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© cacaroot dreamstime.com Business | December 04, 2014

SMA Solar Technology lowers forcast - layoffs inevitable

SMA Solar Technology AG has adjusted its sales and earnings forecast for 2014. SMA expects sales between EUR 775 million and EUR 790 million (previously EUR 850 million to EUR 950 million) and a loss of up to EUR 115 million.

The Managing Board gives the further accelerated decline in demand in the European distribution business and project delays in Great Britain as reasons for lowering the forecast for the current fiscal year. Furthermore, earnings are impacted by additional one-time items. "Our previous forecast was based on the assumption of a strong sales upturn toward the end of the year. Unfortunately, markets in Europe have not developed as well as expected. The British government has unexpectedly extended the deadline for the grid connection of large-scale PV plants under the current subsidy regime by one year to March 31, 2016. As a result of this, a large number of projects will be delayed until 2015. In addition, distribution business has declined dramatically in Europe, particularly in Germany. This trend has not been reversed over the last months," said SMA Chief Executive Officer Pierre-Pascal Urbon. According to Urbon, low sales levels and one-time items resulting from the market consolidation are the main reasons for the deterioration in earnings. The success already achieved in material cost reduction could not be recognized in earnings as planned because of effects of volume In order to return to profitability, SMA will further intensify the measures already initiated. The Managing Board is planning to reduce the development budget to approximately EUR 80 million annually by the middle of 2015. SMA is planning to lay off significantly more than 600 employees worldwide by mid-2015. In addition, the Chinese subsidiary, Zeversolar, will be restructured. Urbon stressed that, with expected liquidity of more than EUR 250 million at the end of the year 2014 and an equity ratio of approximately 50% , SMA can finance the transformation from its own resources.
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