Shakeup At SMA – Jobs Likely To Go

German solar inverter and battery storage manufacturer SMA is continuing to feel the pinch from competition and a volatile market, and now jobs are on the line.

Last week, SMA’s Managing Board decided to embark on a company-wide restructuring program, also aiming to find cost savings of an estimated EUR 150 to 200 million. That’s around AUD 241.5 million to 322 million at current exchange rates, an amount the company won’t find down the back of a couch.

“To ensure that SMA can continue to be an integral part of the global energy transition, we must now position ourselves better and fit for the future,’ said SMA CEO Jürgen Reinert. “However, this will require considerable cost savings, which will also make job cuts likely.”

There isn’t any indication as yet as to how many jobs might go.

“We will carefully discuss the steps necessary for this in the coming weeks in cooperation with the representatives of employee co-determination,” said Mr. Reinert.

SMA Chief Financial Officer Barbara Gregor said the firm’s top priority is to increase profitability and strengthen its financial stability, while “keeping an eye on the future”.

“It will now be crucial to quickly concretise our ambitious plans and then implement them in a disciplined and consistent manner,” said Ms. Gregor.

In the first half of this year,  SMA sales reached €759.3 million, down slightly on H1 2023 sales of €778.9 million. In June, the company adjusted its revenue guidance for 2024 downwards from €1.95 billion – €2.22 billion, to between €1.55 billion and €1.7 billion.

In 2023, the company experienced what it said was an “extraordinarily strong” year with consolidated sales increasing by 78.6% to €1.904 billion (2022: €1.066 billion).

Pricing Competition, Inventory Issues

While the company’s Large Scale & Project Solutions segment appears to be doing well, the Home and C&I (Commercial & Industrial) segments have been struggling. This is as a result of – according to SMA – a very inconsistent market this year, distributors and installers continuing to have high levels of inventory and Chinese manufacturers with excess capacity putting further downward pressure on prices.

SMA manufactures high quality solar inverters, which were particularly popular in the earlier years of Australia’s rooftop solar revolution. But these days, the difference in price between SMA kit and good quality inverters from Chinese companies can be huge and tempting to buyers. According to SQ’s solar inverter comparison table, a 5kW SMA Sunny Boy inverter costs around $1900 retail, not including installation. Chinese company GoodWe’s 5kW inverters cost around $900 – $1300 depending on the model.

This isn’t to say SMA inverters aren’t worth the scratch or GoodWe inverters are somehow better – but if homeowners have a tight budget, it’s understandable they might gravitate towards a cheaper solution. This is even though the inverter is the real workhorse of a rooftop solar system, and the component most likely to fail first.

In the last 20 years, around 135GW of SMA solar inverters for large, medium and small-scale applications have been installed world-wide. Sticking with the GoodWe comparison, it has been manufacturing the devices since 2012 and claims 71GW of commercial and residential installations.

SMA isn’t the only non-Chinese top-shelf inverter manufacturer faced with slashing its workforce to stay in the game. Austria’s Fronius shed 350 employees in early June this year, followed by 650 more a few weeks later.