SMA Solar 2010 margins hit by German subsidy cuts

FRANKFURT (Reuters) - SMA Solar said it now sees its 2010 profitability reaching the lower end of its outlook range after incentive cuts caused fewer Germans to install solar panels in the second half of the year.

Demand for solar products spiked in Germany ahead of expected subsidy cuts there, which had prompted SMA Solar as well as rivals such as Q-Cells and Centrotherm to raise their 2010 outlook.

"However, according to the Managing Board's assumptions, the changes in feed-in tariffs in mid-2010 have caused a considerable reduction of the newly installed PVC (photovoltaic) power in Germany in the second half of the year," SMA Solar said in a statement on Monday.

SMA Solar, the world's largest maker of solar inverters, said it now sees its EBIT margin -- earnings before interest and tax as a percentage of sales -- coming in at the lower end of its forecast range of 26.5 percent to 28.5 percent in 2010, albeit still at a record level. At the same time, it said it now expects 2010 sales to reach the upper end of its outlook range of 1.7-1.9 billion euros ($2.3-2.5 billion) on demand in Southern Europe and the United States.

SMA Solar is due to publish full 2010 financial results on March 31.

(Reporting by Maria Sheahan, Editing by Jonathan Gould)