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SMA holds the line in Q3, but acknowledges tough times ahead

SMA Solar, Europe’s most valuable PV manufacturer, warned that despite holding its ground financially in 2012, it faces steep challenges in the years ahead as PV demand swings to less penetrable markets abroad.

SMA remains profitable, unlike nearly all cell and module producers, hauling in a net profit of €81m ($103m) during the first three quarters of the year, compared to €126.4m in the corresponding period in 2011. Sales through the first nine months were essentially flat on last year, at €1.2bn ($1.5bn).

Acknowledging that global revenues for makers of PV inverters – of which SMA is the leader – are likely to stagnate or fall next year on sharper competition, SMA is focused intensely on developing products targeting the post-shakeout period of solar energy.

Although the market for large systems “will come to a standstill” in Europe for the foreseeable future, SMA anticipates ongoing growth for its Sunny Central product line in the US and Japan, where many utility-scale projects are underway.

SMA also sees huge opportunities in the growing demand for hybrid solar-diesel power generators in island nations and developing economies.

But the company’s heaviest research bets are on nascent inverter markets beginning to emerge in Western countries, incorporating elements of energy management and storage, and with an eye towards self-consumption and the eventual integration of electric vehicles.

The biggest danger for SMA and other traditional inverter suppliers is that much of the PV demand growth over the next few years will come in places like China, India and South Africa, markets which are either difficult to crack or operating under explicit local-content regimes.

SMA claims to have taken a roughly one-third share of the global PV inverter market last year, but says it has only a “very small” share in China “due to the local competitive conditions”.

SMA shares have taken a beating over the last year due in part to the ongoing rash of solar bankruptcies, and they plummeted last month when the company said its revenues are likely to fall in 2013.

Since then, however, the shares have more or less held the line, rising 1.3% on its latest results to €16.54 – giving the company a market capitalisation of nearly €575m.

By comparison, SolarWorld – the only other PV company left on Germany’s TecDAX index after others like Centrotherm, Q-Cells and Conergy were kicked off – is worth less than €150m.