It blamed the decision on the “persistently challenging market in the Home and C&I sectors”. The company’s earnings before interest and tax (EBIT) for the residential market were €46.6 million (US$48.9 million) in the first nine months of 2024 compared with €136.9 million (US$143.9 million) for the same period 2023. SMA said the decline was “due to the lower sales and price level, a reduced utilisation and the corresponding lack of coverage of fixed costs”.

The C&I sector saw EBIT of €77.2 million (US$81.1 million), an increase from €15.8 million (US$16.5 million) in Q1-3 2023.

By contrast, SMA’s utility-scale business grew significantly in the last year. EBIT of €154.4 million (US$162.1 million) in Q1-3 rose from €47.3 million in the same period 2023. The company attributed the growth to “the high level of sales and associated fixed cost degressions, as well as a profitable product mix”.

The company’s net income for the period was €34.7 million (US$36.4 million), down notably from €180.4 million (US$189.5 million) in 2023. Its order backlog as of September 2024 was €1.44 billion (US$1.51 billion) compared with €2.02 billion (US$2.12 billion) on 30^th September 2023.

Barbara Gregor, CFO at SMA said: “The results for the first nine months of this year in the Home and C&I segments highlight the importance of moving ahead with the implementation of our restructuring and transformation program we just started.

“We will be adjusting the cost base to the lower sales volume and changes in demand. The solar industry is going through a transformation. The measures we have now introduced will ensure that we will continue to play an important role in shaping this market in the future.”

Global residential inverter market uncertainties

SMA’s financial difficulties could prove a significant moment in the PV industry. SMA Solar was the largest inverter manufacturer by revenue in 2016, with a 20% leading market share. By August 2023, the company was the sixth-largest firm in the world, according to rankings from Wood Mackenzie. Chinese giants Huawei and Sungrow had become the largest players by far.

Companies in the residential and small-scale solar inverter market have been making negative headlines recently. Israel-headquartered inverter producer SolarEdge saw its CEO step down in August to aid in the company’s “recovery” from back-to-back drops in quarterly revenues and shipments. And more recently, US microinverter producer Enphase announced 500 job cuts and saw its shipments collapse as a result of the slow US residential market and policy changes in Europe.

In its quarterly statement for January-September 2024, SMA Solar said it expects the European residential and C&I markets to “stagnate” after 2024. It said that government subsidies for PV systems will be largely phased out across Europe in the coming years, while the utility-scale sector will continue to grow.

SMA also identified a shift towards energy storage systems and self-consumption in the residential and C&I markets. This often goes hand in hand with phasing out direct government support for distributed PV, as high penetration of small-scale solar can eventually put a strain on the electricity grid and power pricing. As was the case in Poland over the last year (premium access), government support shifted away from residential PV and towards utility-scale projects as the explosion of small-scale systems began to put strain on the distribution grid.