Earnings drop forecast: SMA Solar shocked investors – expectations shattered

Earnings are expected to collapse
SMA Solar shocks investors – expectations shattered

June 19, 2024 at 4:51 pm

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At SMA Solar, five months later, none of the optimism left at the start of the year remains. The company collects forecasts for sales and profits. One reason is that warehouses are full, and another reason is customer reluctance due to political uncertainty. One analyst speaks of a lot of optimism on the board.

At solar technology supplier SMA Solar, business with private and corporate customers is slowing. So the company based in Nestital, Hesse, cut its sales and profit forecasts for this year dramatically and sent the shares, which were already on the verge of falling out of the MDAX index, into a downward spiral: they collapsed 28 percent to 30 euros – a four-year low.

The inverter manufacturer warned that sales will not grow as expected in 2024, but will shrink by up to a fifth, and the operating result (EBITDA) will fall by up to three-quarters. Incoming orders have not increased yet because installers and dealers are still sitting in full warehouses.

The company explained that elections in the European Union and the United States, which could affect the investment climate in renewable energy, caused more uncertainty. After the European elections, experts fear headwinds for the “Green Deal” announced by European Commission President Ursula von der Leyen and the shift towards climate neutrality. However, SMA expects continued strong growth for the project business, it said.

The SMA raised its targets three times last year. In the end, the company achieved revenues of 1.9 billion euros. EBITDA rose to €311 million. The company had already started the current year with greater caution. Sales should rise to 1.95 billion to 2.22 billion euros – and the SMA now expects 1.55 billion to 1.7 billion. EBITDA was already expected to fall to between 220 million and 290 million euros. Now it should be 80 million to 130 million. The SMA warned that the decline may also be due in the first half of the year.

Analysts at Jefferies were surprised by how much the SMA affected the outlook. An analyst from Oddo BHF believes that the reference to the elections is just a pretext. Perhaps the board was too optimistic and reducing inventories was taking longer than expected.