SolarEdge cuts 500 jobs as it closes Energy Storage division

In November 2024, SolarEdge Technologies, a key player in the solar energy sector, announced significant restructuring plans that involve dissolving its Energy Storage division. This decision comes as the company shifts its focus back to its core solar operations. The layoffs are expected to affect around 500 employees, primarily in South Korea, which constitutes about 12% of its total workforce. The job cuts will mainly occur in the manufacturing sector, with most reductions anticipated in the first half of 2025. The financial implications of this closure are considerable, as the company projects pre-tax charges ranging from $81 million to $99 million, which include various expenses such as asset impairment, inventory write-offs, and severance payments. Particularly, SolarEdge has accounted for $40 million to $49 million in asset-related costs, alongside $30 million to $37 million allocated for inventory management and non-cancelable purchase orders. Additionally, they expect severance costs to fall between $4 million to $5 million. The costs related to this restructuring are set to be recorded in their financial reports during the fourth quarter of 2024 and the first quarter of 2025. To manage these costs effectively, SolarEdge is planning asset sales, including some facilities located in South Korea, with the goal of mitigating financial burdens associated with the layoffs and closure of the division. The company anticipates cash payments related to these restructuring charges will amount to $38 million to $46 million, importantly aimed at severance and non-cancelable orders. The leadership under Ronen Faier, the interim CEO, emphasized that the decision to close this division comes after careful consideration of the company's portfolio, market trends, and the competitive landscape within the renewable energy sector. This step is seen as a part of broader strategies focused on achieving financial stability, enhancing profitability, and optimizing core business operations, specifically in solar technologies and energy management. Overall, the announcement marks a significant strategic shift for SolarEdge, indicating a firm commitment to its foundational solar business amidst changing economic conditions and challenges faced in the renewable energy industry.