* Now sees 2011 sales of 1.5-1.7 billion euros
* Sees year EBIT of 220-300 million euros
* Reports minor recovery in demand for solar inverters
* Shares down 9.5 percent
(Adds details, background, share impact)
FRANKFURT, Sept19 - SMA Solar (S92G.DE), the world's biggest maker of solar inverters, slashed full-year targets only days after its chief executive called the outlook challenging, confirming fears the industry bellwether was not immune to falling demand.
The company said there had been only a minor recovery in demand since mid-summer, blaming uncertainty on solar incentive cuts in Germany, the world's biggest solar market, and fallout from the euro zone debt crisis.
Inverters play a key part in the solar industry, converting electricity generated from panels into a form which can be fed into an electricity grid.
Chief Executive Pierre-Pascal Urbon told Reuters on Friday the company's profit target had become challenging but stuck to an operating margin of 21-25 percent for the ongoing year. [ID:nL5E7KG0RA]
SMA said it now saw 2011 sales of 1.5-1.7 billion euros
($2.1-$2.3 billion) against a previous forecast of 1.5-1.9 billion.
It sees earnings before interest and tax (EBIT) of 220-300 million euros this year, down from a previous outlook of 315-475 million, equal to an EBIT margin of at least 15 percent.
"The guidance cut shows how fierce competition has become in the industry," a trader said.
SMA shares were down 9.5 percent at 1210 GMT.
The industry is still dependent on subsidies because solar power is much more expensive than conventional forms of energy. It has been hit by incentive scheme cuts in Germany and Italy, although demand for inverters held up until early this year.
SMA Solar has long been seen as a cash cow for the sector, treating investors to margins near 30 percent, but concern has grown since it said the profit margin in the first three months of the year crashed to 5.4 percent from 27.2 percent in the 2010 period.
It ramped up production last year to meet a surge in demand from Germany and Italy as customers rushed to buy solar panels before governments started to phase out incentives.
($1 = 0.725 euro)
(Additional reporting by Daniela Pegna; Editing by David Hulmes)
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