SMA Lowers 2018 Guidance Range By 6%-15%

Citing Module & Inverter Overcapacity In Chinese Market Along With Developers Shifting Project Implementation To 2019, SMA Solar Brings Down Sales Guidance For 2018
02:12 AM (Beijing Time) - 01. October 2018
sma revised guidance 2018

Key Takeaways

  • Feeling the impact of Chinese policy decisions announced in May 2018, SMA has revised it 2018 sales and earnings guidance
  • The new guidance seeks to achieve sales of €800 million and €850 million ($930 million to $988 million), compared to  €900 million to €1,000 million before
  • It is also expecting break-even to slightly negative EBITDA (after one-off effects from restructuring) for 2018, which was previously guided to reach €90 million to €110 million ($102 million to $125 million)
  • Product innovations in major PV markets in last part of the year and continuing well within 2019 will be the company’s focus

After reporting increased sales in H1/2018 and looking forward to H2/2018, SMA Solar Technology AG isn’t so sure anymore about the outlook (see SMA Solar Sold More & Earned More In H1/2018). Citing oversupply in the market leading to a sharp fall in prices and project postponements due to China’s policy changes announced on May 31, 2018 (referred to as 531) the German inverter leader has brought down its sales and earnings guidance for  2018.

Compared to the previous sales guidance of €900 million to €1,000 million ($1.02 billion to $1.14 billion), it now expects to end 2018 with €800 million and €850 million ($930 million to $988 million), that’s a reduction between 6 and 15%.

The massive and unexpected reduction of the PV expansion targets by the Chinese government has led to enormous excess capacity in module and inverter production in China. As a result, Chinese manufacturers are putting increasing pressure on international markets,” said SMA CEO Pierre-Pascal Urbon. “This has once again exacerbated the already steep decline in prices in all markets and segments. In recent weeks, we have seen that project developers and investors are increasingly delaying the implementation of PV projects until next year in anticipation of even lower prices. Against this backdrop, SMA is currently recording incoming orders below expectations.”

To deal with the situation, the management says it will focus on product innovations in major PV markets in the near future, which it says will help it quickly return to profitability in the current market scenario. The other structural changes it said the company will undertake include reduction of complexity in the areas of operations and technology, the outsourcing of activities and the global adjustment of administrative areas. These measures will be adopted by the end of the year.

These will lead to one-off costs, it says, that will negatively affect earnings. The managing board is expecting break-even to slightly negative EBITDA (after one-off effects from restructuring) for 2018, which was previously guided to reach €90 million to €110 million ($102 million to $125 million). However, SMA is expecting sales growth and positive EBITDA for 2019.

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani