Solar SMA Stuns Investors: Unfulfilled Anticipations
At SMA Solar, the enthusiasm from back in January isn't felt anymore. The company is falling short of their sales and earnings projections. There are two main culprits - stockpiles and client apprehensiveness due to political turmoil. An analyst is critical of the board's overoptimism.
The company's operations with individual and corporate clients are at a standstill. Based in Hesse, Niestetal, SMA Solar Technology, therefore, significantly reduced their sales and earnings projection for this year, causing their stock, dropped from the MDAX index, to plunge - it fell by 28 percent to 30 Euro - hitting its lowest point in four years.
The growth in sales predicted for 2024 may actually decrease by up to 50 percent, and the operational result (EBITDA) might even decrease by up to 75 percent, the inverter manufacturer cautioned. The new orders are yet to pick up because installers and traders are still holding onto their full stockpiles.
Additional concerns are raised by the upcoming elections in the EU and the USA, which could potentially dampen the renewable energy investment climate, the company explained. Experts predict challenges for the "Green Deal" proposed by EU Commission President Ursula von der Leyen, the transition towards climate neutrality. However, SMA remains optimistic about the growth in the project business, as stated.
SMA had raised their targets three times in the previous year. In the end, the company managed sales of 1.9 billion Euro and an EBITDA of 311 million Euro. For the current year, the company had been more prudent and expected sales to increase to 1.95 billion to 2.22 billion Euro - now SMA anticipates 1.55 billion to 1.7 billion. For the EBITDA, they had set themselves a decline to 220 million to 290 million Euro. Now it should be 80 million to 130 million. Half-yearly, there could also be write-downs, warned SMA.
The analysts of Jefferies are taken aback by how much SMA lowered their projections. An analyst from Oddo BHF attributes the reference to the elections as an excuse. The board may have been too optimistic, and the decrease in inventory levels may take longer than expected.
Read also:
- Despite the economic situation in the solar industry being challenging for MDax companies like SMA Solar, the Chinese solar market continues to show robust growth due to government incentives for renewable energies.
- SMA Solar's reduction in sales and earnings projections has led to the removal of the company from the MDAX index, but analysts believe that the solar energy giant can still capitalize on the ongoing shift towards renewable energies in the solar industry.
- As Chinese companies dominate the global solar energy market, SMA Solar needs to focus on innovation and cost-effectiveness to compete effectively in the rapidly evolving solar energy sector, which heavily relies on renewable energies like solar power.
