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Siemens Gamesa revenue rises but margins remain squeezed

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Siemens Gamesa revenue rises but margins remain squeezed
FILE PHOTO: The Siemens Gamesa logo is displayed outside the company headquarters in Zumudio, near Bilbao, Spain, November 28, 2017. REUTERS/Vincent West   -   Copyright  VINCENT WEST(Reuters)
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MADRID (Reuters) – Siemens Gamesa’s revenue rose in the second quarter and the wind turbine maker affirmed its targets for the full year, although it said on Tuesday profitability remained squeezed by lower pricing.

Wind turbine makers’ margins have been constrained as governments turn off the taps on subsidies, leaving them scrambling to offer the lowest prices in contract tenders.

The northern Spain-based company said market prices were stabilising after a 9 percent fall in 2018.

Group revenue rose slightly year on year to 2.39 billion euros (2.04 billion pounds) in the January-March period, ahead of a Refinitiv Eikon SmartEstimate of 2.33 billion euros.

The closely-watched margin earnings before interest and tax (EBIT) margin fell to 7.5 percent from 8.4 percent at the beginning of 2018, and the company reiterated previous guidance that it would be between 7 and 8.5 percent for 2019 as a whole.

Siemens Gamesa ranked third globally for wind turbine installation in 2018, according to consultancy Wood Mackenzie, with its generators accounting for 14.2 percent of capacity connected to grids around the world.

Danish rival Vestas hooked up the most generators, and China’s Xinjiang Goldwind took second place in a global industry the International Energy Agency calculates will expand by 60 percent between 2018 and 2023.

While these heavyweight firms have shouldered the price pressure, the ferocity of the market contributed to pushing smaller German peer Senvion to file for insolvency last month.

(Reporting by Isla Binnie; Editing by Paul Day and Georgina Prodhan)

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