Overview of H1 2016:
- Sales rise to EUR494.1 million (Q1-Q2 2015: EUR429.3 million)
- Positive operating earnings (EBIT) of EUR39.3 million (Q1-Q2 2015: EUR-14.9 million)
- International share again rises significantly to 91.1% (Q1-Q2 2015: 87.2%)
- Financial stability thanks to solid equity ratio of 49.2% (December 31, 2015: 49.1%) and high net cash of EUR294.1 million (December 31, 2015: EUR285.6 million)
- Managing Board confirms its sales and earnings forecast for fiscal year 2016
- Managing Board announces new product solutions and the consolidation of production locations to counter growing price pressure with sustainable cost reductions
SMA Solar Technology AG reported a positive business performance in the first half of 2016 in a market environment characterized by strong price pressure. The SMA Group's sales increased by 15.1% to EUR494.1 million year on year (H1 2015: EUR429.3 million). EBIT was EUR39.3 million (H1 2015: EUR-14.9 million). The main earnings driver was the segment for large-scale PV power plants (Utility). The segment for commercial PV systems (Commercial) also reported a positive performance. Thanks to its international positioning, SMA is continuing to benefit from the growth on foreign photovoltaic markets. The international share of sales was 91.1% in the first six months of 2016 (H1 2015: 87.2%). From January to June 2016, SMA increased its sold PV inverter output by 22.9% to 3.9 GW (H1 2015: 3.2 GW).
As a result of increased sales volumes and the fixed cost reduction, EBITDA improved considerably in the first half of 2016 to EUR73.1 million (EBITDA margin: 14.8%; H1 2015: EUR21.3 million, 5.0%). Consolidated earnings amounted to EUR19.4 million (H1 2015: EUR-21.4 million). Earnings per share thus amounted to EUR0.56 (H1 2015: EUR-0.62).
Gross cash flow improved considerably in the reporting period to EUR60.9 million (H1 2015: EUR-5.1 million). Net cash increased to EUR294.1 million (December 31, 2015: EUR285.6 million). With an equity ratio of 49.2% (December 31, 2015: 49.1%), SMA has a comfortable equity capital base and still has a solid balance sheet structure.
Against the backdrop of the consistently high order backlog of EUR644 million and the expectation of stronger business in the second half of the year, SMA's Managing Board is confirming the sales and earnings forecast for fiscal year 2016 published on January 29, 2016. This forecast anticipates sales of between EUR950 million and EUR1,050 million and a significant year-on-year increase in EBIT to between EUR80 million and EUR120 million. The Managing Board notes that the upper end of the forecast earnings range is ambitious given the price developments in the solar industry.
The Managing Board is anticipating a further intensification of price pressure in 2017 compared to the current year and, in light of this, is announcing the closure of the production locations in Denver, USA, and Cape Town, South Africa. The aim of this is to sustainably improve the cost structure by consolidating the global infrastructure. The Managing Board is also planning targeted investments in technology development and is announcing further product innovations to bolster its market positioning. According to the Managing Board, the effects of the restructuring activities and the product innovations are expected to be seen in earnings within the next twelve months.
"The acceleration of price pressure in the solar industry has been unexpectedly strong in recent weeks. We therefore immediately initiated measures to lower our break-even point even further. The closure of our production locations in Denver and Cape Town was extremely difficult for us. However, this step is unavoidable if we are to lastingly counteract the persistent price pressure and to achieve better production capacity utilization in China and Germany in the future. The American market remains highly important to us. We will be maintaining our presence at the Californian location in Rocklin with Sales and Service moving ahead as well, and we will further boost our leading position on the American market. Moreover, we are planning to further expand our unique positioning with innovative solutions. For example, SMA will be presenting a compact system solution with integrated energy management for the rapidly growing Commercial market segment to the public at Solar Power International in Las Vegas in September 2016," said SMA's CEO Pierre-Pascal Urbon. The solar industry's medium-term prospects are good for those companies emerging successfully from the consolidation phase.
"The cost of solar power generated by PV systems will at last be at a similar level to that of on-shore wind turbines before the end of the decade. This will mean entirely new growth prospects for highly flexible companies such as SMA," stated Urbon.