German solar inverter maker SMA Solar Technology AG (ETR:S92) today said it returned to profit in the first half of 2016 and announced that it would close plants in Denver, USA, and Cape Town, South Africa.
“The acceleration of price pressure in the solar industry has been unexpectedly strong in recent weeks. We therefore immediately initiated measures to lower our break-even point even further,” CEO Pierre-Pascal Urbon said Thursday.
SMA Solar’s managing board is anticipating a further intensification of price pressure in 2017. Closing the Denver and Cape Town production facilities is an “unavoidable” step, allowing the firm to improve its cost structure by consolidating its global infrastructure. It will thus achieve better utilisation of production sites in China and Germany, Urbon added.
The company reported a net profit of EUR 19.4 million (USD 21.3m) for the first half of the year, against a loss of EUR 21.4 million a year ago. Earnings before interest and tax (EBIT) stood at EUR 39.3 million, versus a loss of EUR 14.9 million.
Thanks to higher sales volumes and cost cuts, earnings before interest, tax, depreciation and amortisation (EBITDA) jumped to EUR 73.1 million from EUR 21.3 million.
Sales grew 15.1% to EUR 494.1 million and PV inverter sales rose by 22.9% to 3.9 GW.
Based on SMA Solar’s high order backlog of EUR 644 million and its expectation of stronger business in the second half, the managing board confirmed its forecast for full-year sales of EUR 950 million-1.05 billion and EBIT of EUR 80 million-120 million. It pointed out that the upper end of the earnings forecast is ambitious given the price developments in the industry.
In the first six months of the year, the large-scale PV power plants (utility) segment was the main earnings driver, though the commercial segment also helped. Business abroad accounted for 91.1% of SMA’s sales.
The company said it is planning targeted investments in new technology and it will be presenting next month a compact system solution with integrated energy management for the Commercial market segment at Solar Power International in Las Vegas.
“The cost of solar power generated by PV systems will at last be at a similar level to that of on-shore wind turbines before the end of the decade. This will mean entirely new growth prospects for highly flexible companies such as SMA,” Urbon said.
(EUR 1 = USD 1.100)
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