SMA Solar shuts factories in US and South Africa as price crunch looms

PV inverter group SMA Solar will shut factories in the US and South Africa as it moves to protect profitability against an “unexpectedly strong” downwards pressure on prices that will intensify in 2017, the German company said today.

The production plants in Denver, Colorado and Cape Town will go in a bid to “sustainably improve the cost structure by consolidating the global infrastructure”, said SMA.

The move by SMA – the world’s largest inverter supplier last year according to analyst IHS – is a further signal of the mounting challenges for major PV OEMs, following an unexpectedly grim outlook from SunPower earlier this week that sent that company’s shares plunging.

SMA Solar said: “The acceleration of price pressure in the solar industry has been unexpectedly strong in recent weeks. We therefore immediately initiated measures to lower our break-even point even further.

“The closure of our production locations in Denver and Cape Town was extremely difficult for us. However, this step is unavoidable if we are to lastingly counteract the persistent price pressure and to achieve better production capacity utilisation in China and Germany in the future.”

The Denver closure will result in about 280 job losses, said SMA It did not give details of the staff impact in South Africa, where it opened its plant in 2014 to tap into that country’s fast-emerging renewable energy sector.

Customers will be served from SMA’s production facilities in Germany and China.

The German group said the US market “remains highly important to us”, and it will keep its sales and service facility in Rocklin, California.

SMA has only recently emerged from a major cost-cutting round that saw it cut one-third of its staff in response to a downturn in European markets.

The plant closures came against a background of rising sales and profits in the first half of 2016.

SMA Solar registered a €19.4m ($21.6m) net profit for the January to June period, turning around a loss of €21.4m for the same period in 2015. Sales grew to €494.1m from a year-earlier €429.3m.

The company maintained its existing guidance for profits before tax (Ebit) of between €80m and €120m – but warned that the upper end of that range “is ambitious given the price developments in the solar industry”.