European PV Giant Suffers First-Half Loss Of Over €42 Million As Residential Business Halved

SMA Solar, a leading European PV inverter company, faced pressure in the first half of 2025: a net loss of over €42 million and a halving of its residential business.

SMA Solar, a long-standing European PV inverter company, recently released its operating results for the first half of 2025. The report showed a year-on-year decline in sales, a shift from profit to loss in net profit, and a significant divergence in its core business segments, all highlighting the pressures brought on by industry competition and the market environment.

In the first half of 2025, SMA Solar's core operating data showed significant pressure:

Sales: Total revenue was €684.9 million, a decrease of 9.8% from €759.3 million in the same period of 2024 (Note: Based on a 9.8% year-on-year decline);

Net Profit: From a profit of €44.1 million in the same period of 2024, it turned directly into a net loss of €42.4 million, a year-on-year decrease of 196.15%;

Profitability: The EBITDA (earnings before interest, taxes, depreciation, and amortization) margin contracted significantly, from 10.6% in the same period of 2024 to just 1.3%, with profitability nearly halved.

Regarding this performance, SMA Solar CEO Jürgen Reinert directly highlighted the core challenges in the financial report: "The residential and commercial system markets remained weak in the first half of 2025. In addition to the decline in German market growth, competition and pricing pressure from Asian suppliers intensified again. At the same time, some distributors' inventories remained high and were being depleted very slowly."

A closer look at SMA Solar's business structure reveals a distinct "structural differentiation" in performance across different segments-some experiencing significant declines, while others barely managed to maintain growth:

1. Core Residential Business Fades: Sales in both residential and commercial sectors plummeted.

Residential Segment: Sales in the first half of the year were €54 million, a sharp drop of 50.86% from the €110 million in the same period of 2024 (Note: Based on a 50.86% year-on-year decline), nearly halving.

Commercial and Industrial Segment: Sales were €62.1 million, a decrease from the €110 million in the same period of 2024. In the same period of 2024, sales reached €113.6 million (Note: extrapolated based on a 45.33% year-on-year decline), a decrease of 45.33%, also approaching 50%.

The sharp declines in these two segments were the primary drivers of the company's overall performance.

2. Large Projects "Solely Support the Situation": Sales Increased Slightly

SMA Solar's Large Project Solutions division performed more reliably: sales reached €568.8 million in the first half of the year, an increase of approximately 6.16% from €535.8 million in the same period of 2024. However, this segment's growth was limited and failed to fully offset the significant declines in the residential, commercial, and industrial sectors.

In fact, SMA Solar's sluggish performance in the first half of the year was already evident in the first quarter of 2025:

In the first quarter of this year, the company's total sales reached €327.7 million, a year-on-year decline of 9.4%.

Inverter sales also declined from 4.3GW in the first quarter of 2024 to 4.1GW in the same period of 2025, a simultaneous contraction in sales.

At the time, SMA Solar predicted that the decline in sales and revenue could be related to declining performance in the Home Solutions and Commercial and Industrial Solutions divisions and fixed cost pressures-a prediction directly confirmed by the release of the first-half financial report.

SMA Solar's losses were not accidental, but rather the result of a long-term accumulation of multiple internal and external factors. 1. The Rise of Chinese Companies: Price Advantages Squeezing Market Space

Once a global leader in PV inverters for nearly 30 years, SMA Solar's advantages have gradually eroded since the rise of Chinese PV inverter companies-even falling out of the top three globally at one point, though it had previously maintained profitability. Today, Chinese companies, leveraging scaled production and vertical integration, have significantly reduced production costs, effectively eliminating SMA Solar's price advantage in the global market.

2. Weakened Domestic Demand in Europe: Falling Electricity Prices and Subsidies Reduce Investment Attractiveness

In SMA Solar's core European market, particularly in traditionally advantageous regions like Germany, demand for residential and commercial PV system installations has slowed significantly.

On the one hand, declining electricity prices in Europe have directly reduced the economic returns for households and businesses investing in solar systems.

On the other hand, the gradual reduction or elimination of subsidies for small PV systems in many European countries has further suppressed end-user demand.

3. High Channel Inventory: Slow Inventory Digestion Hinders Sales

Since 2024, SMA Solar's dealer and installer network has been facing high inventory pressure. By the first half of 2025, this problem had not only not eased, but had continued to worsen-the slow pace of inventory reduction directly impacted the signing and delivery of new orders.

4. "Tracing" Performance Fluctuations: From Peak Profits to Losses

A review of SMA Solar's recent performance reveals a clear pattern of fluctuations:

In 2021, the company's performance shifted from profit to loss due to chip shortages and contract cancellations by some customers.

After the outbreak of the European energy crisis, market demand surged, and the company's profits reached a record high in 2023.

However, the good times were short-lived, with performance reversing downward again in 2024: Full-year revenue was €1.53 billion, a year-on-year decrease of 19.7%. EBITDA swung from €311 million in 2023 to a loss of €16 million, shifting back from profit to loss.

Faced with ongoing operational pressures, SMA Solar has launched a large-scale restructuring plan, attempting to improve the situation through cost-cutting:

Business Unit Consolidation: The company plans to streamline and merge the three existing solutions divisions ("Home, Commercial & Industrial, and Large Projects") into two divisions ("Home & Commercial & Industrial" and "Large Projects") to reduce management costs;

Global Layoffs: The company plans to lay off up to 1,100 employees globally by the end of 2025, two-thirds of which will occur in Germany, resulting in estimated cost savings of €150 million to €200 million (approximately RMB 1.143 billion to RMB 1.524 billion). However, as of the release of the first-half financial report, this restructuring and transformation plan had not yet been completed. SMA Solar also lowered its full-year 2025 guidance:

The original annual sales forecast has been adjusted to a range of €1.5 billion to €1.55 billion;

Annual EBITDA is expected to be approximately €80 million (approximately $93.3 million).

The company explained in its financial report that the downward revision was due not only to "a deteriorating macroeconomic environment and declining growth rates in the residential and commercial sectors," but also to "uncertainty arising from volatile tariff policies and their potential direct and indirect impact on the business."

Despite short-term pressures, SMA Solar management remains cautiously optimistic about the outlook for some of its businesses. CEO Reinert reiterated that "the outlook for the large-scale project segment remains positive."

The company's data suggests it has a certain performance cushion: as of March 31, 2025, SMA Solar still has a backlog of €1.2939 billion (approximately $1.516 billion), providing some support for future performance.

However, from a macro perspective, as the global energy transition continues, Western PV inverter manufacturers like SMA Solar still face challenges such as price competition, policy uncertainty, and market demand fluctuations. Whether the company's current strategic restructuring and business focus can be successfully implemented and achieve transformation remains an unknown.