SMA Solar’s H1/2022 Financials Take A Beat

• Continued supply challenges adversely impact SMA Group's sales and earnings in H1/2022
• Annually, sales declined to €471.9 million, and EBITDA dropped down to €16 million
• Management has reiterated 2022 guidance with strong order backlog and anticipation of supply chain improving in H2/2022

German solar inverter maker SMA Solar Technology AG blamed 'persistent supply difficulties' for electronic components' impacting its financials in H1/2022 as net income declined to -€10.6 million compared to €13.3 million earned a year back, however its order intake continued to be high.

During the reporting period, SMA sold inverters with a total power of about 5.8 GW, collecting about €471.9 million in sales, down from €488.3 million in H1/2021 (see COVID-19 Brought Down SMA Solar's H1/2021 Sales).

Sales were at par with last year in the commercial and industrial (C&I) and large scale project solutions segments due to high prices, although there were also supply difficulties and project postponements. However, a shortage of materials hampered its ability to meet high demand in the home solution segment.

The company's EBITDA, by the end of the first half of 2022, had decreased to €16 million, from €38 million of H1 2021.

In the wake of this low-key performance, Chief Executive Officer SMA Jürgen Reinert said, "The ongoing highly strained supply situation is taking a significant toll on the development of sales and earnings. As in numerous other industries, the difficulties relating to the supply of electronic components are also affecting European inverter manufacturers, illustrating once again the dependency of global supply chains on the Asian markets. We have therefore initiated a series of measures to improve our long-term ability to deliver."

Nonetheless, management confirmed its previous annual guidance of sales between €900 million and €1,050 million and EBITDA of between €10 million and €60 million. The confidence is based on the anticipation of an improvement in the supply situation in H2/2022. Expecting profitable sales growth from 2023 onwards, SMA is currently preparing a new GW fab at the Kassel site and doubling production capacity by 2024 (see SMA Solar To Expand Capacity To 40 GW By 2024).

Order backlog for SMA Solar improved 23% from the previous quarter to €1,290 million, comprising €861 million for products and remaining for services. This, it said, more than secures 2022 sales guidance since the company expects a significant part of the current product order backlog to be realized as revenue in 2022.

Commenting on SMA's overall H1/2022 results, Cowen analyst Jeffrey Osborne opined, "SMA retains solid exposure to European solar demand with Europe accounting for 62% and Germany representing 31%. 2022 remains a transition year as the company attempts to reestablish its positioning in resi and commercial. We look for signs of margin improvement (impacted by underutilization in C&I and Large Scale & related to supply constraints) as management (new CFO to start in December) works toward its 8-10% EBIT margin target by 2025."