SMA tightens supplier, stockpiling strategies as delivery constraints set to bite

SMA Solar Technology saw inverter sales decline in the first half of 2021 and warned of potential delivery capacity constraints in H2 because of the ongoing strained supply of electronic components.
Between January and June 2021, the firm sold solar inverters with an accumulated output of around 6.8GW, compared to 7.1GW in the same period last year, and saw sales decline 5% year-on-year to €488.3 million (US$573.1 million).
The dip in sales was put down to a reluctance among small and medium-sized businesses to invest in the first few months of the year due to continuing uncertainties surrounding the coronavirus pandemic.
SMA’s large-scale and product solutions segment, which focuses on international power plant markets with its more powerful string inverters, made the largest contribution to sales in the first half of the year, accounting for 45.9%, with the Americas region making up most of the unit’s sales.
Despite the decline in sales, the company generated earnings before interest, taxes, depreciation and amortisation (EBITDA) of €38.1 million in H1 2021, representing a 59% increase on the same period last year, boosted by an increase in EBITDA margin to 7.8%, compared to 4.7% in H1 2020.
SMA CEO Jürgen Reinert said the EBITDA rise was thanks in part to an improvement of the company’s product mix and cost structure.
While SMA maintained its production and supply chains in the first half of the year despite the challenges posed by COVID-19, a shortage of electronic components had a “minor overall impact” on the level of sales.
Supply issues have also been noted by rival inverter supplier Enphase Energy, which said in its Q2 results statement that it was beset by supply constraints related to the AC FET drivers used in its flagship microinverter products.
Faced with the potential of delivery capacity constraints in H2, SMA’s board has implemented tighter and more intensive supplier management policies and has put in place a stockpiling strategy.
Nevertheless, the board has confirmed its 2021 sales and earnings guidance as published in February, which forecasts an increase in sales to between €1,075 million and €1,175 million and EBITDA in the range of €75 million and €95 million.
The board is said to be confident that lower production costs and the leveraging of economies of scale accompanied by a levelling off of price declines will bolster both SMA’s profitability and the portfolio streamlining to focus on higher margin products.
While the company recorded a drop in H1 sales within its business solutions segment, which is focused on medium-sized PV systems, Reinert said orders in this unit improved in the second quarter, adding: “We therefore expect positive sales and earnings development here as well in the second half of the year.”