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Siemens Gamesa upbeat on margin outlook, shares jump


Reuters MADRID
By Isla Binnie
MADRID (Reuters) - Wind turbine maker Siemens Gamesa reported a 6 percent rise in first-quarter sales and though margins narrowed it forecast better ahead, sending its shares higher after an early fall.
Revenue rose to 2.26 billion euros from 2.13 billion a year earlier but its earnings before interest and tax (EBIT) margin for the October-December quarter fell to 6.1 percent from 6.3 percent.
The company, formed by a merger between Spain's Gamesa and the wind power business of Siemens, maintained its guidance for an EBIT margin of 7 to 8.5 percent for the full year.
Chief Executive Marcus Tacke expects a stronger second half to the year, he told analysts on a conference call.
Shares fell 2.5 percent after the results were published, but rebounded to stand up more than 5 percent by 1015 GMT to lead gainers on Spain's blue-chip IBEX index.
Wind businesses around the world have face margin pressure as governments phase out subsidies and move towards more competitive contract tenders.
Siemens Gamesa, which vies with Denmark's Vestas to lead the global wind turbine sector, said its offshore and wind service businesses drove revenue growth, while its onshore performance lagged.
Profitability was also dragged down by pricing on a backlog of orders struck in 2018. Average selling prices for new orders in the first quarter were broadly in line with those at the end of last year, during which the company said they had fallen 9 percent.
A trade row during which the United States and China imposed tariffs on each other's imports has driven up the cost of steel, the main raw material for wind turbine parts.
Tacke said Siemens Gamesa had taken this into account in giving guidance for future performance, but discussions between the two major economies now needed to play out.
"We still need to see how the recent discussion is going to be concluded, depending on if there is an upside or a downside opportunity out of it," he said.
He reiterated an earlier calculation given by the company of an increase of 2-4 percent in the costs of U.S. projects, depending on the product. ($1 = 0.8743 euros)
(Reporting by Isla Binnie; additional reporting by Jose Elias Rodriguez; editing by Jason Neely)

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First Published: Jan 29 2019 | 3:57 PM IST

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