UPDATE 3-SMA Solar warns of market slow-down in 2011

* Proposes 2010 div of 3.00 eur/shr vs 1.30 eur for 2009

* Says still sees 2011 sales in 1.5-1.9 bln eur range

* Says still sees 2011 EBIT margin at 21-25 percent

* Warns global solar market could shrink this year

* Shares down 0.4 percent

(Adds details, updates shares)

By Christoph Steitz

FRANKFURT, March 30 (Reuters) – SMA Solar (S92G.DE: Quote, Profile, Research),
Germany’s No.1 solar company by market value, warned lower
subsidies could lead to a shrinking solar market in 2011 after
it more than doubled its dividend following record 2010 results.

“Due to changes in support programmes in important European
solar markets, SMA predicts a temporary stagnation in the market
in 2011. A slight downturn in growth cannot be ruled out,” the
company said on Wednesday.

Solar energy firms cashed in last year on strong demand in
Germany, the world’s largest solar market, but government
subsidies there are set to fall this year. And Italy, the
world’s second-biggest market, also could curb support to the
industry. [ID:nLDE71N2KG] [ID:nLDE722105]

These governments want to encourage the subsidy-dependent
solar sector to become more competitive with fossil-fuel based
forms of energy.

Steubing analyst Alla Gorelova said that the statement
sounded more cautious than previous statements by the company,
which had said there was an opportunity for market growth this

Another German solar company Q-Cells SE (QCEG.DE: Quote, Profile, Research) on Tuesday
had downplayed hopes of an upturn in orders after the nuclear
crisis in Japan and warned profits might fall due to subsidy
cuts in Europe. [ID:nLDE72R0IS]

At 0742 GMT, SMA’s shares were down 0.4 percent.

Solar energy stocks have seen a massive rally since the
events in Japan have sharpened the focus on the renewable energy

Germany has already shut down some nuclear plants following
the events in Japan.[ID:nLDE72E176]. China may double its target
for photovoltaic power capacity over the next five years.

Analysts and industry executives have cautioned that any
impact from Japan on the industry longer term would be limited.

SMA, the world’s largest maker of solar inverters, said it
would propose a dividend of 3.00 euros ($4.23) per share for
2010, much higher than the Thomson Reuters I/B/E/S average
estimate of 2.28 euros.

But due to its cautious view on the current year, SMA —
which posted record sales of 1.9 billion euros in 2010 — also
stuck to its 2011 margin range for earnings before interest and
tax (EBIT) of 21-25 percent, down from 27.4 percent in 2010.

SMA competes with smaller players Power-One (PWER.O: Quote, Profile, Research),
Fronius and Kaco, but also with big conglomerates such as
Siemens (SIEGn.DE: Quote, Profile, Research) and Schneider Electric (SCHN.PA: Quote, Profile, Research).

The company also stuck to its 2011 sales outlook range of
1.5 billion euros to 1.9 billion.

Solar inverters convert electricity generated from solar
modules into a form which can be fed into the electricity grid.

Graphic on solar inverter market share:


According to database StarMine, SMA Solar trades at 8.2
times estimated 12-month forward earnings, a slight premium to
its biggest rival Power-One, but at a discount to First Solar
(FSLR.O: Quote, Profile, Research), the world’s biggest solar company by market value.

(Graphic by Scott Barber. Editing by Jane Merriman)

UPDATE 3-SMA Solar warns of market slow-down in 2011