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UPDATE 1-SMA Solar's 2012 operating profit plunges on Asian competition

* Proposes 2012 div of 0.60 eur/shr vs 1.30 eur for 2011

* 2012 EBIT 102 mln eur vs 122 mln Rtrs poll avg

* 2012 sales 1.46 bln eur vs 1.47 bln Rtrs poll avg

FRANKFURT, March 27 (Reuters) - Germany's top solar company SMA Solar said its profits and dividend more than halved last year, as cheaper Asian rivals hurt prices and margins for its key products.

The world's largest maker of solar inverters - a key component in solar installations needed to feed solar power into the electricity grid - posted a 58-percent decline in operating earnings in 2012 to 102 million euros ($131 million).

Analysts had on average expected the group to post 2012 EBIT of 122 million euros.

It proposed a dividend of 0.60 euros per share for 2012, less than half the 1.30 euros per share it paid for 2011.

Over-capacities of cells and modules have led to a pricing crisis in the solar industry over the past four years, with Suntech's Wuxi unit becoming the latest company to be caught up in insolvency proceedings.

The crisis had filtered through to SMA's operating margin, which plummeted from about 27 percent in 2010 to 7 percent last year. The group reiterated it could not rule out an operating loss this year, with sales falling from 1.46 billion euros in 2012 to 0.9 billion euros to 1.3 billion euros.

The pressure on margins also saw German engineer Siemens as well as manufacturing conglomerate Bosch recently end their ventures in the solar industry.