FRANKFURT Strong demand in overseas markets pushed Germany's SMA Solar (S92G.DE), the world's largest maker of solar inverters, to forecast-busting second-quarter profit and confirmation of its ambitious outlook.
The large exposure to foreign markets was a key advantage compared with SMA's biggest competitor Power-One PWER.O, which makes about half of its sales in Italy where demand was hit by falling government subsidies.
In the first half of the year, SMA made more than 56 percent of sales outside Germany, the world's top solar market, which was also hit by lower incentives the industry needs to survive.
In the same period last year, that proportion was 36.4 percent.
By 4:51 a.m. EDT, shares in the company, also Europe's largest solar company by market share, were 14 percent higher, lifting the global S&P Global Clean Energy Index .SPGTCLEE, which was up 1.4 percent.
Second-quarter earnings before interest and tax (EBIT) were 90 million euros ($127 million), above the 68.7 million average forecast in a Reuters poll of analysts.
The company -- which commands about 40 percent of the global inverter market -- kept its outlook for 2011 sales of 1.5-1.9 billion euros and said it also still sees an EBIT margin of 21-25 percent, which analysts have described as ambitious.
"While SMA confirmed its financial guidance for 2011 we want to highlight that it is still a long way to go in order to reach that target," Silvia Quandt analyst Sebastian Zank said.
EBIT margin in the first half of the year stood at 14.5 percent.
Equity research performance firm StarMine, which gives more weight to timelier forecasts and those from the historically most accurate analysts, shows SMA's EBIT margin for 2011 is expected to come in at 20.5 percent.
SMA Solar, whose inverters are needed to feed power generated from sun rays into the power grid, also competes with larger conglomerates such as Siemens (SIEGn.DE) and Schneider Electric (SCHN.PA).
(Editing by Sophie Walker and Mike Nesbit)