German solar inverter supplier SMA Solar Technology had a solid run in 2023 led by the Large Scale and Project Solutions segment as demand slows down for Home and Commercial & Industrial Solutions segments. The management expects further growth in 2024 according to its preliminary financial results.
An annual increase of 78.6% to over €1.904 billion ($2.06 billion) in total sales last year helped it conclude the year 'extremely successfully,' as its EBITDA improved from €70 million to €311 million ($336 million). Its shipments grew by 68% annually from 12.2 GW in 2022 to 20.5 GW in 2023.
The management attributes persistently high demand for its products and the easing of delivery situation to have contributed to this growth.
It was the Large Scale and Project Solutions segment that doubled its annual sales contribution by over 89% to €845 million ($914 million) with an EBIT of €103.8 million ($112 million).
Sales increased in both the Home Solutions and Commercial & Industrial Solutions segments by 73% and 65% annually to €580.2 million ($627 million) and €478.9 million ($518 million), respectively.
At the end of 2023, SMA's backlog remained at a high level of €1.705 billion ($1.84 billion) even though it dropped from €2.077 billion at the end of 2022 (see SMA Solar Exceeds Revised 2022 Guidance). It includes €1.33 billion ($1.44 billion) in product business.
The German company revealed that incoming orders declined as anticipated in H2/2023 compared to H1. It was due to the majority of the Home Solutions and Commercial & Industrial segment orders being already in place by Q1. Incoming orders slowed down in Q4 last year due to changing market conditions.
"Despite the changed market conditions and the associated higher volatility compared with the previous year, we intend to continue our profitable growth overall," said SMA CFO Barbara Gregor.
It has high hopes from the Large Scale & Project Solutions segment where high order backlog and incoming orders will boost both sales and earnings. In the C&I Solutions segment, sales are expected to grow slightly in 2024, but it sees earnings to be at the same level as in 2023.
"In the Home Solutions and Commercial & Industrial Solutions segments, we do not anticipate an increase in the order intake before the second quarter," added Gregor. "Due to this seasonal development and our increased future investments in new products and solutions, we therefore expect a decline in sales and earnings in the Home Solutions segment compared with 2023."
Confident of further demand from the large-scale segment, the management has forecast 2024 sales of €1.95 billion to €2.22 billion ($2.11 billion to $2.40 billion). EBITDA is expected in the range of €220 million to €290 million ($238 million to $313 million).
Jeffrey Osborne of TD Cowen opines, "Guidance implies the company is on track to achieve its 2024 target of double-digit EBIT margin with expected contraction from 14.2% EBIT margin in 2023."
Late last year, SMA had announced plans to establish a 3.5 GW solar inverter manufacturing plant in the US, inspired by the Inflation Reduction Act, while growing its local German capacity to 40 GW. However, the company has not revealed any specific location as yet (see German Inverter Producer Announces US Manufacturing).
SMA will release its audited consolidated financial statements and annual report for 2023 on March 27, 2024.