Smart meter manufacturers are under ‘margin pressure’

AMI smart meter manufacturers
Meter manufacturers face shifting timelines for major rollouts due to the need to engage consumers and convince them of benefits

Public pushback to smart metering rollouts is one factor that is putting pressure on major meter manufacturers as government-led programmes face delays due to the need to engage consumers, according to a financial report.

Zacks Rank highlighted how despite government support for the smartening of the grid, large-scale advanced metering infrastructure projects still need to be justified to rate-payers and are subject to intense scrutiny by public utility commissions to ensure that the benefits outweigh the costs.

Some countries have experienced public pushback to smart metering roll-outs on health and privacy concerns. These situations create a timeline risk for large projects and may limit the growth of manufacturers, said the report.

Other factors hitting meter manufacturers is what the financial reporting service describes as “margin pressure due to increased competition in the AMI space”, particularly in North America.

Meanwhile in Europe, there are many service providers that offer complete deployment solutions of software, meters, communication and installation, reducing the opportunities to supply one part of a rollout or a complete end-to-end solution.

Impact of currency fluctuations

Energy services giant Itron hasn’t been immune to global pressures on its business leading the company to adjust its earnings guidance for 2015 to the range of US$1.00–US$1.30 per share.

Zacks Rank reports that revenue from the meter manufacturers’ water segment was down by 16% year on year in the quarter in nominal terms and 2% in constant currency.

The water segment is allegedly more vulnerable to weakness in the euro than Itron’s other two segments – electricity and gas.

The currency-adjusted decline, primarily in the Latin American region, was related to spending constraints in Brazil.

The company expects this trend to continue impacting its water segment’s revenues in that particular region for the rest of 2015.

Despite tougher operating conditions, Itron has announced a raft of deals since May 2015 in Austria, Germany, Italy, the US and Jordan.