SMA, the world's largest solar inverter maker, slashes its full-year targets

SMA Solar Technology, the world’s largest solar inverter maker, has slashed its full-year targets just days after its chief executive described the company’s outlook as challenging.

SMA said demand for solar inverters had recovered slightly since mid-summer, with the trend of cutting solar incentives in Germany, the world’s largest solar market, blamed as a fallout from the eurozone debt crisis.

Inverters play a critical role in the solar industry by feeding the electricity generated by solar panels into the grid in a form that allows them to be used in a variety of applications.

It is understood that the company's profit target is now facing certain challenges, but it can still maintain an operating margin between 21% and 25% this year.

SMA, Power-One's biggest competitor, said sales for 2011 were now in the range of 1.5 billion euros to 1.7 billion euros, compared with a previous budget of 1.5 billion euros to 1.9 billion euros.

This year's earnings before interest and taxes (EBIT) are expected to be between 220 million euros and 300 million euros, down from the previous forecast of 315 million euros to 475 million euros, and equivalent to at least 15% EBIT.

Because solar power is much more expensive than traditional forms of energy, the solar industry still relies on subsidies for support. Cuts in incentives in Germany and Italy have hit demand for inverters.

Solar inverter production surged last year to meet a surge in demand in Germany and Italy, as customers rushed to buy solar panels before governments began phasing out incentives.