SMA Solar Technology AG Considerably Increases Operating Earnings And Net Cash Flow In First Nine Months Of 2016
SMA Solar Technology AG increased its sales and earnings from January to September 2016 despite high price pressure in all market segments and regions. SMA Group sales rose by 3.2% year on year to €708.8 million (Q1-Q3 2015: €686.9 million). Operating earnings (EBIT) increased considerably to €59.4 million (Q1-Q3 2015: €9.9 million). The main earnings driver was the segment for large-scale PV power plants (Utility). In addition, the segment for commercial PV systems (Commercial) continued its positive business performance. From January to September 2016, SMA sold PV inverters with a cumulative power of 5.7 GW (Q1-Q3 2015: 5.0 GW). SMA’s high international share of sales of 90.0% (Q1-Q3 2015: 86.9%) underscores its strong international positioning.
As a result of increased sales volumes and the fixed cost reduction, EBITDA improved considerably from January to September 2016 to €107.9 million (EBITDA margin: 15.2%; Q1-Q3 2015: €64.6 million, 9.4%). The result includes one-time items from the consolidation of worldwide production sites. Consolidated earnings amounted to €36.9 million (Q1-Q3 2015: €–13.7 million). Earnings per share thus amounted to €1.06 (Q1-Q3 2015: €–0.39).
The considerable increase in SMA’s flexibility and the attractiveness of the business model can be seen in its net cash flow in particular. The net cash flow increased considerably in the first nine months of 2016 to €123.6 million (Q1-Q3 2015: €70.4 million). Net cash increased to €352.8 million (December 31, 2015: €285.6 million). With an equity ratio of 49.7% (December 31, 2015: 49.1%), SMA has a comfortable equity capital base and continues to boast a very solid balance sheet structure.
“In a market environment characterized by increasing price pressure, SMA has shown its strengths in the first nine months of 2016 and considerably increased its net cash flow. Thanks to our strong product portfolio for large-scale PV power plants and medium-sized PV systems and our service business, we compensated for the market-driven decline in small PV systems and successfully defended our global market leadership,” explained SMA Chief Executive Officer Pierre-Pascal Urbon. „In the coming months, the policy of Donald Trump president-elect will be an important issue for the industry. While the introduction of import duties on Chinese goods in the U.S. as it is planned by Trump could be advantageous for us, he has never made a secret of the fact that he doesn’t think much of renewable energy. However, the current U.S. incentive programs (Investment Tax Credit) were passed jointly by Democrats and Republicans in Congress.
Therefore, the situation should not be overestimated at present. Another factor influencing the market is the halving of the Chinese photovoltaic market. To tap into foreign markets, Chinese competitors, who are fighting for survival, are trying to offset the disadvantages in the functionality and quality of their products, and the lack of service infrastructure with an aggressive pricing policy. It is alarming that many Chinese PV inverters do not even come up to legal standards. In contrast, SMA has a complete, multi-award-winning product portfolio for all power ranges, certified for compliance with international standards, and a global sales and service network that allows us to support our customers on-site. Our internationalization strategy and consolidation of our production locations are absolutely the right course. Our goal is to at least absorb the market fluctuations while also keeping costs as low as possible. With our solid financial position, we are well-placed to deal with the changes ahead.”
The SMA Managing Board confirms its sales and earnings forecast for fiscal year 2016 adjusted on October 24, 2016. This forecast anticipates sales of €900 million to €950 million and a significant increase in operating earnings (EBIT) year on year to between €60 million and €70 million. The earnings forecast takes into account one-off items from the consolidation of global production sites of a low double-digit amount. However, the positive impact on earnings from the disposal of SMA Railway Technology GmbH is no longer considered in the forecast.
