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Company News

Siemens Gamesa shares up as wind power firm sees rising margins

MADRID (Reuters) - Shares in Siemens Gamesa SGREN.MC rose on Thursday after it confirmed forecasts for a steady rise in margins until 2023, even though a small operating profit in the fourth quarter was not enough to save the wind turbine maker from an annual loss.

FILE PHOTO: A model of a wind turbine with the Siemens Gamesa logo is displayed outside the annual general shareholders meeting in Zamudio, Spain, June 20, 2017. REUTERS/Vincent West

Beset by a slowdown in the Indian market, cost overruns in northern Europe and disruptions linked to COVID-19, the German-Spanish company reported a net loss of 918 million euros ($1.08 billion) for its fiscal year that ended in September.

Demand for wind energy as countries and companies seek to cut carbon emissions helped propel orders 15.6% higher from the previous year to 14.7 billion euros.

The company confirmed its target to increase revenue from now on and bolster its margin on core earnings before interest, taxes and some other costs to 8% to 10% in 2023.

Despite strong competition, high steel costs and production disruptions caused by the coronavirus crisis, shares in Siemens Gamesa have soared more than 60% in 2020 on expectations it will benefit from rising demand for renewable energy.

They rose further on Thursday, climbing as much as 5.7% to 26.71 euros apiece, a 12-year high and also outperforming Spain's blue-chip index .IBEX.MC.

Shares in parent Siemens Energy ENR1n.DE, which owns 67% of Siemens Gamesa, rose as much as 6.8%.

Siemens Gamesa Chief Executive Andreas Nauen aims to capitalise on new technology like a new offshore turbine with a 222-metre rotor to lift the company out of losses.

Danish rival Vestas VWS.CO reported a positive surprise for profits on Wednesday but a disappointing order intake. Global uncertainty about the outcome of the U.S. presidential election dragged on Vestas' shares.

Nauen told reporters on a conference call he saw potential opportunities for offshore wind projects in the United States.

Additional reporting by Christoph Steitz in Frankfurt; Editing by Edmund Blair and Steve Orlofsky

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