced product innovations and solutions to our customers at leading trade fairs in Europe and in the USA.
However, it is important to note that the financial statistics for 2016 will be better than 2015, particularly the EBIT. The company has also undertaken some restructuring activities, including that closing down of its production sites around the world.
With a high equity ration of nearly 50% and net case of more than EUR 350 million, SMA is one of the most solid companies in the solar industry continued Urbon. Financial strength is of great important in view of the market for major solar projects and the long-term service business.
Interestingly, SolarWorld today also announced a decrease in its revenues and EBIT forecast for 2016. The German company said that, although it was meeting its sales forecast, price pressure in the industry had forced it to lower its revenue expectations. These two similar announcements, from manufacturers of different solar products on the same, shows that prices are getting squeezed right across the solar industry.