SMA stays on track despite coronavirus crisis

SMA posted a marked year-on-year improvement in sales and earnings in the first half of the year. The Managing Board continues to stand by its targets for the year. We put three questions about this to Chief Executive Officer Jürgen Reinert.

Jürgen, SMA increased its sales by 42% to €514 million and more than doubled its operating earnings (EBITDA) from €9 million to €24 million in the first half of the year, notwithstanding the coronavirus crisis. What are the reasons behind this positive performance?

It goes without saying that we are, too, very much feeling the effects of the coronavirus crisis. It is definitely quite a challenge to keep the entire supply chain intact when suppliers cease production overnight, borders are closed and strict social distancing rules make it impossible to operate our usual company processes. But we have managed to do exactly that, all without recourse to state aid. Right at the start of the crisis, we set up a task force and established an effective crisis management. We adjusted our production processes to protect our employees, stepped up our collaboration with our suppliers and continued to give our customers comprehensive support. That enabled us to keep production going without a hitch and deliver inverters with seven gigawatts of power from January to June – that’s the equivalent of the power generated by five or six conventional power plant units. Ultimately, all of that was possible only thanks to the great commitment and exceptional flexibility of our employees. I would like to thank them for that.

While many companies have cut their sales and earnings forecasts for 2020 in recent months, the SMA Managing Board is sticking with its guidance published at the start of February. What makes you so optimistic about achieving the intended growth?

In the first half of the year, we demonstrated that we can gain market share even in the current challenging circumstances. Whereas the market as a whole has contracted, we considerably increased both inverter power delivered and our sales. We did generate lower sales in the second quarter than we had planned for at the start of the year, and incoming orders were weaker as well. However, we assumed that, given the coronavirus crisis. We expect that demand will rise again in the coming months. Of course, we need to keep a close eye on how the situation develops. Provided that no unforeseeable events occur, though, we are still confident to increase sales to more than €1 billion and achieve EBIT of €50 million to €80 million.

What do the medium- to long-term prospects for SMA look like, in your view?

Positive. In tackling the coronavirus crisis, there is a historic opportunity for us to make the economy more sustainable and resilient. The use of renewable energy is going to play a crucial role in this. Political initiatives such as the European Green Deal and U.S. presidential candidate Joe Biden’s climate protection plan are steps in the right direction. Now we need to consistently implement them. SMA is ready and ideally equipped to help shape this process with our extensive expertise and our innovative and sustainable technologies.

Jürgen, thanks for talking to us.