The Managing Board of SMA Solar Technology AG (SMA/FWB: S92) is adjusting its sales and earnings forecast for the 2016 fiscal year. The new forecast anticipates sales between €900 million and €950 million (previously €950 million to €1,050 million) and continues to anticipate a significant year-on-year increase in EBIT to between €60 million and €70 million (previously €80 million to €120 million). This forecast adjustment was mainly caused by price pressure emerging in all market segments worldwide since the middle of 2016 and numerous delays in major solar projects. Based on provisional figures, SMA achieved sales of more than €220 million and EBIT of more than €20 million in the third quarter of 2016. In the third quarter, the gross margin was around 25%. High net cash of more than €350 million as of September 30, 2016 underlines the attractive cash flow profile of SMA.
“SMA will also achieve a positive result in the current fiscal year. After a successful third quarter in 2016, we expect weaker business at year-end due to the significant increase in price pressure and numerous project delays in the EMEA and North American regions,” explained SMA Chief Executive Officer Pierre-Pascal Urbon. “SMA has reacted to changes in market conditions in good time. This year, we presented significantly cost-reduced product innovations and solutions to our customers at leading trade fairs in Europe and in the USA. Other innovations also resulting in a decrease in manufacturing costs are planned for the years to come. In the middle of the year, the Managing Board of SMA resolved the closure of the production sites in Denver, USA, and Cape Town, South Africa, at the end of 2016 in order to decrease the Group’s fixed costs and further increase flexibility. The positive effects of product innovations and restructuring activities are expected to be seen in earnings from 2017. With a high equity ratio of nearly 50% and net cash of more than €350 million, SMA is one of the most solid companies in the solar industry. Financial strength is of great importance in view of the market for major solar projects and the long-term service business.”
The new earnings forecast takes into account one-off effects from the consolidation of global production sites of a low double-digit million amount. Some of these one-time items are already included in the earnings for the third quarter. However, the positive impact on earnings from the disposal of SMA Railway Technology GmbH is no longer considered in the forecast. The Managing Board of SMA continues to anticipate the conclusion of an agreement for the disposal of the SMA Railway Technology GmbH subsidiary within the fourth quarter of 2016. Due to antitrust approval requirements, the transaction is now expected to be completed in the first quarter of 2017.
In the first nine months of 2016, SMA is expected to have generated sales of more than €715 million (Q1-Q3 2015: €699.2 million). The Utility business unit, which accounts for more than 40% of sales, was the main sales driver here. International business accounted for around 90% of sales in the first nine months of the fiscal year. The gross margin increased to around 25% year-on-year (Q1-Q3 2015: 19.4%) and EBIT rose to approximately €60 million (Q1-Q3 2015: €3.4 million). SMA generated high operating cash flows and thus increased net cash to more than €350 million as of September 30, 2015 (December 31, 2015: €285.6 million). As of September 30, 2016, the order backlog amounted to €588 million in total and was thus slightly lower than the level of the previous year (September 30, 2015: €629 million). Around €170 million thereof was attributable to the product business (September 30, 2015: €275 million). SMA will publish the quarterly statement January to September 2016 on November 10, 2016.
Source: SMA Solar Technology AG
Date: Oct 24, 2016