Top Inverter Maker SMA Loss Wider Than Expected after Solar Market Shifts

SMA Solar Technology AG, Germany’s biggest solar maker, reported a wider-than-expected loss because demand shifted from its home market in Europe toward Asia.

SMA incurred a net loss of 67 million euros ($92 million) in 2013, the Niestetal-based company said today in a statement. That compares with the 62.4 million-euro-loss average estimate by seven analysts surveyed by Bloomberg.

The shares fell the most in a month. SMA is the top maker of inverters, which convert solar power for use on the grid.

“In order to remain the No. 1 supplier, it is critical for SMA that it delivers on its promises of cost reduction and expansion into China, Japan” and emerging markets, Cormac Gilligan, a solar analyst at IHS Inc., said in an e-mailed statement.

SMA has cut jobs and is reducing costs in a bid to counter falling sales in Europe. It expects revenue to improve to as much as 1.3 billion euros this year from 933 million euros and an operating profit of as much as 20 million euros even as price pressure accelerates amid subsidy cuts in the region.

SMA, which has invested 300 million euros in the last three years on research and development, is developing a “completely new product platform for all applications” that will lead to lower material costs, Chief Executive Officer Pierre-Pascal Urbon said today on a call with analysts.

China Market

Besides cutting costs, SMA needs to do more to sell its products to Asia, IHS’s Gilligan said. China and Japan will account for 44 percent of global photovoltaic installations this year, and for 35 percent of inverter revenues, he said. “SMA currently has a very minor position in both of these markets.”

SMA in February agreed to sell a 20 percent stake to Danfoss A/S in exchange for its inverter business and a procurement and sales partnership that will increase revenues in markets including China and the U.S. SMA’s 2012 purchase of a majority stake in China’s Jiangsu Zeversolar will help it win access to the Asian country’s market, Urbon said last year.

SMA fell as much as 9.6 percent in Frankfurt, the steepest intraday drop since Feb. 27. The shares were down 7.5 percent, at 41.92 euros, as of 2 p.m. local time.

Copyright 2014 Bloomberg

Lead image: Cost cutting sign via Shutterstock

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