SMA Solar Tumbles With Outlook for Tough Year for Inverter Sales

  • Growth in India and China constrained by standards, cost focus
  • Inverter sales growth will lag boom in PV panel installations

SMA Solar Technology AG fell the most in a year after the German maker of power converters for photovoltaics predicted a tough year for sales in its key markets.

Sales growth for its inverters, which convert direct current from PV panels into alternating current for the grid, said China and India are the two biggest growth markets for its equipment this year. The prospects are constrained because of differing standards for what can be sold there and because customers in both markets are price sensitive.

The outlook released on Friday sent SMA shares down as much as 18 percent in Frankfurt trading, the sharpest decline since January 2015. The company is a bellwether for the industry because it’s the biggest maker of solar inverters, and its equipment is widely used by most of the major panel suppliers.

“Growth areas are the very same as those where price pressures are greatest,” Pierre-Pascal Urbon, chief executive officer at SMA, said in an interview. “China and India are both price-sensitive markets with product specifications that are different to other markets. That’ll put pressure on average global equipment prices.”

SMA forecast that global solar installations would grow as much as 18 percent this year to 60 gigawatts, driven by utility-scale plant expansion in the U.S., China and India. The global market for inverter sales won’t mirror those gains, growing 4 percent to 4.9 billion euros ($5.3 billion) on the year, the company said in a statement.

2015 Outlook

SMA said the outlook means its sales this year may merely match 2015’s result of about 1 billion euros. SMA has cut costs, firing 1,400 workers by the end of last year. It expects operating profit as high as 120 million euros, compared with 30 million euros to 33 million euros last year.

About two-thirds of SMA’s sales are in utility-scale inverters. The company is seeking expansion in retail sales and its partnering with Tesla Motors Inc. in Germany to sell retail solar power systems that incorporate storage and power management.

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