SMA reports loss due to Europe, China and one-time-items

Niestetal, Germany - SMA Solar Technology AG recorded a sales decline of 13.6% to EUR805.4 million (2013: EUR932.5 million) primarily as a result of the market development.

In Europe and China, demand for PV inverters fell last year due to a change in political conditions. The decline was not offset by the growth in North America. In 2014, the heavy price pressure continued in all markets and market segments. As measured by the volume of investment, global demand fell by 10% year on year to EUR3.9 billion (approximately 40 GW of newly installed power). With a share of approximately 20%, SMA defended its position as a global market leader in a dynamic and highly competitive market environment.

In 2014, the international share of sales increased to 76.0% (2013: 71.0%). The most important foreign markets were North America, Australia, Japan and Great Britain. Operating earnings (EBIT) were EUR-164.9 million (2013: EUR-89.1 million). The EBIT margin was -20.5% (2013: -9.6%). The operating result includes provisions for the planned staff reduction, further one-time items, for example such as impairment, and the losses of Chinese subsidiary Zeversolar totaling EUR129.7 million. The operating result before provisions for the staff reduction is in line with the published forecast. The consolidated earnings amounted to EUR-179.3 million in the reporting period (2013: EUR-66.9 million).

"We are not satisfied with our business performance in 2014. Due to our high fixed costs, we were not able to respond to the significant decline in demand in Europe fast enough. Demand in Germany almost halved last year as a result of political decisions. For the current fiscal year, we are expecting a further decline in the installation of new PV systems in Germany. In addition, our result in 2014 was impacted by the losses of our Chinese subsidiary Zeversolar and considerable one-time items. We are planning extensive transformation measures to generate profits from sales of only EUR700 million. In this regard, SMA unfortunately needs to lay off approximately 1,600 employees (full-time positions) worldwide. In the scope of the severance program that ended on March 25, SMA was expected to be able to realize the staff reduction in a short period of time without involuntary layoffs. Currently, there is a gap of approx. 100 full-time-positions in Kassel/Niestetal in order to achieve the planned target for staff reduction. The fact that we will be able to realize the planned staff reduction without involuntary layoffs in a short period of time is a very good result. While the personnel adjustments are extremely painful for SMA, they are unfortunately necessary to return to profitability. With net cash of EUR225.4 million and an equity ratio of approximately 47%, we can finance the transformation from our own resources," explained SMA Chief Executive Officer Pierre-Pascal Urbon.

Especially the SMA workers council declared its will to find alternative solutions to involuntary layoffs for the remaining staff reduction. For the first quarter of 2015, the SMA Managing Board is anticipating sales of EUR210 million to EUR230 million (Q1 2014: EUR176.3 million) and operating earnings (EBIT) of EUR-5 million to EUR-10 million. It is therefore expecting business performance to be more positive than in the same period of the previous year (Q1 2014: EUR-22.0 million). SMA will make a strong start to the second quarter with an order backlog of more than EUR150 million (excluding service business). The Managing Board therefore confirms the sales and earnings forecast for the current fiscal year and predicts sales of EUR730 million to EUR770 million. Given that the savings from the transformation measures currently being implemented will only be recognized in profit or loss from mid-2015 at the earliest, the SMA Managing Board is forecasting negative operating earnings (EBIT) of EUR-30 million to EUR-60 million for the current year. The SMA Managing Board expects to return to positive operating earnings (EBIT) in 2016.

Source: IWR Online, 26 Mar 2015