The Managing Board of SMA Solar Technology AG (SMA/FWB: S92) estimates that the global photovoltaic market will experience subdued growth in 2012. Forecasts are clouded by uncertainty about massive cuts to solar power subsidies and the expected decline in market development throughout Europe. The Managing Board believes that the radical reduction in subsidies, particularly in Germany, will lead to lower demand for medium to large-scale PV plants. At the moment, it cannot be predicted whether Asian and American markets can fully compensate for the decline. SMA will continue to pursue its 2012 internationalisation strategy and invest even more into technology development.
The Managing Board of SMA Solar Technology AG is expecting only moderate growth in the global photovoltaic market in 2012 and a decline in the market remains a possibility. Growth in European markets will be impacted by massive cuts to incentive programs, especially in Germany where radical cuts to solar power subsidies were hastily adopted. This will lead to a market downturn for medium to large-scale PV plants. “SMA depends on the global market. Declining demand in Europe will thus affect the bottom line of SMA,” says Pierre-Pascal Urbon, Speaker of the Managing Board and Chief Financial Officer.
In light of these changes in the solar industry, the SMA Managing Board predicts that 2012 sales will decline to €1.2 billion to €1.5 billion with an EBIT margin of between 5 percent and 10 percent. “In terms of target profitability, SMA is above the German electrical industry but below the figures the company reported from the previous year. Technological innovations alone are not enough to compensate for such a sudden drop in sales. Given the current price level of PV plants, foreign markets will develop at a faster pace. In response, we will pursue our internationalisation strategy even more aggressively and increase foreign sales to over 80 percent. This will allow us to significantly reduce our dependence on the German photovoltaic market,” explains Pierre-Pascal Urbon.
SMA will invest over €100 million in research and development to drive the key technologies of tomorrow. “The success of the energy revolution depends on technologies for managing decentralised energy production and integrating energy storage solutions. By focusing on strategic areas such as energy management and grid integration at an early stage, SMA is currently able to offer solutions that can meet the demands of the future,” remarks Mr. Urbon. “Our expertise allows us to play an active role in ushering in the global energy revolution. It not only helps us to stand apart from the competition, but also allows us to lower system costs.”
PV plant prices have actually gone down by almost 60 percent since 2008. According to Mr. Urbon, the lower prices are primarily the result of technological innovations. “Today photovoltaics are becoming commercially competitive and are being used on an increasing global scale. Thanks to a wide range of high quality and flexible products combined with subsidiaries in 19 countries and a tight-knit service network, SMA is uniquely positioned in the photovoltaic market. SMA has the financial strength to take advantage of future growth opportunities on its own,” says the Speaker of the Managing Board.
The Managing Board predicts an increase in sales in all business areas over the coming years. However, due to the foreseeable changes in different incentive programs and the generally high dynamism of global photovoltaic markets, accurate forecasts are not currently possible.