German inverter manufacturer SMA Solar Technology AG saw its sales drop from €891.0 million in 2017 to €760.9 million last year. The company partly attributed its poor performance to China’s abrupt policy change in late May 2018, claiming that the shift has exacerbated price pressure in the global PV market. As a result, it registered a net loss of €175.5 million for last year, down considerably down from the net profit of €30.1 million it posted a year earlier.
The company stated that it still has high net liquidity of €305.5 million and a credit line of €100 million from German banks. But it also explained that the policy change in China was not solely responsible for its grim results.
“Having started the fiscal year with a high order backlog, the continuing shortage of electronic components meant that in the first half of the year, we were only able to supply our customers to a limited extent, particularly in the commercial PV systems segment,” said SMA CEO Jürgen Reinert.
In the second half of 2018, SMA identified policy changes in China — as well as price pressure in all market segments — as key factors that negatively impacted its results. But it also said that many project developers and investors have postponed their PV projects in anticipation of further price declines. “In addition, storage technology growth was affected by the limited availability of battery-storage systems,” said Reinert.
Last year, SMA launched a cost-cutting program to help it ramp up sales and quickly return to profitability. The subsequent decision to sell off its Chinese subsidiaries has already been completed, Reinert said. Efforts to reduce its workforce in Germany were designed to be more socially acceptable through a “volunteer program,” leading it to announce plans in mid-December 2018 to cut 425 full-time jobs throughout the world by 2020. The cuts amount to around 13% of all jobs in the company.
It remains unclear whether SMA will be able to pull off a quick turnaround. In the first quarter of 2019, the company’s board said that it expects sales of €160 million to €170 million, which is slightly below the previous year’s total. It also expects an Ebidta of between -€5 and €0 million, on top of an anticipated profit of €17.5 million.
At the end of January, SMA’s board also confirmed its forecast for the current financial year. It is aiming for sales of between €800 million and €880 million, with an Ebitda ranging from €20 million to €50 million.