Siemens Gamesa, the world’s number two maker of wind turbines yesterday said it would reduce costs by about €2 billion by 2020, hoping this will help it narrow a margin gap with larger rival Vestas.

Presenting its new three-year business plan at a capital markets day, Siemens Gamesa said it would raise its margin on earnings before interest and tax (EBIT) to eight to 10 per cent by 2020, up from the seven to eight per cent it expects for this year.

The group’s announcement comes a week after Denmark’s Vestas unveiled its ambitious outlook, forecasting an EBIT margin of nine to 11 per cent in 2018, with a mid-term target of 10 per cent.

Chief dxecutive Markus Tacke said that the three-year plan was putting the group on track to increase profitability, “fully bearing out the merger rationale and positioning us as leaders in an increasingly competitive environment”.

Shares in the group were up 2.7 per cent after the announcement.

Along with its rivals, Siemens Gamesa, the result of a tie-up between Siemens’ wind power business and Gamesa that was completed last year, is facing major pricing pressure as governments around the world are reining in on subsidies.

The company said that the €2 billion in cost reductions included a faster delivery of merger synergies, restructuring efforts and the fine-tuning of its product portfolio as well as its procurement.