SolarProfit, a Spanish solar panel installer listed on the stock exchange (BME:SPH), has announced plans to slash 90% of its workforce as it grapples with severe financial challenges stemming from a slowdown in demand and declining energy prices.
In a filing to the stock exchange on Thursday, SolarProfit revealed substantial losses incurred in 2023, with its EBITDA plunging into the red by EUR 33 million (USD 35.2 million). The company's consolidated equity is in negative territory, and liquidity constraints persist, with the provisional accounting figures for the first quarter of 2024 expected to show no signs of improvement.
Despite presenting a plan in September 2023 aimed at boosting revenues and cutting costs, SolarProfit acknowledged that the market conditions have continued to deteriorate. Residential demand for solar installations has not only failed to recover but has worsened, while the industrial sector has witnessed a decline due to the decrease in energy prices. Intensifying competition within the solar installation market has further compounded SolarProfit's challenges.
The decline in solar demand in Spain during 2023 marked the first such downturn, attributed to factors including the gradual reduction of European subsidies, interest rate hikes, and the stabilization of power prices, according to the Spanish Association of Renewable Energy Companies (APPA).
In its annual report on the sector, APPA highlighted that solar self-consumption companies in Spain installed 1,943 MW of systems in 2023, a decline from the 2,649 MW installed in 2022 when EU NextGeneration funds were more readily available and power prices surged amid the conflict in Ukraine.
With little prospect for improvement in the near future, SolarProfit has abandoned its key performance indicator (KPI) forecasts for the end of 2024. The company plans to initiate a redundancy plan promptly and outsource installations to third parties. Additionally, it has commenced negotiations with creditors to devise a restructuring plan aimed at navigating its financial challenges.
