The Zhitong Finance App learned that Siemens Energy has made progress in solving its troubled wind turbine manufacturing business. The company said on Wednesday that it will cut production and jobs at its Gamesa subsidiary to allow the division to return to profit after four years of losses, with the ultimate goal of achieving double-digit returns. The business will shrink and focus mainly on the European and US markets. The company did not specify the number of potential layoffs, and Gamesa currently has around 26,000 employees.

According to reports, these measures target Gamesa's onshore business. This part of the business is facing the most serious difficulties because high costs have caused the industry to lose money, and serious technical problems with next-generation Gamesa turbines have ultimately threatened Siemens Energy's profitable grid manufacturing and natural gas divisions, and forced the company to seek government support so that it can compete for large orders.

Additionally, Gamesa will change its CEO for the fourth time since 2017. Vinod Philip, 50, is currently in charge of Siemens Energy's IT, procurement and innovation division. He will replace Jochen Eickholt, who will step down in July this year.

Siemens Energy also announced results for the second fiscal quarter ending March 31. According to the data, the company's revenue for the second fiscal quarter was 8.28 billion euros, up 3% from 8.03 billion euros in the same period last year, mainly due to growth brought about by its power grid technology and industry transformation; net profit was 68 million euros, and net loss for the same period last year was 204 million euros. The backlog of orders as of the end of the second fiscal quarter was €11.9 billion.

Siemens Energy raised expectations for this fiscal year due to strong demand for the technology that powers the energy transition and the stability of its wind energy business. The company currently expects revenue growth of 10% to 12% for the current fiscal year (previously estimated at a maximum of 7%), anticipates capital cash flow of around €1 billion, and continues to target net profit of €1 billion.

Wind turbine defects in Gamesa, a subsidiary of Siemens Energy, have plagued the company for many years and cast a shadow over the strong performance of the company's other divisions, such as gas and grid technology. These problems caused losses of several billion euros in the previous fiscal year, and eventually led to a 15 billion euro agreement with the German government to boost its financial position, including the sale of assets.

To make matters worse, these problems come at a time when raw material costs are soaring and the entire industry's supply chain is disrupted. Gamesa's competitor Vestas Wind Systems A/S said last week that after rising prices, turbine sales declined sharply in the first three months of this year.

Siemens Energy said it will take years to resolve these issues, and it is expected that balance of payments will not be achieved until 2026. In February of this year, Christian Bruch, CEO of Siemens Energy, said that if Siemens Energy is unable to meet its medium-term profit target, it may divest the struggling onshore wind power business.