Germany's SMA Solar cuts jobs after profit warning
By Christoph Steitz
FRANKFURT (Reuters) - SMA Solar , Germany's biggest solar company by revenue, said it will cut 12 percent of its workforce after competition from Asia and a decline in Europe's solar sector forced it to lower its outlook for sales and profit.
The 600 job losses by the end of 2015 are SMA Solar's second major round of layoffs in as many years. The company has been badly hit by falling solar power subsidies in Europe, most notably in its home market Germany, where the company makes about 28 percent of its sales.
SMA Solar shares were down 12.3 percent at 22.755 euros by 11:00 BST on Wednesday, their lowest level in almost seven months and the fifth-biggest decliner in Germany's main stocks index <.PL.DE>.
The company's profit warning follows that of German peer SolarWorld which on Monday said it would not reach its sales target this year, pointing to weak demand in its core home market.
"Particularly in the core markets in Europe, demand has collapsed even further than expected due to further cuts in subsidies," SMA Solar Chief Executive Pierre-Pascal Urbon said in a statement on Wednesday.
"The cut-throat competition is keeping pricing pressure high in the industry," he said.
SMA Solar, the world's largest maker of the inverters used to feed solar-generated electricity into the power grid, warned it could make a loss of up to 45 million euros this year and at best would break even. Previously, the company had expected an operating profit of 20 million euros at best.
The company cut its 2014 sales target to 850-950 million euros from 1.0-1.3 billion.
Urbon said the firm will cut its development budget to about 90 million euros per year from 102.5 million last year, he said.
Competition from low-cost Asian peers has been a drag for SMA over the past three years, gnawing away at its market share and profit margins, which declined from about 27 percent in 2010 to 7 percent in 2012.
In response to the crisis, SMA earlier this year struck a deal with Danish energy firm Danfoss A/S, which bought a fifth of the German group for 302 million euros.($1 = 0.7463 Euros)
(Additional reporting by Till Weber; Editing by Erica Billingham)
