Inverter giant SMA Solar has impressive first half results but will still close its factories in the US and South Africa

Most of the major solar industry companies' performance in the first half of 2016 was not very good, but the German solar inverter giant SMA Solar's profit performance in the first half of the year was quite impressive. Despite this, under the pressure of inverter market prices, SMA Solar still decided to close its Denver, USA and Cape Town, South Africa factories.

In the first half of 2016, SMA Solar's revenue grew by 15.1% to US$550.3 million, and its consolidated profit was US$21.6 million, mainly from the field of solar energy projects for power companies. The proportion of revenue from overseas markets also increased to 91.1%. SMA Solar also revealed that its performance in July was as strong as the entire second quarter. Looking forward to the whole of 2016, it is estimated that the full-year revenue will be between US$1.058 billion and US$1.169 billion, and the earnings before interest and taxes (EBIT) will also increase compared with 2015.

However, despite the good performance, SMA Solar still has to close the factory. SMA Solar said that since the price pressure in the solar industry has accelerated beyond expectations in recent weeks, it immediately launched further cost reduction measures and will close the Denver factory in the United States and the Cape Town factory in South Africa. SMA Solar said that in order to fight against the continued price pressure, the decision to close the two factories is inevitable. Closing the two factories can improve the capacity utilization of the German and Chinese factories. Despite the closure of the US factory, SMA Solar emphasized that the US market is still very important.

The market believes that concentrating production in Germany and China will allow SMA Solar to increase its production scale. However, the key point is that the price of the inverter market has fallen rapidly, and the downward trend is not convenient. Chinese suppliers are rushing to attack the international market, causing strong price pressure, and even the originally higher-priced markets such as the United States have been affected.

Global inverter shipments will reach 90 GW in 2020, with a total value of US$7.1 billion, an annual growth rate of 11% from 2016 to 2020. However, under fierce price competition, market growth may not necessarily translate into profits, which is probably a major concern for inverter manufacturers.