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SMA Solar Tumbles in Frankfurt After Lowering Profit Outlook

SMA Solar Technology AG (S92), Germany’s biggest solar-power company by market value, dropped to a two-year low in Frankfurt trading after reducing its profit forecast amid weaker-than-expected demand for rooftop systems.

SMA plunged 12 percent to 49.25 euros at 5:30 p.m. local time, the lowest closing price since Sept. 2, 2009. The company expects earnings before interest and tax of 220 million euros ($300 million) to 300 million euros in fiscal 2011, down from an earlier estimate of 315 million euros to 475 million euros.

“The demand for solar power plants has only marginally improved in many solar markets after the summer months,” Niestetal-based SMA said in a statement. “Contrary to managing-board expectations, SMA has established only a minor upturn in the high-volume business of solar inverters for roof systems.”

SMA is the biggest maker of inverters, devices that convert electricity generated in solar panels for the grid. It’s among solar companies including Bonn-based Solarworld AG to experience slumping sales in Europe, where Germany, Italy and France have cut premiums paid for power from panels over the past 12 months.

Power-One Inc., a Camarillo, California-based peer of SMA, fell as much as 6.9 percent in New York, and traded down 4.4 percent at $6.48 as of 11:30 a.m. local time. Suntech Power Holdings Co. and LDK Solar Co., the world’s biggest solar-panel producers, each dropped as much as 10 percent.

Drag on Market

“SMA’s outlook has always been a very reliable indicator for the overall market and that’s why you see most solar companies falling today,” said Lars Dannenberg, an analyst at Berenberg Bank in London. The solar market slump may cut Germany’s installations to about 5 gigawatts this year, he said.

Bloomberg New Energy Finance, a London-based researcher, estimated in March that Germany would install at least 6 gigawatts of panels in 2011, followed by Italy with at least 4.5 gigawatts.

SMA shares have tumbled 29 percent this year, outperforming a 45 percent decline in the Global Leaders Solar Inverter Index.

On Aug. 12, SMA jumped 18 percent after posting first-half earnings that beat analyst estimates and forecasting higher demand in the second half. Today, it reported a “pleasing development” in the market for large-scale solar power plants, adding that it can’t compensate for the “weak commercial order situation.”

The company also revised its sales outlook, reducing its target to as much as 1.7 billion euros for fiscal 2011 from an earlier estimate of as much as 1.9 billion euros.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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