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Abu Dhabi, UAEThursday 15 November 2018

Siemens Gamesa quarterly sales soar as wind turbine demand picks up

Shares surge with order intake in the fourth quarter up by a fifth, led by the United States and India

Siemens Gamesa said demand for wind turbines helped drive sales growth. Reuters
Siemens Gamesa said demand for wind turbines helped drive sales growth. Reuters

Shares in Siemens Gamesa rose 9 per cent on Tuesday after it said it sold more wind turbines in the fourth quarter, boosted by demand in the United States and a recovery in the volatile Indian market.

The industry faces pressure on margins as markets around the world phase out subsidies and governments opt for more competitive contract tenders.

Further pressure has been piled on the price of steel, the main raw material for wind turbine parts, as the United States and China imposed tariffs on each other's imports worth tens of billions of dollars.

But healthy demand pushed Siemens Gamesa's fourth-quarter sales up 12 per cent to €2.62 billion (Dh10.98bn), while the margin on earnings before interest and tax (ebit) came in at 8.2 per cent, exceeding its 2018 target.

Order intake in the quarter was up by a fifth, led by the United States and India, where favourable legislative conditions drove demand for wind turbines, a technology that still depends on government support in many parts of the world.

Shares in Siemens Gamesa, formed by the merger of Spain's Gamesa with the wind power business of Siemens, rose 9.2 per cent to their highest level since September 28.

The results set a high bar for Siemens Gamesa's main rival Vestas, which is due to report results on Wednesday and fights with the German-Spanish group for dominance of the global $50bn wind turbine industry.

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Siemens Gamesa said average selling prices had fallen by 9 per cent year-on-year.

In a sign of ongoing pressure, the group said its ebit margin in 2019 would come in between 7 to 8.5 per cent, compared with 7.6 per cent in the previous year.

"The second half of the year is projected to be much stronger than the first," the company said.

The group, which counts Spain's Iberdrola as a major shareholder, also said it signed its first contract in Russia. Strong demand boosted order backlog to €22.8bn, a 10 per cent increase on September 2017.