SMA to axe 600, may face loss

German PV inverter group SMA Solar today warned investors it will “break even at best” this year and announced plans to cut 600 jobs amid “cut-throat competition” in the industry.

SMA, which has been battered by sinking demand in its core European solar markets and new competition from Asia, said it now expects sales of between €850m ($1.14bn) and €950m, down from a previous guidance of €1bn-1.3bn.

The company   –   the global market-leader in inverters  –  could face a loss of about €45m if sales come in at the low end of that range, it warned.

The 600 job cuts in Germany and worldwide are planned by the end of next year, said SMA, partly through expiring temporary posts. The group currently employs about 5,000 people.

CEO Pierre-Pascal Urbon said: “After intensive conversations with customers at the key trade fairs in China, Europe and North America as well as our own market analysis, we expect to see a stagnation in the worldwide demand for PV systems for 2014 as a whole.

“Particularly in the core markets in Europe, demand has collapsed even further than expected due to further cuts in subsidies.”

Urbon said SMA expects North America, Japan and China to between them account for 60% of total global demand this year.

“The cut-throat competition is keeping pricing pressure high in the industry,” said Urbon.

The announcement marks the second major round of job cuts by SMA in as many years.

Urbon said: “In order to generate sustainable earnings, SMA will therefore need to do even more than previously planned to reduce costs. We very much regret that further job cuts in Germany and abroad are unavoidable due to the changes in the market.”