* H1 profits fall
* Confirms 2017 and 2018 earnings targets (Adds detail on nuclear output, competition)
PARIS, July 28 (Reuters) - French state-controlled utility EDF said its first-half 2017 core earnings dropped nearly 22 percent to 6.99 billion euros ($8.17 billion) as two nuclear plants remained closed and competition weighed on retail electricity prices.
EDF's nuclear output fell by 8 terrawatthours (Twh), or 3.9 percent, to 197.2 TWh as its French Gravelines 5 and Fessenheim 2 reactors were offline for the whole period for checks in connection with manufacturing problems and the falsification of documentation at the Areva-owned Creusot Forge foundry, which made key components for the plants.
Another reactor, Paluel 2, also has been halted since May 2015 and is not expected to re-start before February 2018 because one of its steam generators fell inside the reactor building during maintenance.
The utility did confirm its 2017 nuclear production target of 390-400 TWh because of the recent restart of the Bugey 5 reactor, which had been out for two years because of sealing problems, as well as the restart of Gravelines 5 and higher output at other reactors.
Hydropower production also fell by 4.2 TWh to 21.3 TWh due to unfavorable hydrological conditions and the company said that intense competition and negative price effects on new offers also hit core earnings.
New power vendors such as Direct Energie are winning market share from EDF, while gas group Engie and oil group Total are also breaking into the French power retail market and putting pressure on electricity prices.
EDF's sales fell 2.6 percent to 35.72 billion euros, earnings before interest and taxes (EBIT) fell 14 percent to 3.88 billion euros while net income declined by 3.7 percent to 2.01 billion euros.
The company confirmed its 2017 and 2018 earnings targets.
($1 = 0.8554 euros) (Reporting by Geert De Clercq; Editing by Sudip Kar-Gupta)