The German company will cut back on output and jobs in its Gamesa unit to return the division to profit, eventually targeting double-digit returns, Siemens Energy said Wednesday.  

The measures target the onshore business, where Gamesa’s struggles have been most severe, compounded by high costs that have pushed the industry into the red. Losses from the deep technical problems with a new generation of Gamesa turbines eventually threatened to engulf the company’s profitable grid-making and gas units. 

The company didn’t specify the number of potential job cuts. Gamesa employs roughly 26,000 people. The plans will also see the manufacturer retreat to primarily focus on European and US markets.

“We will not defend each and every market, in particular onshore, where we do not see the midterm profit,” Chief Executive Officer Christian Bruch said in a Bloomberg TV interview. “It is about focus and selectivity.”

Gamesa will also swap out its chief executive officer, the fourth such move since 2017. Vinod Philip, 50, who currently heads Siemens Energy’s IT, purchasing and innovation unit, will replace Jochen Eickholt, who has headed the Spanish wind power division since March 2022. Eickholt, 62, will step down in July. 

Siemens Energy also reported earnings for its fiscal second quarter that met analyst expectations and raised its guidance. The company now sees comparable revenue growing by as much as 12% this fiscal year, up from as much as 7%, and pretax free cash flow of as much as €1 billion ($1.1 billion), up from a negative €1 billion previously. 

There is “continued strong demand for technology to power the energy transition,” Bruch said in a statement. “The turnaround of our wind business is still our focus.”

Problems with defective wind turbines at Siemens Energy’s Gamesa unit have weighed on the company for years, overshadowing strong results in other units such as gas and grid technology. The issues fueled billions of euros in losses last fiscal year and culminated in a €15 billion deal with the German government to shore up its finances, including asset sales. 

Making matters worse, the debacle has coincided with a period of soaring raw material costs and supply-chain disruptions across the industry. Rival Vestas Wind Systems A/S said last week that turbine sales slumped in the first three months of the year after price increases. 

Siemens Energy has said it will take years to fix the problems, expecting it to take until 2026 to break even. In February, Bruch indicated that Siemens Energy might divest its troubled onshore wind business if it can’t meet midterm profit targets.