SMA Solar, a leading manufacturer of solar inverters based in Niestetal, Germany, has faced a significant downturn in its financial performance for the fiscal year 2024. The company reported a turnover of 1.530 billion euros, a staggering 19.7 percent decline compared to the previous year. This downturn has raised concerns among investors and analysts alike, particularly as SMA Solar's earnings have plummeted into the red.
The primary factors contributing to this decline were lower revenues in the Home Solutions and Commercial & Industrial Solutions segments. The gross margin also took a hit, falling from 29.4 percent in 2023 to just 16.5 percent in 2024. This sharp decrease in profitability was reflected in the company's operating result before interest, taxes, and depreciation (EBITDA), which collapsed to a loss of 16 million euros, down from a profit of 311 million euros the previous year.
According to SMA Solar, the reasons for this dramatic drop include a combination of lower fixed cost degression due to weaker sales, increased costs, and significant write-downs associated with ongoing restructuring measures. The company saw its EBIT plunge from a healthy 269.5 million euros to a loss of 93.1 million euros. As a result, the consolidated profit halved to 117.7 million euros, translating to a loss per share of 3.39 euros, down from a profit of 6.50 euros in 2023.
In terms of operational performance, the total inverter output sold decreased slightly to 19.5 gigawatts, indicating a potential slowdown in demand. By the end of the year, SMA Solar's net liquidity had dropped to 84.2 million euros, down from 283.3 million euros in 2023. The order backlog also fell to 1.3556 billion euros, further signaling challenges ahead for the company.
Despite these setbacks, SMA Solar remains optimistic about its future. On March 27, 2025, the company reaffirmed its guidance for the current fiscal year, projecting revenues between 1.5 and 1.65 billion euros and aiming for an EBITDA of 70 to 110 million euros. This outlook is crucial as the company seeks to return to profitability.
Investor sentiment, however, has been cautious. Following the announcement, SMA Solar's stock price dropped by 9.7 percent, trading at 19.34 euros. The market's reaction reflects a broader concern about the company's ability to navigate its current challenges, especially in light of fierce competition in the solar market, particularly from China.
In a bid to address its financial woes, SMA Solar is undergoing a significant restructuring process. The company has announced plans to cut approximately 1,100 jobs globally, with around 700 positions being eliminated at its headquarters in Niestetal and 400 more abroad. This reduction is expected to be completed within the next six to eight weeks.
Olaf Heyden, who has been appointed to oversee the transformation, explained that the restructuring aims to achieve savings of 150 to 200 million euros over the next two years. "About half of these savings will come from job cuts," Heyden stated. The remainder will be achieved through reductions in various corporate expenses, such as material costs and external services.
Furthermore, SMA Solar is reevaluating its presence in international markets. The company has already closed its branch in Turkey and reduced operations in South Africa, indicating a strategic withdrawal from less profitable areas. This realignment is part of a broader strategy to streamline operations and focus on more lucrative markets.
Jürgen Reinert, the CEO of SMA Solar, emphasized the importance of efficiently utilizing resources. He noted, "It is essential that we deploy our resources sparingly and purposefully." The ultimate goal is to position SMA Solar more favorably in the market by 2030, ensuring a sustainable future for the company.
The challenges faced by SMA Solar are not unique to the company but reflect broader trends in the solar industry, which has been grappling with fluctuating demand and increased competition. As the market evolves, companies like SMA Solar must adapt to remain competitive and viable.
In summary, SMA Solar's fiscal year 2024 was marked by significant losses and operational challenges, prompting a comprehensive restructuring plan aimed at stabilizing the company and returning to profitability. While the outlook for 2025 remains cautiously optimistic, the company must navigate a complex landscape to achieve its goals.
