SMA sold more than 8 GW inverters in 2016 – further price drop expected

1/27/17, 9:10 AM -

Last year, it went well for SMA, at least as far as sales were concerned. The company has reached a new record of inverter sales. In the medium term, the upward trend will continue. There are several reasons for this.

SMA sold more inverters last year than ever before - prices dropped by 20 percent and are expected to decline further.

The German inverter manufacturer continued to grow last year. At least as far as the inverter performance is concerned, the company has reached a new record. In the year 2016, the Hessian inverters sold with a total output of more than 8 gigawatts. This is an increase of 9.5 percent compared to the same period of the previous year, when they sold inverters with a total output of 7.3 gigawatts.

Average sales price dropped by 20 percent

However, despite the higher sales of equipment, sales are slightly declining to around 940 million euro in 2016. SMA generated sales of 981.8 million euros a year. This is mainly due to the unexpectedly sharp decline in average sales prices by almost 20 percent. In the current fiscal year 2017, the management board also expects a further drop in prices on the inverter market.

Result is within the forecast

Despite the drop in prices, SMA was able to increase operating earnings before interest and taxes (EBIT) to approximately EUR 65 million. In 2015, SMA achieved an EBIT result of 43.3 million euros. With these sales and operating results, the company is within the forecast of the management board for the financial year ended.

Further price drop expected

This year, however, SMA will not be able to catch the falling prices as it did last year. The management board expects revenues to drop by between 830 and 900 million as a result of continuing high price pressure as well as market and segment shifts. Earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to fall to EUR 70 to 90 million. "The 2017 financial year will certainly not be easy for SMA," said Pierre-Pascal Urbon, CEO of SMA. "However, we have already proven in the past that we can counteract the enormous price pressure of our industry by means of technical innovations and systematic fixed cost reductions."

New technologies boost sales

In the medium term, the company is therefore continuing to see itself on the upswing for various reasons. The management board therefore expects operating cash flow to continue to grow and net liquidity to grow to more than EUR 400 million in 2017. "SMA has successfully continued its path to more profit and higher cash flow in 2016," said Pierre-Pascal Urbon, SMA's Chief Executive Officer. He predicts that photovoltaics, as one of the most innovative technologies of the 21st century, will become one of the most efficient energy carriers and the carbon dioxide from the energy mix due to the enormous technological advances. "The future generation of energy will be decentral, regenerative and digital," Urbon emphasizes. "This creates attractive opportunities for specialists in environmental and communication technology."

Sustained strengthening of competitiveness

These opportunities will provide SMA with a further boost. The Board of Management will present new products and innovative solutions for the digitalization of the energy industry on today`s Capital Market Day. From 2018 onwards, these will lead to an improvement in profitability and a sustained strengthening of the company's competitiveness. "SMA will use digital energy management to achieve the transparency of the energy flows across various sectors, such as photovoltaics, heat and electricity, and optimize the overall energy costs at the local level," Urbon outlines the announced innovations. "With our innovation, we are entering new technological fields and entering into strategic partnerships." With the future offer of services, photovoltaics will be an integral part of the new energy market, he says. In addition, the gross margin of 2018 will have a positive effect. (SU/HCN)

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