UPDATE 2-SMA Solar's market share drops as rivals circle in

Thu Mar 29, 2012 6:20am EDT

* 2011 mkt share was about 33 pct, down from about 40 pct in 2010

* Proposes div of 1.30 eur/shr for 2011 vs 1.76 eur poll

* Says 2011 net profit 166 mln eur vs 174 mln eur Reuters poll

* Shares down 7.9 pct

By Christoph Steitz

FRANKFURT, March 29 (Reuters) - SMA Solar, Germany's top solar company, revealed its market share dropped significantly in 2011, as the world's largest maker of solar inverters came under heavy attack from cheaper Asian rivals and was hurt by plunging equipment prices.

The company said its share in the global market for solar inverters, a key component in solar installations to feed solar power into the power grid, dropped to about a third in 2011, from about 40 percent in 2010.

SMA's market share will fall further this year as it will not be able to enter the restrictive Chinese market, which is expected to grow strongly in the future, said Chief Executive Pierre-Pascal Urbon.

Western solar groups have accused China for protecting its solar market from western groups while flooding European and U.S. markets with cheap cells and modules.

About 40 percent of the global inverter market is held by 300-400 small players, of which more than 200 are Asian, Urbon said.

SMA, which competes with large conglomerates such as Schneider Electric and Siemens, said in the past it expected a big competitive threat from small Asian players, a development that has already hurt U.S.-based and European makers of cells and modules.

The past year is generally considered to be the worst year ever for the young solar industry, as falling government subsidies, plunging prices as well as low-cost Asian competition has driven some sector players out of business, including Germany's Solon and Solar Millennium.

This had led SMA to more than halve its dividend and post profits below expectations for 2011. It proposed a dividend of 1.30 euros per share for 2011, following a payout of 3.00 euros per share for 2010. Analysts had, on average, expected a dividend of 1.76 euros per share.

The company, which had released some preliminary results in January, said 2011 net profit reached 166 million euros ($220.59 million), while earnings before interest and tax (EBIT) came in at 240 million, both below the average analyst forecast in a Reuters poll.

At 1013 GMT, shares were down 7.9 percent at 34.49 euros.

U.S.-based Power-One, SMA Solar's main peer, in February warned declining incentives for solar power in Europe, the world's largest solar market, would impact business in 2012.

SMA confirmed its forecast for 2012 sales of 1.2-1.5 billion euros, a drop of up to 29 percent from 2011 levels, while its EBIT margin would narrow to 5-10 percent, compared with about 14 percent last year.

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